Daejan Properties Ltd -v- Griffin

The Upper Tribunal has ruled in a landlord’s favour on the question of whether the cost of repair works which should have been undertaken long before they in fact were, is recoverable in full through the service charge.

In this case the tenants applied to the LVT for a determination on the extent of their liability to pay the cost of works which it was accepted should have been done in the 1960s but in fact were done in 2008-10.  The tenants argued that had the work been done in the 1960s the cost of the eventual works in 2008-2010 would have been less, and as such these extra costs were not recoverable through the service charge.  The LVT found for the tenants and reduced the amount recoverable through the service charge.

On appeal it was acknowledged that the landlord was in breach of its repairing covenant, and the decision confirmed the position that an obligation to repair does not depend on a landlord having actual notice of the condition of the property.  However, the tribunal stated that the only circumstances in which an allegation of historic neglect may provide a defence to a claim for service charges is where, but for the landlord’s failure to deal with the neglect, the costs of repair would have been reduced or avoided.  There is then a breach of covenant by the landlord which enables the tenant to offset some or all of its liability for service charges. 

The Upper Tribunal found in this case that, on the expert evidence, substantially the same work would have been required at any time in the preceding 30 years, and accordingly no real savings would have been made had the property been inspected and the works carried out at any earlier time.

Therefore the landlord’s appeal was allowed.  The Upper Tribunal found that the cost of the works claimed was appropriate and recoverable from the tenants through the service charge.

However, the result of the appeal may have been different if substantial savings could have been made as a result of the work being carried out by the landlord at an earlier date.