Useful warning for commercial tenants from the court
23rd November 2020 by Mark Timberlake
The Court of Appeal has given a salutary warning to tenants of commercial premises to be careful what you sign when they overruled the High Court in the case of Sara and Hossein Asset Holdings Ltd v Blacks Outdoor Retail (2020)
The lease said that the tenant was to pay a “fair and reasonable proportion” of the total service cost of the building. The landlord was entitled to this upon giving a certificate of the amount payable for each service charge year which was “conclusive in the absence of manifest or mathematical error or fraud“.
The Court of Appeal said that the wording used meant that the amount demanded in the certificate could not be challenged as it was not claimed that there was manifest or mathematical error or fraud. It said that the judge in the High Court was wrong to be influenced by the fact that this made the landlord “judge in its own cause”.
The Court of Appeal commented that its role was to interpret what the parties had agreed and “not what the court thinks they should have agreed’’!
As the Court of Appeal said, tenants need to be well advised to consider very carefully before agreeing a lease with such terms.
Tenants of residential premises who pay service charges are in the fortunate position of having statutory protection so the decision would probably have been very different for them.
Laceys is well placed to advise both landlords and tenants on the granting of a lease and if there is a dispute later on. For further advice contact firstname.lastname@example.org, head of our Commercial Landlord and Tenant team