[2024] UKUT 205 (LC)

The provisions of clause 5(4)(g) are set out at paragraph 8 above. The FTT said that it is “aimed at the employment of professionals for the purpose of implementing other obligations under the lease. It is wide enough to include lawyers but there has to be an obligation elsewhere in the lease for which such lawyers may be used.” The appellant therefore argues that the clause authorises the use of legal professionals in the implementation of its repairing covenant.

I do not agree that that is what the clause says or is “aimed at.” Clause 5(4)(g)(i) enables the landlord to employ managing agents and accountants in order to manage the building and collect the rent and service charges. It is not a licence to use professionals in order to carry out any other obligations and it is not about repairs or maintenance. Clause 5(4)(g)(ii) is in broader terms and authorises the employment of professional persons for the “maintenance safety and administration” of the building. Taken literally that might be said to encompass the taking of legal advice, but does it really go that far in the absence of a specific mention of legal professionals?

A number of authorities have considered the same issue in construing similar clauses. It is worth saying at the outset that the absence of a specific mention of legal advice is not fatal to the appellant’s construction; in Assethold Ltd v Watts [2014] UKUT 537 (LC) it was held that the landlord’s obligation to do “all works installations acts matters and things as in the reasonable discretion of the Landlord may be considered necessary or desirable for the proper maintenance safety amenity and administration of the Development” included the taking of legal advice about a neighbouring development which posed a threat to the structure of the building, serving notices under the Party Wall Act 1966 and obtaining an injunction. The Tribunal (the Deputy President, Martin Rodger QC) said at paragraph 58:

However, the purpose and context of the clause in question are critical. In Sella House the landlord sought to recover by way of service charge legal expenses incurred in pursuing other tenants for rent and service charges. The landlord argued that the expenditure arose from its fulfilling its obligations under clause 5(4)(j) of the lease, which required it:

That wording is identical to that of clause 5(4)(g) in the respondent’s lease.

Dillon LJ concluded that legal costs were “outside the contemplation of either limb of Clause 5(4)(j) of the lease". Taylor LJ, said at 156:

Identically worded clauses do not necessarily generate identical outcomes, but there is nothing in the facts of the present appeal to permit a different conclusion about identical words.

What is different is that items (c) to (e) of the list at paragraph 5 above are legal costs incurred by the appellant in disputes with this respondent. Does that make a difference? In both No. 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2021] EWCA Civ 1119 and in Kensquare Ltd v Boakye [2021] EWCA Civ 1725 the Court of Appeal had to decide whether a similarly worded clause encompassed a charge for legal costs incurred in a dispute with the tenant who contested the charges, and came to the same conclusion: a clause concerned with management, or with the provision of services, does not enable the landlord to recover through the service charge its legal costs in a dispute with any of its tenants.