We deal with a lot of enquiries from managing agents and landlords where disputes arise as to the liabilty for costs relating to works to repair, say, the communal lift in the building or decoration to the internal common parts to which the basement or ground floor tenant has no access.  In such cases it is not at all uncommon for the basement or ground floor flat owner to question why they should contribute when they have no reason to use the lift or access the internal common parts. 

In all cases, the liability to contribute is dependent on what the lease for the relevant property provides.  Some leases exempt the basement or ground floor leaseholder from making such a contribution in circumstances like that in our example and other leases do not.  Accordingly, it is necessary in such cases to check the lease before acting.

This very issue came up in the recent case of Reekie v Oakwood Court Residents Association Ltd [2023] where the Upper Tribunal (Lands Chamber) (“UT”) had to decide whether the Appellant, Mr Reekie, was obliged to pay a contribution towards the refurbishment of a lift in the building where he owned three flats but did not use, nor had any need to use the lift.

At first instance the First Tier Tribunal found that Mr Reekie was liable to pay the contribution demanded by Oakwood Court Residents Association Ltd (OCRA) (the management company under the leases).  Mr Reekie disagreed and appealed to the UT. 

The facts

Oakwood Court is a house converted into eight self-contained flats, two on the ground floor, three on the first floor and three on the second floor.  Mr Reekie owns Flats 1 and 2 on the ground floor and Flat 5 on the first floor.

Flats 1 and 2 can be accessed via the front entrance to the building.  The flats on the first and second floors can be reached via a side entrance which leads to a communal hallway containing a lift and staircase to the upper floors.  When the building was originally converted into flats, the only way of accessing the upper floors was via this side entrance to the building which led to the communal staircase and lift.   However, at some point, Flats 1, 2 and 5 were converted into a single dwelling and an internal staircase was built which allowed access from Flats 1 and 2 to Flat 5 on the next floor without the owner having to use the communal staircase or lift via the side entrance.  Mr Reekie purchased Flats 1, 2 and 5 as a single dwelling and has never used the lift,  there being no need for him to do so. 

In 2019, OCRA demanded £3,870.00 (one sixth of the estimated cost of the works) for the cost of refurbishing the lift.  OCRA sought this sum from Mr Reekie in respect of Flat 5 only (not Flats 1 and 2) as the lift serviced Flats 3 to 8 and so just six of the eight flats in the building.

Mr Reekie refused to pay his contribution and OCRA issued proceedings for a determination as to whether this service charge was payable by him. The Tribunal found that Mr Reekie was liable to pay the proportion of costs towards the work.  Mr Reekie appealed.

The lease for Flat 5, required the management company to keep the lift in repair and the leaseholder was obliged to pay a specific percentage of the Total Service Cost (TSC) (the cost of performing the management company’s obligations in any one year) in equal half yearly payments (the service charge). There was also a provision at Clause 3(1) of the lease which entitled the management company to give notice at any time requiring payment within 14 days of a contribution towards “any unusual or unexpected expenditure” required in order for it to perform its covenants.  The demand for a contribution towards the lift refurbishment was brought under the ad-hoc demand provision at Clause 3(1).

Clause 1 to Part II of the Fifth Schedule, a slightly unusual provision, was the main point of contention between the parties and says as follows.

“In respect of any parts of the main structure of the Building (for example the lift flat roofs or balconies) and the driveway leading to the garages at the rear which are the responsibility of the Company under Part One of this Schedule but of which only a tenant or certain tenants have the use the Company may charge such tenant or those tenants either the whole or such part as the Company thinks fit of the cost of maintenance of those parts to reflect such use”.

The First Tier Tribunal had interpreted “have the use…” as “able to use” and, therefore, Mr Reekie was liable to pay a contribution towards the lift repair as the option was available to him to use the lift to access Flat 5 if he chose to do so.

Mr Reekie’s  position on appeal

Mr Reekie argued that the wording in Clause 1 to Part II of the Fifth Schedule, “the Company may charge such tenant or those tenants…the cost of maintenance of those parts to reflect such use”, meant that he was not obliged to pay the contribution towards the cost of the works as he did not use the lift.  As the contribution reflected the use of the part that required repairing then Mr Reekie did not see why he should pay as he did not use the lift.

Upper Tribunal’s decision

The UT agreed with the FTT’s interpretation of the lease finding that the lease to Flat 5 provided an express right to the leaseholder to use the lift.  There was also an obligation on the management company to keep the structure and any parts of the building which were for communal use in good and substantial repair.

The UT stated that there is a normal expectation that each leaseholder will contribute to the cost of keeping the whole building in repair (with the exception of the interior of individual flats).  This expectation is reflected in the definition of service charge as a percentage of the TSC.

Clause 1 to Part II of the Fifth Schedule provides that the management company can charge a different proportion to the fixed percentage for certain works.

The UT agreed with the FTT that “Have the use of“ means the leaseholders have the right to be able to use.  Therefore, there is a lift at their disposal to use and they are entitled to use it.  Whether they actually use it is irrelevant.

The UT decided that the wording “to reflect such use” did not mean that the costs associated with the lift, or any of the other communal facilities, should be allocated depending on how often the individual used these facilities i.e. the proportion of charge for repairing/maintaining the lift was not based on actual usage of the lift. They stated that if the management company were to apportion the contributions based on individual use then, firstly, Mr Reekie would never contribute (having never used the lift), which would create a continual shortfall, and, secondly, the building would either need surveillance and logging of the comings and goings and thus the amount of use by each leaseholder (clearly impractical) or there would need to be a high degree of trust amongst the leaseholders.

The appeal was, therefore, dismissed and the UT determined that the amount of contribution to be paid by Mr Reekie (for the lift refurbishment) was at the discretion of OCRA (i.e. they could decide whether the contribution would be more or less than the 7.338% service charge proportion).  OCRA decided that Mr Reekie should pay (in respect of Flat 5) the same contribution as all the other leaseholders.

Conclusion

Whilst the fact of this case and the specific lease terms are as they are, the arguments raised are no different to the general arguments seen on a regular basis with such expenses. The key issue here is to have regard to, and understand, the specific provision of the leases in the block that is to be subject to the repairs. Most of these sort of disputes can be knocked on the head at an early stage.  If in doubt, as the agent/management company might have been in this case given the specific the provisions in the subject lease, then seek advice before the works start or demands are sent so that you/your client is fully aware of any issue that might arise.

For more information, please feel free to contact a member of the team on 01435 897297 or info@kdllaw.com.

Disclaimer

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