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Holiday Village Tenants Must Pay Service Charges

Residential CaravansArguments put forward by residents of a Cornish holiday village that they are entitled to withhold service charges until their landlord has complied in full with repair and maintenance covenants under their leases have been rejected. The Court of Appeal ruled that the tenants were obliged to make reasonable contributions to the costs incurred by the landlord under the equitable benefit and burden principle established by the case of Halsall v Brizell (1957) 1 Ch 169.

The holiday village, which was built in the 1960s and ultimately comprised more than 100 chalets, was in a state of advanced disrepair when it was bought by the current freeholder who, whilst having embarked on a renovation project, conceded that it had yet to meet its full repair and maintenance obligations under the leases. A number of tenants had refused to pay service charges on the basis that no payment at all was due unless and until all of the landlords’ obligations were met.

However, dismissing the tenants’ appeal against a first instance decision to like effect, the court noted that they had continued to use certain of the village’s common facilities and rejected arguments that the requirement to pay services charges was so closely linked to performance of the landlord’s maintenance and repair obligations as to be unenforceable until the same were fully complied with. The determinant of liability to pay the service charges was the tenants’ rights to make use of estate roads and other communal facilities.

The court also rejected the tenants’ arguments that covenants requiring payment of services charges were personal to the original purchasers of the chalets and that obligations thereunder had not passed to successors in title.