Thanet Lodge (Mapesbury Road) & Anor v Arun Mirchandani
Decision date: 16 July 2024
Neutral citation: [2024] UKUT 205 (LC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal to the Upper Tribunal concerned whether an RTM company could recover certain legal and mediation costs from a leaseholder as service charges under clause 5(4)(g) and the Fifth Schedule definition of "Total Expenditure" in the lease. The Tribunal held that costs for advice about the RTM company's constitution and legal/mediation costs incurred in dispute resolution with leaseholders were not recoverable as service charges. The appeal was dismissed and the FTT decision upheld.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The operative ratio is that broad or general words in a service-charge provision (for example, "any other costs and expenses reasonably and properly incurred in connection with the Building") must be read in the context of the lease and do not, without clear and specific wording, extend to legal costs of disputes with leaseholders or costs incurred in litigation/mediation concerning the RTM company's relationship with leaseholders. Likewise, a clause permitting employment of "other professional persons" for management/maintenance does not, absent explicit provision, authorise recovery of legal costs incurred in dispute resolution with tenants.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal suggested obiter that broad general language can, in some leases, suffice to include particular expenditure where the context shows an intention to do so, and that identical wording has in other cases been held not to include legal costs. It also noted that where legal costs are not recoverable under the lease an RTM company must seek alternative funding (for example, voluntary contributions) from its members.