Service charge: Service charge demands under a tenancy agreement (Curo Places Ltd v Pimlett – 2020)

Is a landlord entitled to demand service charges in respect of grounds maintenance where such costs had not previously been demanded?

The background

In Curo Places Ltd v Pimlett [2020], the tenant occupied a bungalow under a tenancy agreement. Communal grounds for the sheltered housing scheme were maintained by the landlord. At the start of the agreement, the landlord did not charge the tenant for maintenance of the grounds.

Following the landlord carrying out a proper consultation, the landlord served notice on the tenant seeking to include grounds maintenance in the service charges. The tenant objected on the basis that the tenancy agreement gave the landlord no power to demand such charges. In addition, the tenant argued that even if the tenancy agreement did permit the additional service charge, the Unfair Terms in Consumer Contracts Regulations 1999 prevented the tenant from being bound by the charges.

The First-tier Tribunal considered the wording of the tenancy agreement found in favour of the tenant. The Upper Tribunal dismissed the landlord’s appeal but granted permission to appeal. The matter was thereafter considered by the Court of Appeal.

The decision

The Court of Appeal allowed the landlord’s appeal, finding that the landlord was entitled to add additional services to those listed within the tenancy agreement and was further entitled to recover costs for them through the service charge.

The Court considered whether, under the terms of the tenancy agreement, the landlord was entitled to charge the tenant for grounds maintenance through the service charge. Grounds maintenance was not listed as a service charge item in the agreement, but the agreement did state that, where the landlord consulted with tenants, it was able to provide ‘extra services’ if the landlord believed such extra services were ‘useful’. As the grounds had always been maintained by the landlord, the First-tier Tribunal concluded that the additional service could not be useful as it left the estate in the same position.

The Upper Tribunal had considered that the maintenance of the grounds could not be considered as ‘extra services’ given that the service had always been provided.

The Court of Appeal could find no reason to support the Tribunals’ interpretation, and instead found that the ‘extra services’ could be deemed to be those not listed within the tenancy agreement. The grounds maintenance was therefore found to be an ‘extra service’. The tenant was not required to agree to the additional service charge provided the landlord carried out the proper consultation.

Advice and action

As with many cases we review, Curo Places turned on the interpretation of wording contained in the tenancy agreement.

The Court of Appeal took a practical viewpoint here as to what the ‘natural and ordinary meaning’ of the words ‘extra services’ would have been, finding that it referred only to the services listed in the tenancy agreement. Landlords are advised, as always, to ensure that tenancy agreements are as thorough as possible, anticipating at drafting stage what services they may need to cover under the service charge, whether presently or in the future.