Bruce Anthony Reekie v Oakwood Court Residents Association Limited

A service-charge provision allowing a management company to apportion maintenance costs among leaseholders who “have the use of” particular building parts refers to the right or ability to use them. It does not depend on the quantity of actual use. The provision confers a discretion, rather than imposing a mandatory apportionment method. The management company may therefore charge a different proportion from the fixed service-charge percentage, provided it does not exercise the discretion capriciously or for an inappropriate purpose.

The appellant owned three flats in a converted building, including a first-floor flat served by a communal lift. Internal alterations enabled access to that flat without using the lift, which the appellant said he never used.

The lease required payment of a specified percentage of the total service cost, but also allowed the management company to charge tenants who had the use of certain building parts such proportion of maintenance costs as it thought fit. The First-tier Tribunal decided that the appellant was liable to contribute towards the proposed lift refurbishment. The appeal concerned the meaning and effect of that provision.

1. Appeal dismissed. The appellant remained liable to contribute towards the cost of refurbishing the lift.
2. The lease had to be interpreted according to its terms and the circumstances existing when it was granted. Later alterations, which allowed access to the first-floor flat without using the communal entrance, stairs or lift, did not change the lease’s meaning.
3. The ordinary meaning of “have the use of” was the right or ability to use. A leaseholder had the use of a lift or staircase where, as a matter of entitlement and practical ability, the leaseholder could use it. Actual use was irrelevant.
4. The clause applied only to maintenance costs relating to specified parts of the building. It gave the management company a discretion, because it provided that the company “may” charge the relevant tenants such part of the cost as it thought fit. It did not require a particular apportionment method.
5. The discretion was subject to the ordinary requirement that it must not be exercised capriciously or for an inappropriate purpose. The company was entitled to charge the appellant the same proportion as the other upper-floor leaseholders with access to the lift.
6. The appellant’s proposed system, under which liability depended on the amount of actual use, would create uncertainty and potential shortfalls and was unsupported by the lease.

• Upper Tribunal (Lands Chamber): appeal from the First-tier Tribunal’s decision issued on 2 March 2022 dismissed.