Service Charge in UK Law

Paragraph 6 of Schedule 3 entitles the Lessor to reimbursement by the service charge of both the pay and expenses of "staff employed" and "fees paid" to "architects agents surveyors and solicitors" employed in regard to the management of the Estate. The context in which the word "agent" is used is by reference to the provision of some professional service required in connection with the management of the Estate. That is to be distinguished from the general management of the Estate.

Mr Venables then follows through that Redrow sequence. The payment in question is the Service Charge which LMUK pays to Suppliers. Did LMUK receive anything – anything at all – used or to be used for the purposes of its business in return for that payment?

There is no single touchstone, no reliable litmus paper, that assuredly reveals the characteristics for which I am looking but why I would prefer the Commissioners' argument is that it seems to me the more consistent with the requirements, illustrated in Auto Lease and the coupon cases, that one should stand back and look at the characteristics of the provision and payment in issue in a relatively robust and commonsensical way, not bound by a strict analysis of the mesh of the contracts or the language used in them.

In the light of the facts I have described, I would regard the Service Charges, so closely related to the occasions and often to the prices of provision by Suppliers to Collectors, as more having the characteristic of being a payment by LMUK for or towards the supply of goods or services by Suppliers to Collectors than being of any other nature.

Finally, I agree with Ms Eilledge that, so far as discernible, the policy behind section 20B of the Act is that the tenant should not be faced with a bill for expenditure, of which he or she was not sufficiently warned to set aside provision. It is not directed at preventing the lessor from recovering any expenditure on matters, and to the extent, of which there was adequate prior notice. This does not leave the tenant without a remedy for the failure of the lessor to prepare a final account.

I also reject the suggestion that there is any significant relationship between the service charge provisions and the Rent Acts. As the judgments in Horford make clear (see in particular the extract from Scarman LJ's judgment, quoted in paragraph 34 above) , the decision in that case was materially influenced by the underlying policy of the Rent Acts.

Bearing in mind that a covenant by the tenant falling within paragraph 5 of schedule 6, especially one to pay service charge, will place a burden on the tenant and that that burden is specifically required by section 127 to be taken into account in assessing the value of the house and thus the price to be paid for it, I do not think it is permissible, in the absence of a specific provision to that effect, to construe the 1985 Act as allowing a tenant who has entered into the covenant by executing a conveyance to secure his release from it except under the provisions of section 167 and 168.