Newspaper article The Journal (Newcastle, England)

Be Adult When It Comes to Disputes about Service Fees

Newspaper article The Journal (Newcastle, England)

Be Adult When It Comes to Disputes about Service Fees

Article excerpt


LAST week's column touched upon service charges - and the headlines in The Journal and a follow-up last Saturday highlights the points I made.

The case of Hotspur v Alan J Smith, decided in the High Court last week, resulted in the tenant achieving an estimated saving of about pounds 100,000 on the demand for service charge made by the landlord and a further estimated saving of pounds 1m over the remainder of the lease.

The dispute dealt with three matters; the timeliness of the demands, the fair apportionment of costs and the fair allocation of those costs.

Although the lease sets out how the service charge will operate and is paramount, the Rics (Royal Institution of Chartered Surveyors) has issued a Code of Practice Standards - Service Charges in Commercial Property, which is the industry standard for best practice. The courts will refer to the code in any dispute, as a fair and reasonable basis by which to act.

In the Newcastle case, the service charge was demanded from Alan J Smith in late 2009 for the years 2002-08.

Over that time the normal quarterly payments had been made, but no account had been given for those payments.

The previous owner of the property caused this poor timeliness and the lack of accounting standards was not acceptable, in fairness to Hotspur which was a recent purchaser.

The lease required that the apportionment of service charge costs be based on the gross internal area of the occupied over the gross internal area of the building.

The dispute centred on whether or not the external areas of the courtyard and roof garden of Alan J Smith's accommodation should be included in the apportionment.

In contrast, the residential apartment terraces were not included in the calculation. The judge identified this inconsistency and decided that all external terraces and roof garden be included but that the entrance courtyard be excluded. …

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