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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Brown's Operating System Services Ltd v Southwark Roman Catholic Diocesan Corporation [2007] EWCA Civ 164 (01 March 2007) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2007/164.html Cite as: [2007] EWCA Civ 164 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
HH JUDGE CRAWFORD LINDSAY QC
4CL06471
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE LONGMORE
and
LADY JUSTICE SMITH
____________________
Brown's Operating System Services Limited |
Appellant |
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- and - |
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Southwark Roman Catholic Diocesan Corporation |
Respondent |
____________________
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Edward Peters (instructed by Messrs Ibb Solicitors) for the Respondent
Hearing dates : 7 February 2007
____________________
Crown Copyright ©
Lady Justice Smith :
Introduction
The Factual Background
The Lease
"to pay to the Landlord by way of additional rent the Service Rent (including the sums payable on account thereof as set out or referred to in the Third Schedule hereto)"
"The Service Rent means the Tenant's contribution towards the total costs fees charges expenses or outgoings of whatever nature paid or discharged or incurred by the Landlord ("the Total Service Cost") in respect of the services ("the Services") set out in the Second Schedule hereto the Service Rent being calculated and payable in accordance with and otherwise as set out in the Third Schedule hereto."
"Subject to the tenant paying the rents reserved herein at the times and in the manner specified … the Landlord shall to the best of [its] ability and in accordance with the principles of good estate management carry out or procure the carrying out of the services set out in Part I of the Second Schedule hereto for the benefit of the Building PROVIDED THAT for the proper and more efficient provision of such services the [Landlord] shall be entitled whenever it is reasonable so to do to undertake the functions and incur the further fees charges and expenses (if any) referred to in Part II of the Second Schedule….."
"The cost of carrying out all other work or providing goods and services of any kind whatsoever which the Landlord may from time to time reasonably consider necessary or desirable for the purpose of maintaining managing or improving the Building in the interests of the occupants thereof including such sum as the Landlord shall in its reasonable discretion think fit as being a reasonable provision for expenditure likely to be incurred in the future in connection with the matters mentioned in this Schedule save that such provision shall not include any amount in respect of management fees which may be incurred in connection with such future expenditure."
"…[the landlord] shall as soon as possible after the end of each Accounting Period prepare and deliver to the Tenant an audited statement of the Total Service Cost and the Service Rent for each Accounting Period and the Tenant shall within fourteen days of receipt pay to the Landlord any balance shown by such statement to be due from the Tenant as being in excess of any sums received by the Landlord on account of the Service Rent under the provisions of this Schedule and in the event of any such sums received on account exceeding the Service Rent the Landlord shall retain the amount of the excess on account of any future Service Rent payable by the tenant to the landlord under the provisions hereof."
"If in any Accounting Period the Landlord ….in the reasonable exercise of [its] discretion desires to pay discharge or incur any costs expenses outgoings or otherwise authorised under the provisions of the Second Schedule hereto and the money held by the Landlord either in reserve (as authorised by the Second Schedule hereto) or on account of the Service Rent shall be insufficient for this purpose as well as for the purpose of paying discharging or incurring the costs expenses outgoings or otherwise which the landlord has anticipated ……. in the estimated Total Service Cost referred to in paragraph (b) of this clause then the Landlord … shall be entitled to demand (…) a further sum or sums on account of Service Rent such sum or sums to be paid to the landlord within 14 days of demand."
"All reasonable endeavours will be used by the Landlord to maintain the Total Service Cost at the lowest figure consistent with the due performance and observance of the Landlord's obligations hereunder but the Tenant shall not be entitled to object to any items comprised therein by reason only that the materials work service or other matter in question might then have been provided or performed at a lower cost PROVIDED ALWAYS that in preparing the estimated Total Service Cost for each Accounting Period or in determining whether any further sum or sums on Account of Service Rent are required during the course of any Accounting Period the Landlord shall consult with the Tenant."
What Happened in Practice
"We have been asked by the Landlords to conduct an in-depth investigation into future service charges so that they do include some element of provision for periodic major repairs and renewals.
We would therefore write to inform you that as from 1st April 1999, the Annual Service Charge will be increased from £17,000 to £24,000 and that it is intended to review the charges each year in the future."
The Hearing before the Judge
The Appeal
Lord Justice Longmore :
(1) that the landlord was entitled to make a reasonable provision for expenditure likely to be incurred during the currency of the lease in connection with the performance of the landlord's covenants;
(2) that such sums fell to be included in the Total Service Cost as defined in the lease of which the Service Rent payable by the tenant was part;
(3) that the reference in clause 2(d) in the Third Schedule to the lease to money held "in reserve (as authorised by the Second Schedule hereto)" is a reference to those sums.
Lord Justice May: