Edwards & Walkden (Norfolk) Ltd v City of London [2012] EWHC 2527 (Ch)

The claimants leased stalls, shops and offices at Smithfield Market in London. The landlord was the City of London. The claimants had the benefit of security of tenure under the Landlord and Tenant Act 1954 and applied to renew their leases in accordance with the provisions of that Act.

The claimants’ original leases were granted in the early 1980s and had provided for them to pay a rent plus variable service charge. However the leases were subsequently varied to provide for service charge inclusive rents whilst building works took place. In 2001 the parties entered into further leases. Although these included detailed service charge provisions, the rent was actually inclusive of service charge. On renewal, a dispute arose as to whether new leases should include service charge inclusive rent.

The court found that the landlord should be entitled to recover a separate variable service charge in addition to annual rent. Although this represented a change from the existing arrangements, the landlord had shown that there were good and sufficient reasons to justify this change. Moreover, the fact that the existing provisions had been the subject of an on-going dispute reduced the weight which should be afforded to them. It was fair and reasonable that the risk of the service costs increasing over time should be borne by the claimants.