VALLEY VIEW HEALTH CENTRE (A FIRM) & Ors. v NHS PROPERTY SERVICES LIMITED

In undocumented or informal commercial occupation, the nature and terms of the tenancy are inferred from what was agreed and all the surrounding circumstances. Payment of rent is only one factor. Continuing negotiations for a formal lease, particularly one intended to exclude statutory protection, may support a tenancy at will rather than a periodic tenancy.

Service-charge liability depends on the terms of the particular tenancy. Costs of services, and appropriately related internal management costs, may be recoverable where the contractual wording is sufficiently wide and the costs are reasonable. The existence of an inter-NHS funding gap does not alter private-law rights. Declaratory relief should be refused where there is no real dispute, no useful purpose, or a substantial risk of misleading other occupiers.

Five GP practices brought claims against their landlord, NHS Property Services Limited, concerning the terms of their occupation of NHS premises and alleged arrears of service charges. The Defendant admitted that its Charging Policies had not been incorporated into the tenancies, but counterclaimed for service charges under the tenancies and, in one case, in unjust enrichment.

The trial was the first part of a split trial. It concerned the nature of two tenancies, the parties’ obligations to provide and pay for services, the recoverability in principle of management costs, limitation, the extent of premises and historic occupation, and whether declarations concerning the Charging Policies should be made.

1. Valley View. The occupation was a tenancy at will. The continuing intention to grant a formal lease, prolonged negotiations, absence of agreed terms and intended exclusion of the Landlord and Tenant Act 1954 outweighed the payment of rent. The rent was not all-inclusive. The tenancy contained implied obligations to reimburse the Defendant’s liability for superior-landlord service charges and to pay the reasonable costs of maintaining the boiler system. Management costs were recoverable in principle only as part of the reasonable costs of boiler works.
2. Coleford. The implied tenancy required the landlord to continue providing services, subject to the landlord reasonably concluding that a service was unnecessary or inappropriate. The tenants had to pay, on demand, the reasonable costs of services reasonably provided. The obligation was not subject to the alleged cap. Management costs were recoverable in principle as part of the reasonable costs of services. The 2013/2014 sums had been paid, so no limitation defence arose for that year. Historic occupation percentages were determined at 54.4%, 59.55%, 59.55%, 66.42% and 67.03% for 2015/16 to 2019/20.
3. Bushbury. Clause 5.2.2 covered services supplied to the Premises as part of the wider building, including planned and reactive grounds and garden maintenance, planned and reactive snow clearing and gritting, and buildings insurance. Management costs were recoverable in principle under clause 5.2, but not under clause 5.2.1. The alternative unjust-enrichment claim was deferred to Trial 2. The 2013/2014 sums had been paid. Historic occupation was determined at 77.7%, 79.44% and 79.44% for 2017/18 to 2019/20.
4. St Andrews. Holding over produced a tenancy at will. The tenant’s service-charge obligations derived from clauses 3.2, 4.1.2 and 4.1.3 of the 2004 lease. Management costs were recoverable under clause 3.2, but not under clause 4.1.3. The demised premises remained co-extensive with those in the 2004 lease. Historic occupation was determined at 64.57%, 64.57%, 69% and 71% for 2016/17 to 2019/20.
5. St Keverne and common issues. The rent was not all-inclusive. The tenancy contained implied obligations to pay the reasonable costs of services reasonably provided and to continue providing services, subject to the landlord’s reasonable control over the services supplied. Management costs were recoverable in principle. The Charging Policy declarations were refused: there was no real and present dispute, they would add no utility, and they risked misleading other GP practices. The Claimants’ claims for declarations were dismissed. Declaratory relief was granted on the Defendant’s counterclaims to the extent set out in the judgment, with consequential orders and Trial 2 directions to follow.