The recent case of Fluor Daniel Properties Ltd and others
-v- Shortlands Investments Ltd considered an attempt by a landlord to
pass on hefty substantial service charges to its tenants for works that
were considered by those tenants to be both unreasonable and premature.
The case involved an office block in Hammersmith constructed in 1980
with an air conditioning system.
The test of reasonableness of the sums involved was to be such as the
tenants, having regard to the lengths of their leases, could fairly
be expected to pay. The landlord cannot, because he has an interest
in the matter, overlook the limited interest of the tenants who are
having to pay by carrying out works which are calculated to serve an
interest extending beyond that of the tenants. If the landlord wished
to carry out repairs which go beyond those for which the tenants, given
their more limited interest, can be fairly expected to pay, then the
landlord must bear the additional costs himself, provided there is nothing
in the lease to the contrary.
The moral of this case is that a landlord may not use a service charge
to upgrade an existing service if it is not in disrepair unless there
is very clear wording permitting this. Once it is established that repair
is required, it is not for the tenant to require how the repair is to
be undertaken, provided the landlord acts reasonably. The landlord must,
however, consider the tenant's interest in the property when deciding
how to perform its covenants.