The Mayor and Burgesses of the London Borough of Tower Hamlets v Various Leaseholders of Brewster House and Malting House

Right-to-buy leases must be construed objectively, in the context of the lease as a whole and the statutory background. General wording requiring works necessary or advisable for building safety, or costs reasonably incurred in connection with the building, does not clearly extend to the cost of making good a pre-existing structural defect that makes the building unsafe. The right-to-buy scheme places the landlord under a duty to remedy such defects and regulates when leaseholders may contribute. A liability of that exceptional scale must therefore be stated in clear and express terms. The necessity or expense of the works does not determine the construction by itself.

The council, as freeholder, sought to recover through service charges part of the cost of extensive works to remedy a structural defect in two tower blocks built using the Large Panel System. Nine right-to-buy leaseholders applied under section 27 A of the Landlord and Tenant Act 1985. The First-tier Tribunal held that the costs were not recoverable, and the Upper Tribunal confirmed that conclusion in [2024] UKUT 193 (LC). On appeal, the council relied on the lease’s safety provision and its general provision for costs incurred in connection with the building. The central questions were whether those provisions covered pre-existing structural defects and whether additional wording in two early leases altered the result.

Lord Justice Males gave the judgment, with Lord Justices Snowden and Dove agreeing. The appeal was dismissed.

1. Interpretation. A lease is construed by ascertaining the objective meaning of the language chosen by the parties, read in the context of the lease as a whole and relevant background. There are no special rules for service-charge clauses, but general words should not be extended to matters which do not clearly belong within them. The right-to-buy legislation formed part of the relevant background because the leases were granted under that statutory scheme and would be expected to conform to it. This approach was consistent with Arnold v Britton [2015] UKSC 36, Wood v Capita Insurance Services Ltd [2017] UKSC 24 and McHale v Earl Cadogan [2010] HLR 412.
2. Safety provision. Clause 5(5)(o), read in context, concerned relatively routine matters arising in the day-to-day management, maintenance, safety, amenity and administration of the building. Although the works were necessary for safety, the provision did not extend to making good a pre-existing structural defect rendering the building unsafe for habitation. The reference to the landlord’s absolute discretion was also inconsistent with the statutory duty to remedy such a defect, which involved no comparable discretion.
3. Statutory context. The Housing Act 1980 and Housing Act 1985, as amended by the Housing and Planning Act 1986, imposed obligations to make good structural defects and restricted recovery from right-to-buy leaseholders. Any contractual contribution to that cost therefore required clear express wording. The absence of an express reference to structural defects in the later leases was significant.
4. Early leases and general costs. The two earliest leases expressly addressed structural defects, but excluded recovery unless the defect had been notified before the lease was granted or the council became aware of it after the specified five-year period. The defect was known from the outset and had not been notified. The insurance wording also contemplated insurance against the cost of making good structural defects, supporting the conclusion that the leaseholder was not directly liable for that cost. The general words covering other costs and expenses reasonably and properly incurred in connection with the building had the same effect: they did not permit recovery of structural-defect costs. The fundamental nature and scale of the works were relevant contextual considerations, but cost alone was not decisive.

• Court of Appeal (Civil Division) dismissed the council’s appeal: [2025] EWCA Civ 1591.
• Upper Tribunal (Lands Chamber) agreed with the First-tier Tribunal that the relevant lease provisions did not make the leaseholders liable for the structural-remediation costs: [2024] UKUT 193 (LC).
• First-tier Tribunal held that the proposed works were not recoverable through the service charge under the leases.