Home / Service Charges in Commercial Leases – Pay Now, Argue Later
31st January 2023
The implications on service charges following the Supreme Court ruling in Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd
What the lease said
Blacks did not argue manifest or mathematical error or fraud (“the Permitted Defences”)
The High Court held that S&H’s certificate was conclusive in relation to the costs incurred in providing the services, not as to whether items properly fell within the service charge.
The Court of Appeal held that S&H’s certificate was conclusive in relation to: a) the costs incurred in providing the services and b) the services properly falling within the service charge.
S&H was granted summary judgement but Blacks appealed.
The decision helps landlords’ cashflow but leaves financially vulnerable tenants in a difficult position – having to pay upfront and then issue a claim later on to dispute amounts already paid if they disagree. Equally, financially squeezed landlords will not want the costs of dealing with claims from those tenants who do bring challenges post-certification.
Tenants should ensure that leases permit proper inspection rights, so that they can check invoices and records to verify if items are correctly included within the service charge. Tenants may argue more for service charge caps and more extensive exclusions.
It is not clear how the decision impacts on sinking funds.
Watch this space….
If you would like any help with your service charge queries, we can help. Please contact Associate Kate Kurtz on email@example.com.