Curo Places Ltd v Pimlett

A contractual power allowing a landlord, following consultation, to provide extra services referred to services additional to those listed in the tenancy agreement. It did not depend on whether the landlord was already providing the service in fact without charge. Once properly added, the service became part of the landlord’s contractual obligations and could be included in the annual service charge under the agreement.

The landlord’s belief that adding a service would be useful had to be genuine and rational, reached by reference to relevant considerations. The Court of Appeal allowed the landlord’s appeal and remitted the unresolved unfair-terms issue under the Unfair Terms in Consumer Contracts Regulations 1999 to the First-tier Tribunal.

The tenant held a bungalow within a sheltered housing scheme. Although the landlord had maintained the communal grounds throughout the tenancy, it had not charged this tenant for that maintenance. In 2017, it served a notice adding grounds maintenance as a chargeable service.

The tenant applied under section 27A of the Landlord and Tenant Act 1985. The First-tier Tribunal held that the tenancy agreement did not permit the charge. The Upper Tribunal (Lands Chamber) dismissed the landlord’s appeal on the same construction issue: [2019] UKUT 0130 (LC).

On this second appeal, the Court considered whether the clause permitting the landlord to provide extra services allowed it to add a service already supplied in practice, and whether the resulting cost could be charged. It declined to determine the separate unfair-terms issue, which had not been determined below.

1. Appeal allowed. The Upper Tribunal had misconstrued the tenancy agreement. In clause 2.10.1(iii), “extra Services” meant services additional to those listed in the tenancy agreement, not services additional to those which the landlord happened already to provide in practice. Clauses 2.10.1(i), (ii) and (iii) formed a coherent scheme allowing variation of the landlord’s service obligations, subject to consultation.

2. The contrary construction introduced an unsupported factual reference point and could produce different results under identical tenancy terms according to the services provided when an individual tenancy began. Nothing in the agreement required that inquiry.

3. The requirement that the landlord believe the addition useful concerned providing the extra services as contractual services. It was capable of being useful even where grounds maintenance had previously been provided voluntarily, because its addition made the landlord contractually bound to provide it, subject to the power to stop where continued provision was no longer practicable.

4. The landlord’s belief had to be genuine and rational, reached after considering obviously relevant matters and excluding irrelevant ones. Once an extra service was validly added, it fell within “the services” for the annual service-charge calculation under clause 1.5.1. Clause 6.3.1 permitted that service-charge change without the tenant’s written agreement.

5. The Court remitted to the First-tier Tribunal the issue whether the term was unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999. That issue required factual evaluation and was unsuitable for determination for the first time on a second appeal.

• Court of Appeal (Civil Division): Allowed the landlord’s second appeal and remitted the unfair-terms issue to the First-tier Tribunal: [2020] EWCA Civ 1621.
• Upper Tribunal (Lands Chamber): Dismissed the landlord’s appeal from the First-tier Tribunal on the construction of the tenancy agreement: [2019] UKUT 0130 (LC).
• First-tier Tribunal (Property Chamber): Held that the tenancy agreement did not permit the landlord to charge the tenant for grounds maintenance. It did not determine the issue under the Unfair Terms in Consumer Contracts Regulations 1999.