[2023] UKUT 207 (LC)

Boswell Court and Hitherwood Court form part of a much larger residential development on the site of the former Colindale Hospital. All of the buildings on what is now referred to as the “Pulse” estate were built by the same developer, Fairview New Homes (Colindale) Ltd. After each building was completed the flats in it were sold off on long leases. The freehold reversions in the individual buildings were then sold to different investors, with Boswell Court and Hitherwood Court being acquired by RMB.

The leases of the flats in the two blocks (and quite possibly the leases of flats in the other blocks in the Pulse development) are in a standard form. I was shown Mr Douglas’ lease of Flat 30, Boswell Court, which was granted to him on 5 November 2015 for a term of 250 years (the Lease).

The Lease was made between Fairview as Lessor, Mr Douglas as Lessee and Colindale Hospital Management Company Ltd which is referred to in the lease as “the Company”. It begins by reciting that the two blocks formed part of a larger estate, and that the Company had been incorporated to provide services for the lessees of the blocks and the owners of other parts of the estate.

The Lessee’s covenants are in clause 3 of the Lease and are made with the Lessor, the Company, and the lessees of the other flats in the block. By clause 3(5)(a) the Lessee covenanted to pay on demand an agreed proportion of the costs incurred by the Company in carrying out obligations under Part IV of the Schedule to the Lease. It was also provided that if the Lessor performed any of the obligations of the Company the Lessee was to pay the agreed proportion to the Lessor.

The Lessor’s covenants with the Lessee and the Company are in clause 4 of the Lease. They include, at clause 4(6), an obligation that if the Company fails or neglects to perform its obligations or goes into liquidation, the Lessor will undertake those obligations, and will be entitled to recover a due proportion of all its costs of doing so from the Lessee.

The Lease includes, at clause 5(2), a conventional right of forfeiture in the event that the rent is unpaid, or any other breach of covenant is committed by the Lessee.

By clauses 7 and the Company covenants with the Lessee and the Lessor respectively to perform the obligations in Part IV of the Schedule. In the event of its failure to perform its obligations it authorised the Lessor to do so and to recover the Lessee’s contribution as agent for the Company.

The Company’s obligations listed in Part IV of the Schedule to the Lease include, at paragraph 7, the following concerning insurance:

“The Company will at all times during the said term (unless such insurance shall be vitiated by any act or default of the Lessee) insure and keep insured the Block (including lifts if any) and the contents of the Common Parts in the names of the Lessor the Lessee their mortgagees (according to the respective estates and interests) and the Company against comprehensive risks with an insurance company of repute nominated by the Lessor and through the agency of the Lessor …”

The general structure of the Lease was, therefore, that services (including insurance) would be provided by the Company which, in turn, would receive the service charge contributions from the Lessee. The Lessor’s role was to nominate the insurer and act as agent of the Company in connection with the insurance, and to step-in to provide the services in the event of a default by the Company.