Curo Places Ltd v Pimlett (LANDLORD AND TENANT – service charges – tenancy agreement of a bungalow in a sheltered housing scheme) (2019) UKUT 130 (LC)

Another Upper Tribunal case on a landlord adding additional services and charges to assured tenancy agreements, but where Wilcock v The Guinness Partnership Ltd (2019) UKUT 146 (LC) (our report) concerned an agreement with specified services only, this appeal concerned a tenancy agreement with a clause that did allow the landlord to add additional services and charge for them.

Mr P was the tenant of a one bed bungalow in a sheltered housing scheme. Curo were the current landlord (as the successor to an HA called SHT). The original tenancy agreement had specified services for which a charge could be made, and then had a clause stating:

“2.10.1 The Trust agrees to provide the Services (if any) listed in the Tenancy Agreement and for which you pay a service charge providing that, subject to consultation with tenants:

(i) the Trust may stop providing any of the Services if it reasonably believes it is no longer practicable to do so; or

(ii) provide the same service in a different way; or

(iii) it may provide extra Services if it believes this would be useful.”

The landlord had from the start of the tenancy agreement carried out ground maintenance. There was no obligation on the landlord to do so under the tenancy agreement, and no corresponding listing of it as a service. This had been recognised as a problem and other tenancy agreements issued after Mr P’s had ground maintenance as a chargeable service listed, but existing tenancies weren’t changed.

In 2016/7 the landlord proposed to vary the tenancy agreement to include as additional chargeable services “Clearance, Communal Grounds Management, Management charge (Curo), Tree Maintenance”. This was consulted upon.

Mr P challenged whether the charge was payable in the First Tier Tribunal, and the FTT found it was not. Curo appealed.

The argument centred around whether this clause meant that the landlord could add charge for services that the tenant was already receiving.

Curo argued that

Clause 1.4.1 deals with services for which there are specific charges. It should not prevent the charging for services in respect of which there are no specific charges – provided those services are properly added in accordance with clause 2.10.1(iii). The necessary implication of that clause is that if extra services are properly provided in accordance with that clause then they will become additional to any services for which a specific charging provision is made and the appellant will be entitled to charge for them.

Mr P argued that

the word extra meant extra. Thus when clause 2.10.1 (iii) speaks of the provision of extra services, these must be services which the tenant under the tenancy agreement was not already receiving (albeit without being charged for) as at the date of the grant of the tenancy agreement.

The Upper Tribunal held:

the position at the date of the grant of the tenancy agreement was as follows. The bungalow let to the respondent was part of a sheltered housing scheme and was set within substantial garden grounds which were properly maintained by the landlord SHT. SHT was a responsible social landlord. Accordingly the tenancy was granted in circumstances where both landlord and tenant knew that the grounds were maintained by the landlord and where there was nothing to indicate any prospect of alteration in this position. Despite this being the case the tenancy agreement made no provision for payment by the tenant of a service charge towards the landlord’s costs of maintaining the grounds.

(…)

The respondent could only operate clause 2.10.1(iii) for the purpose it seeks if ground maintenance can properly be said to fall within the following words: “it may provide extra Services if it believes this would be useful.”

In my view the word extra here means extra to services that as a matter of fact are being provided by the appellant prior to the purported reliance upon clause 2.10.1(iii). This in my judgement is the natural meaning of the words.

My view upon this point is strengthened by the inclusion of the words “if it believes this would be useful”. The addition of the extra service must be something which can properly be believed to be of some use (or benefit) so as to make the post-addition position on the estate better than the pre-addition position. However on the facts of the present case the pre-addition position (i.e. prior to the purported exercise of clause 2.10.1(iii)) is exactly the same as regards ground maintenance to the post addition position. There is no way in which the operation by the appellant of clause 2.10.1 (iii) can be said to be useful save only the use to the appellant of being able to charge money for something it was not previously charging money for. A financial benefit of this kind to the appellant is in my view not what is contemplated by the word “useful”.

In short, the ground maintenance was not an ‘extra’ service, and the landlord could not add the cost to the service charge.

Testing the foregoing conclusion further, it is helpful to have regard to the principles in paragraph 15 of Arnold v Britton . I have already examined what I consider to be the natural and ordinary meaning of the relevant provisions in the tenancy agreement in the light of any other relevant provisions in the agreement. As regards the overall purpose of the clause and the tenancy agreement, the purpose of the tenancy agreement was to grant to the respondent a tenancy of a bungalow in attractive garden grounds which could be expected to be kept maintained (rather than be allowed to become neglected and overgrown) by the landlord. These were the facts and circumstances known or assumed by the parties at the time the tenancy agreement was executed. However despite this the tenancy agreement made no provision for the payment of any service charge by the tenant in respect of ground maintenance. Also there is nothing inconsistent with commercial common sense for the respondent to be taking a tenancy of a bungalow in maintained grounds in circumstances where, although there was no contractual obligation on the landlord, the landlord was a responsible provider of sheltered accommodation and could be expected to continue to maintain the grounds – such that the rent paid by the respondent would be a rent appropriate for a bungalow in grounds which could be expected to continue to be maintained without further charge to the tenant.

So, while in Wilcock, there was no clause allowing for extra services (and charges) to be added, in this case, the relevant clause could only allow for new services, not adding existing works costs to the service charge.