Annja Weinberger & Ors v BHRM Limited

The construction of a lease is objective. The tribunal must ascertain the meaning a reasonable person with the relevant background knowledge would give to its language, read in its documentary, factual and commercial context. It must not begin with an assumed subjective intention and then construe the lease to match it.

A service-charge covenant is limited by its terms. In a covenant to pay “rates, taxes and outgoings”, outgoings takes its meaning from the associated words and covers externally imposed charges of a similar nature. It does not, without clear language, make a lessee liable for expenditure on services or facilities from which the lessee derives no benefit.

The joint leaseholders of Flat 2 appealed from the First-tier Tribunal’s determination concerning service charges demanded by the freeholder between 2020 and 2024. Flat 2, in a separate wing, had its own entrance and no right to use the internal common parts of the main house.

The lease required a one-thirteenth contribution to specified costs in the Fourth Schedule. The appellants contended that it did not require contributions for lighting, installations, safety measures, cleaning and inspections relating to the main house’s common parts. The FTT had held that a number of those charges were payable.

The central issue was whether the lease, properly construed, imposed liability for those charges.

1. Appeal allowed. The FTT’s decision was set aside insofar as it imposed liability for services and installations inside the main house and for outdoor electrical installations.

2. The FTT had misstated the law of construction by asking what the original parties intended and interpreting the lease accordingly. Applying Arnold v Britton [2015] UKSC 36, the Tribunal held that intention must instead be discerned objectively from the lease’s words, read with the lease as a whole and the relevant contemporaneous circumstances. The earlier lease of Flat 3 was relevant because it demonstrated the deliberately different arrangements for flats using the internal common parts. A later standard-form lease could not illuminate the parties’ intentions in 1971.

3. Although Flat 2 formed part of the defined “Mansion”, that did not make its lessees liable for all expenditure concerning the Mansion. The Fourth Schedule carefully specified the costs to which Flat 2 was to contribute. Unlike the lease of Flat 3, it neither gave Flat 2 rights over the internal entrance, passages, landings and stairs nor required a contribution to their upkeep.

4. “Rates, taxes and outgoings” in paragraph 3 of the Fourth Schedule meant externally imposed charges of a similar character, rather than expenditure incurred in providing a service. It could not therefore justify charges for internal lighting, asbestos and fire-safety work, solar lamp-posts, CCTV signs, cleaning, or inspections of common parts. Nor did paragraph 5 cover cleaning or inspections merely because it referred to wages of servants employed in running and maintaining the Mansion.

5. Charges for electrical installations were payable only to the extent that they concerned repair or renewal of cables and wires falling within paragraph 1 of the Fourth Schedule. The appellants were not contractually liable for other installations, including lights and equipment in the internal common parts. The existing agreed variation from one thirteenth to one fourteenth remained unproblematic.

• Upper Tribunal (Lands Chamber): In Annja Weinberger & Ors v BHRM Limited [2025] UKUT 160 (LC), the appeal was allowed and the FTT’s service-charge determination was set aside in part.
• First-tier Tribunal (Property Chamber): The FTT determined the appellants’ liability for service charges and varied the lease’s contribution from one thirteenth to one fourteenth. Its service-charge decision was challenged on appeal.