Search

How can we help?

Icon

Tenant wins challenge against Landlord’s ‘conclusive’ service charge statement

In the recent case of  Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2020] EWHC 1263 (Ch), the High Court held that a tenant could challenge the service charge sums due under their lease, despite a clause in their lease stating that the landlord’s service charge certificate was ‘conclusive’ save for absent manifest or mathematical error or fraud.

Blacks Outdoor Retail Ltd (Blacks) was the tenant of commercial premises at Chicago Buildings, Whitechapel and Stanley Street.  Their landlord – Sara & Hossein Asset Holdings Ltd (S&HAH Ltd) instigated proceedings against them for non-payment of service charge over the previous two years.  The service charge amounted to £55,000 in the first year and £400,000 in the second year.  S&HAH Ltd asserted that they had produced a certificate in respect of such sums and that in accordance with the terms of the lease, such certificate was ‘conclusive’.  However, Blacks argued that the costs S&HAH Ltd were seeking to recover were in respect of modernisation and improvement works and as such were not recoverable as service charge, as they did not fall within the landlord’s repairing obligations under the lease.

The High Court found in favour of Blacks and held that, the service charge certificate was conclusive as to the amount of the service charge, but was not conclusive as to whether those costs actually fell within the scope of the service charge payable by the tenant under the lease.  Accordingly the tenant was entitled to challenge the service charge costs.

Landlords should carefully consider whether the sums they are seeking to recover actually fall within the service charge provisions of their lease

While this case turned on the specific wording of Black’s lease, it nonetheless provides a useful reminder that a clause purporting that a service charge certificate is ‘conclusive’ will not be conclusive where those sums were never properly due.  Landlords should carefully consider whether the sums they are seeking to recover actually fall within the service charge provisions of their lease, particularly in respect of improvement and modernisation works.  Similarly, tenants should scrutinise any certificates/demands for payment so that they only pay what is due under their lease.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

Pub
  • 05 March 2024
  • Privacy and Data Protection

How do I protect my business in the event of a personal data breach?

Don’t let your business fall victim to personal data breaches. Join Louise Keenan and Rebecca Dowle, for a quick overview of how to protect your business.

Pub
  • 05 March 2024
  • Privacy and Data Protection

AI Podcast: AI and Intellectual Property

In the second of our three-part ‘AI Podcast’ series, Jacob Montague and Lucy Densham Brown, will be exploring how artificial intelligence (AI) interacts with intellectual property rights (IP rights).

art
  • 04 March 2024
  • Corporate and M&A

Treasury Shares – An Opportunity to be Treasured

Under section 658 of the Companies Act 2006 (‘CA 2006’), there is a general rule against companies acquiring and owning their own shares.

art
  • 28 February 2024
  • Commercial Real Estate

Hidden risks in serviced office agreements

This is usually a fully furnished and equipped office space that is managed by a facility management company and made available for short-term or long-term rentals to businesses, varying from one week to a year, or even longer.

art
  • 27 February 2024
  • Employment

Changing Attitudes to Menopause

We have set out some answers to the frequently asked questions that employers ask when considering how to support a menopausal employee.

art
  • 22 February 2024
  • Employment

Time to take the heat off menopausal women

On 22 February 2024, the EHRC released guidance and resources for employers designed to help employers understand their legal obligations in relation to supporting workers experiencing menopausal symptoms.