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The Supreme Court has rejected an appeal by 25 chalet tenants against the strict interpretation of the service charge provisions in their 99 year leases.
The leases provide for the tenants to pay a fixed £90 service charge in the first year of the term, to be compounded annually by 10%. Although this means that, for a lease granted in 1980, the tenant will be paying over £550,000 by 2072 for limited services, the court held that this was not a reason to depart from the natural meaning of the clause and that it was not the court’s job to relieve a party from the consequences of his imprudence.
When most of the leases were granted (in the 1970s and 80s), inflation was running at over 10%. However, this case shows the importance of drafting leases to cater as far as possible against unexpected eventualities (in this case, the significant decrease in the inflation rate).
The Court of Appeal has ruled that the wording of a service charge clause precluded a tenant from challenging the sums claimed by a landlord.
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Break rights have proved a fertile source of litigation over the last few years. Courts have consistently required strict compliance with the terms of those rights.
Judgement has been handed down for the seminal case of Cardtronics UK Ltd and others (Respondents) v Sykes and others (Valuation Officers) (Appellants) [2020] UKSC 21.
Some commentators had anticipated that persisting retail sector challenges might disrupt more than the make-up of the high street or commercial property negotiations between landlords and tenants.
Partner and Head of Real Estate
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