Introduction:
What regard should the courts have to the Royal Institute of Chartered Surveyors’ Code of
Practice on Service Charges in Commercial Property when hearing disputes regarding
service charges in commercial leases?
I will begin by giving a very brief introduction on service charges and the Royal Institute of
Chartered Surveyors’ Code of Practice on service charges in commercial property.
I will then move on to the main part of my presentation, to assess whether or not the
courts should have regard of the Code when hearing disputes. For which I hold a view that
the courts could rely on the code as a guidance note when hearing service charge disputes.
However, it must be noted that courts should be cautious when relying on the code of
practice, as over reliance on the Code poses its own dangers.
What is a service charge?
According to the Code a service charge allows the “owner (the landlord) to recover the costs
of servicing and operating a property from the occupiers, as well as any others who benefit
from and use the services and facilities provided.”
The service charge arrangement between the landlord and the tenant is solely governed as
per the terms stipulated in the lease
The starting point for any court hearing a service charge dispute is therefore the terms of
the lease.
Royal Institute of Chartered Surveyors’ Code of Practice on Service Charges in Commercial
Property (currently 3rd ed, 2014)- What is this? Is it a legally binding document on the court?
This is a code of good practice that “sets down the best practice in the management and
administration of service charges in commercial properties”
The code has the status of a guidance note and is not legally binding on the courts.
The Code generally aims to strike a balance of fairness between the landlord and the tenant
when dealing with all aspects of the service charge arrangements.
What regard should the courts have to the code?
I am of the view that the courts can rely on the code when hearing a service charge dispute
to the extent that the landlord and tenant have relied on the code when dealing with their
service charge arrangement.
This is because the code of practice and case law seem to share the same line of thought and
reasoning when dealing with issues of service charges. For example the Code suggests that
to achieve the balance of fairness between the parties, the parties should ensure:
o Services are procured on an appropriate value for money basis
o Owners should not profit from the provision of the service
o The basis of apportionment should be fair and reasonable.
The courts seem to share the same line of reasoning for example in the case of Lowe v
Quayle Munro- where, Lord Penrose observed that, “I consider that the landlord must act
reasonably … the clause does not provide the landlord with a blank cheque to recover the
cost of any works...”
What regard should the courts have to the Royal Institute of Chartered Surveyors’ Code of
Practice on Service Charges in Commercial Property when hearing disputes regarding
service charges in commercial leases?
I will begin by giving a very brief introduction on service charges and the Royal Institute of
Chartered Surveyors’ Code of Practice on service charges in commercial property.
I will then move on to the main part of my presentation, to assess whether or not the
courts should have regard of the Code when hearing disputes. For which I hold a view that
the courts could rely on the code as a guidance note when hearing service charge disputes.
However, it must be noted that courts should be cautious when relying on the code of
practice, as over reliance on the Code poses its own dangers.
What is a service charge?
According to the Code a service charge allows the “owner (the landlord) to recover the costs
of servicing and operating a property from the occupiers, as well as any others who benefit
from and use the services and facilities provided.”
The service charge arrangement between the landlord and the tenant is solely governed as
per the terms stipulated in the lease
The starting point for any court hearing a service charge dispute is therefore the terms of
the lease.
Royal Institute of Chartered Surveyors’ Code of Practice on Service Charges in Commercial
Property (currently 3rd ed, 2014)- What is this? Is it a legally binding document on the court?
This is a code of good practice that “sets down the best practice in the management and
administration of service charges in commercial properties”
The code has the status of a guidance note and is not legally binding on the courts.
The Code generally aims to strike a balance of fairness between the landlord and the tenant
when dealing with all aspects of the service charge arrangements.
What regard should the courts have to the code?
I am of the view that the courts can rely on the code when hearing a service charge dispute
to the extent that the landlord and tenant have relied on the code when dealing with their
service charge arrangement.
This is because the code of practice and case law seem to share the same line of thought and
reasoning when dealing with issues of service charges. For example the Code suggests that
to achieve the balance of fairness between the parties, the parties should ensure:
o Services are procured on an appropriate value for money basis
o Owners should not profit from the provision of the service
o The basis of apportionment should be fair and reasonable.
The courts seem to share the same line of reasoning for example in the case of Lowe v
Quayle Munro- where, Lord Penrose observed that, “I consider that the landlord must act
reasonably … the clause does not provide the landlord with a blank cheque to recover the
cost of any works...”
