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LAWS10177 Commercial Leases Handout for the presentation
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LAWS10177 Commercial Leases Handout for the presentation
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Voorbeeld van de inhoud
1. What is a service charge? “Service charges enable an owner to recover the costs of servicing and operating a property from
the occupiers, as well as any others who benefit from and use the services and facilities
provided.” (RICS, Code of Practice on Service Charges in Commercial Property, 2014, p 4.)
The service charge arrangement is governed by the terms of the lease.
2. What is the Royal Institute of Chartered Surveyors’ Code of Practice on Service Charges in Commercial
property (3rd ed, 2014)?
“This Code sets down best practice in the management and administration of service charges in
commercial property.” (RICS, Code of Practice on Service Charges in Commercial Property, 2014,
p 4.)
It is a GUIDANCE NOTE.
It aims to:
o “[I]mprove general standards… promote best practice… fairness… in the management
and administration of services charges in commercial property.”
o “[R]educe the causes of disputes, and to provide guidance on the resolution of
disputes...”
o “[P]rovide guidance … in the negotiation, drafting, interpreting and operation of
leases...”
(RICS, Code of Practice on Service Charges in Commercial Property, 2014, p 5.)
3. Should the courts have to take regard of the Code of Practice when hearing service charge disputes?
Yes to the extent that the landlord and the tenant have relied on the Code of Practice when
dealing with their service charge arrangements.
Lowe v Quayle Munro Ltd 1997 S.C. 346 as per Lord Penrose at p 351: “I consider that the
landlord must act reasonably in considering whether such works are carried out... The clause
does not provide the landlord with a blank cheque to recover the cost of any works which might
conceivably be brought within the scope of one of the heads of the tenant's obligation.”(Same
aim as the Code)
Replication of common law in the Code of Practice can restrict the development of the law:
Section 2, Part 1 Administration, 1.5, 1.5.1 of the Code of Practice: “The rationale for the
apportionment between occupiers should be set down in writing… re-examined periodically to
see whether there is a need for a new apportionment... Where reasonable and appropriate…
costs can be apportioned to those who benefit from those services.”
This replicates the common law position as per the case of Pole Properties Limited v Feinberg
(1982( 43 P. & C. R. 121, where Lord Denning M. R. said at pp 124- 125: “other words, each
tenant should pay according to the use he has of the heating… That seems to me to be the right
and fair way of apportioning the cost.”
Leonora Investment Co v Mott Macdonald Ltd, [2008] 2 P. & C.R. DG15, “Provisions of this kind
should not be seen as procedural obstacle courses. Businessmen dealing with one another often
make mistakes and there is no scope for saying that the provisions in this clause only gave the
landlord one opportunity to get it right.”
What is the reality?
Where are all the Service Charge Disputes, Estates Gazette, Duncan Freeman a senior associate
at CMS Cameron McKenna, 17th May 2014, ProQuest, p 93 : “If courts aren’t refereeing…
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