Vincent Chent-Wei Teo v Rockstead Holding Company Limited

Service-charge liability depends on the lease’s words. A tribunal must not enlarge a tenant’s liability to achieve a commercially convenient result or an equal division of costs. Where the Lands Chamber has construed identical or almost identical lease terms for the same building, the FTT should follow that construction unless a material difference in the leases justifies another result. Under the terms considered here, “to include” added roof and foundation costs, while “in particular” introduced examples rather than extending the costs covered. A provision limited to costs incurred did not permit on-account demands for costs yet to be incurred. Flat 1 remained liable for roof and foundation costs and for other costs only where the lease’s sharing or rights provisions applied.

Vincent Chent-Wei Teo held the lease of Flat 1 in a converted building. Rockstead Holding Company Limited claimed service and other charges from him. The building had five flats; a former sixth flat had been sold separately. The lease contained two service-charge provisions with different wording about shared costs and costs incurred or to be incurred.

The FTT upheld Rockstead’s claim on 11 July 2025. The dispute had originated in county-court proceedings: after a Deputy District Judge entered judgment for Rockstead, Teo succeeded on appeal to a Circuit Judge, who transferred the service-charge issues to the FTT. Teo appealed the FTT’s construction of his lease, including its treatment of an earlier Lands Chamber decision concerning other leases in the same building. The central questions were how the lease provisions applied to Flat 1 and whether they permitted on-account charges.

1. Appeal allowed. The FTT erred in its construction of the service-charge provisions. The Lands Chamber’s decision in Lardy v Van Gytenbeek [2010] UKUT 347 (LC) concerned the same building and identical or almost identical terms. The FTT should have construed the same words consistently unless a difference in the leases justified a different result. The Tribunal found no basis for the FTT’s contrary construction.

2. The governing approach was that in Arnold v Britton [2015] UKSC 36: identify the meaning a reasonable reader with the parties’ relevant background would understand, giving primary weight to the words used and reading them in the context of the lease. Commercial common sense does not permit a tribunal to rewrite an agreement or relieve a party from poor drafting. Nor is there a presumption that service-charge provisions enable a landlord to recover all expenditure.

3. In the Fifth Schedule, Part I, paragraph 3, “to include” added roof and foundation costs to the other costs covered. In Part II, paragraph 3, “in particular” introduced examples of the costs already described; it did not extend that category. The FTT was not entitled to give the latter phrase an extended meaning to make the provisions more commercially consistent.

4. Part I covered costs incurred and costs to be incurred. Part II referred only to costs incurred. That distinction had to be given effect despite the apparent drafting error. Part II therefore did not permit on-account recovery for costs yet to be incurred.

5. Flat 1 was liable for its share of roof and foundation costs. Other costs were recoverable only where they related to matters shared by Flat 1 or to parts of the building over which the lease gave it rights. The Tribunal set aside the FTT’s decision and allowed the appeal.

1. Upper Tribunal (Lands Chamber): Appeal allowed. The FTT’s construction was set aside.
2. First-tier Tribunal (Property Chamber): On 11 July 2025, upheld Rockstead’s claim for service and other charges.
3. Circuit Judge: Allowed Teo’s appeal from the county-court judgment and, on 19 July 2024, transferred the service-charge issues to the FTT.
4. County Court: In October 2023, a Deputy District Judge entered judgment for Rockstead on its claims.