Can you bill service charges to a commercial tenant via a deed of conditions?

The recent case of The Glasgow Angling Centre Limited (Tenant) v Granton Central Developments Limited, Granton Central Management Limited and Pip Asset Management LLP (Landlord) concerned a dispute in relation to service charge demands.

The Facts

The Tenant occupies commercial premises at West Harbour Road, Granton, Edinburgh under an FRI lease.

Clause 4.4 of the lease related to service charge. It obliged the tenant to pay the usual sort of common charges on written demand.

There was also a deed of conditions ("DOC"). The DOC permits a “promoter” to demand various payments (including service charge) in respect of the area forming Granton Harbour Estate, subject to various further provisions, such as the designation of a Public Realm Area or “PRA”.

The Landlord invoiced for three payments for service charge which were charged at 4.58% of an unspecified budget. The total invoiced was £20,023.65. The Tenant paid the invoices.

The Dispute & Decision

The Tenant sued the landlord for repayment of the £20,023.65. It claimed that payment was demanded incorrectly under the DOC, as the provision that a PRA had to be defined was not met.

The Landlord responded to say that its invoices were for service charge under the Lease, not for sums due under the DOC. It therefore didn't matter if no PRA had been defined.

The Court agreed with the Landlord. If it was charging under the service charge provisions of the Lease, it didn't really matter that the claim did not meet the requirements of the DOC. What was important was whether the demands met the requirements of the service charge provisions under the Lease. There was nothing from the Tenant in the court action to suggest that they did not. The court therefore dismissed the Tenant's claim.

What can be taken from the decision?

If you plan to challenge service charge invoices, it is important to know the basis of the charge before challenging it. Otherwise, you could end up having your claim thrown out and face a hefty legal bill.