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The Upper Tribunal has today handed down judgment in The London Borough of Tower Hamlets v. Lessees of Brewster House and Malting House [2024] UKUT 193 (LC), an appeal from a decision of the First-tier Tribunal that Tower Hamlets was not entitled to recover from its leaseholders, as part of their service charge, the cost of work needed to remedy structural defects caused by the construction of two tower blocks in the 1960’s using the Large Panel System.
Judge Elizabeth Cooke considered whether any part of the cost of Tower Hamlets’ planned major works, currently estimated to be just over £9m, were recoverable under the long leases of flats within the blocks as being the cost of work to “maintain” the blocks in good condition or alternatively via the “sweeper” provisions in the leases.
The Judge held that whilst “maintain” does mean something different from “repair” and can denote something preventive rather than remedial, neither a covenant to repair nor a covenant to maintain is a covenant to remedy structural defects, nor to make safe a building that was not safe when built. Further, she found that it was not appropriate to read a sweeping up clause literally as including absolutely anything that the landlord might reasonably and properly do in connection with the building and whilst such a clause was intended to provide for items not thought of as at the grant of the leases, only express words would generate an obligation vastly different in kind and in likely scale from the other obligations specified.
The result is hugely important for the parties: Tower Hamlets currently faces a significant hole in its Housing Revenue Account, whilst an unfavourable outcome would have seen the leaseholders facing “ruinously expensive” service charges. However, it arguably has wider significance for landlords and tenants of other buildings and for defects which are only just being discovered and/or are yet to be discovered, RAAC problems, for example.
A link to the judgment may be found here.
Justin Bates KC and Mattie Green acted for Tower Hamlets.
Ellodie Gibbons acted for the leaseholders, instructed by Karen Bright of Bishop & Sewell LLP.
