[2025] UKUT 160 (LC)

The charges in issue are listed above at paragraph 14 in the order in which they are addressed in the FTT’s decision.

Electricity costs. These charges related to the cost of lighting the communal hall and the exterior of the property. The FTT noted that the lessee of Flat 2 does not have or need a specific right of access to the main building but that it benefits from exterior lighting. It determined that the electricity costs, both interior in the communal hall and exterior, were payable by virtue of paragraph 3 of Schedule 4 because it took the view that the electricity costs were outgoings incurred for the running of “other parts of the Mansion”.

There are two reasons why that cannot be right. First, clauses requiring payment of “rates taxes and outgoings” are common in leases; the word “outgoings” takes its meaning from the other words in the clause and means outgoings of a similar nature, being charges “imposed” from outside (such as Council Tax), not incurred in providing a service. If “outgoings” meant “any expenditure on the Mansion incurred for any purpose” that would lead to absurd and obviously unintended results; the scheme of the lease is that the lessee pays for expenditure that the Lessor incurs in relation to the Mansion for the benefit of Flat 2 only. Second, the intention of the parties is clear from clause 5(e) of the lease of Flat 3, which contains an obligation on the Lessor to provide lighting in the common parts inside the main building and from paragraph 2 of the Fourth Schedule to the lease of Flat 3 (paragraph 11 above) where the lessee is specifically obliged to contribute to the cost of lighting the common parts. Only the lessees in the main building are entitled to lighting in the common parts and only they pay for them.

Accordingly the lease of Flat 2 does not provide for the lessee to contribute to the cost of lighting the common parts inside the main building. Furthermore I can see no provision for it to contribute to the cost of exterior lighting, probably because there is no obligation upon the freeholder to provide exterior lighting. The FTT’s decision about electricity costs is set aside; these charges are not payable.

That said, the appellants state in their grounds of appeal that they are content to share the electricity costs for the external installations. That is an obviously sensible arrangement by way of personal contract. It may be that the new form of lease under which most of the flats are now held (see paragraph 17 above) remedies the omission and makes proper provision for the external lighting.

Electrical installations. The FTT’s decision does not say what these are, except that one example is lights and external wiring outside Flat 2 which were repaired by the respondent. According to the grounds of appeal they relate in large part to installations in the common parts inside the main building. The FTT decided that these charges were payable for two reasons. The first was that, irrespective of the date of installation the lights had become part of the freehold, and that the lessee of Flat 2 had to pay for them as part of their contribution to the respondent’s repairing obligation. That is obviously wrong, (a) because without further reasoning – and without precise identification of the lights concerned – it is not possible to understand how any lighting installations had become part of the freehold, and (b) because the lease of Flat 2 does not oblige the freeholder to repair the Mansion, nor does it require the lessee of Flat 2 to pay for such repair.

The second reason why the FTT thought that the lessee of Flat 2 was liable to pay charges in respect of electrical installations was that paragraph 1 of the Fourth Schedule requires a contribution to the maintenance, repair and renewal of “electric cables and wires in under or upon the Mansion and enjoyed by the Lessee in common with the owners and lessees of the other Flats”. That is correct only insofar as the charges relate to cables and wires, and it appears that some of the charges did indeed relate to wiring, but it appears from the grounds of appeal that some related to lights in the common parts, emergency lights, heaters in the common parts and so on.

Accordingly, except insofar as they relate to the repair or renewal of wires and cables, charges in relation to electrical installations are not payable under the lease of Flat 2, and the FTT’s decision is set aside to that extent.

If it is the case that the respondent has repaired lights outside Flat 2, it was not obliged to do so under the lease; whether or not the appellants pay for those lights is a matter for discussion between the parties.

Asbestos survey, fire risk assessment and fire equipment Again no details are given in the FTT’s decision, but the FTT noted that the appellants said these costs were incurred in respect of the main house. The FTT decided the charges were payable under paragraph 3 of the Fourth Schedule as part of “rates, taxes and outgoings”. For the reasons given in paragraph 22 above, “outgoings” in this context means charges imposed by external authorities; this cannot justify a charge in respect of the main building, for which no provision is made in the lease of Flat 2. The FTT’s decision on this point is set aside.

Solar lamp-post and CCTV signs According to the grounds of appeal these are security lights and sensors in the car park and on external walls of Flat 2. The FTT decided that the charges were payable, again, as “outgoings” under paragraph 3 of the Fourth Schedule. For the same reasons the FTT was wrong and the decision is set aside. The appellants are willing to pay for these installations and that is a matter of contract between the parties.

Cherry-picker and annual safety check. These charges relate to maintenance in the grounds. The FTT decided that the appellants were not liable to pay for them, and there is no appeal from that decision.

Cleaning the common parts This is a charge for the cleaning of the common parts inside the main building, and for treatment of the carpet for moth infestation. The FTT decided that the appellants were liable for cleaning costs both under paragraph 3 of the Fourth Schedule, as “outgoings”, and under paragraph 5 of the Fourth Schedule, “The wages of the gardener and any other servants from time to time employed by the Lessor in connection with the running and maintenance of the Mansion”, on the basis that a cleaner falls under “any other servants”.

In my judgment the FTT’s reasoning was wrong; the same observations on “outgoings” are relevant here. As to paragraph 5 of the Fourth Schedule, the point of the paragraph appears to be specifically to cover wages, rather than the cost of getting work done (which, in the case of the garden, was already chargeable under paragraph 2 of the Fourth Schedule). The FTT did not refer to any evidence that the respondent employed a cleaner; even if they did, it would be perverse to construe paragraph 5 as requiring the appellants to pay for an employee from whose work they derived no benefit. The FTT’s decision on this item is set aside; nothing is payable by the appellants in relation to cleaning in the main building.

Account costs for BHRM Limited This is a charge for the production of the respondent’s company accounts. The FTT decided, correctly, that this is not payable as a service charge and there is no appeal about that.

Administration charge for checking the lighting in the common parts. The FTT said that this related to “regular checks of the common parts including checking the lighting”, and that checks were done by “the regular representative of the freehold company”. The FTT decided that this work was chargeable under paragraph 5 of the Fourth Schedule by analogy with the wages of a gardener. Again this is incorrect for the same reasons as the decision about cleaning costs was incorrect. The decision is set aside; nothing is payable for these checks of the common parts in the main building.