The recent Court of Appeal case of Campbell v Daejan Properties Limited [2012] EWCA Civ 1503 has served as an important reminder to landlords that there is not a presumption that they should receive full recovery of their maintenance and repair costs from a tenant through the service charge.
The facts of the case
The outcome of this case is clearly based on its own individual facts, including the persuasive reality that Mrs Campbell would have had to pay for costs relating to 40% of the entire house when being in occupation of less than 30% had the landlord’s argument won out, but some general conclusions can be drawn.
Conclusions for landlords
Landlords should take note of the warning that they do not have an automatic entitlement to reclaim all of their costs via the service charge and care should be taken when drafting service charge provisions within their leases. They should also be aware that the Court is unlikely to step in to rectify any supposed drafting errors just on the basis that they do not support the landlord’s commercial position in relation to expenditure.
Conclusions for tenants
Whilst Mrs Campbell was successful in her case, it is worth noting that she was left with a landlord that had no obligation under the lease to repair or maintain the rest of the house other than the maisonette, despite the fact that the rest of the house was required for the support of the maisonette. Tenants should also watch out for drafting errors in their service charge provisions to ensure that the wording in the lease reflects a fair and accurate commercial agreement between the parties.
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