Southern Land Securities Ltd v Gisele Catherine Rettie & Anor

By its decision handed down on 21 July 2025, the First-tier Tribunal, Property Chamber (the FTT) determined that the respondents, Ms Rettie and Mr Li, were not liable to contribute through their service charge to the costs incurred by the appellant, their landlord, Southern Land Securities Ltd, in providing temporary accommodation to the occupants of the two basement flats in their block while damp proofing work was carried out. With the permission of this Tribunal, the appellant now appeals against that decision.

At the hearing of the appeal the appellant was represented by Mr Maltz and the responded both attended and represented themselves.

75 Gunterstone Road is a large semi-detached Victorian villa standing on the corner of Gunterstone Road and Glazbury Road. The building has been converted into eight self-contained flats of which two, Flats A and B, are on the basement or lower ground floor. Parts of both Flat A and Flat B are below ground level and have experienced damp penetration through their walls.

In 2021 the appellant obtained the advice of a building surveyor who recommended remedial works. The works eventually carried out involved hacking off the plaster on the damp affected walls of the basement flats back to the brick, injecting a chemical damp proof course into the walls, applying a waterproof render to the interior walls and repairing the exterior pointing. The execution of this work was delayed by objections from the leaseholders, but it was eventually undertaken at a cost of approximately £85,000 (the final account had not been rendered by the time the matter came before the FTT).

All eight flats in the building are let on long lease in the same form. Miss Rettie is the leasehold owner of Flat 4 which is on the ground floor. Mr Li is the leasehold owner of the First Floor Rear Flat. Flat A is occupied by its leasehold owners, but prior to the works being carried out Flats B was let by its leasehold owner to short-term assured tenants.

Each of the leaseholders has been asked by the appellant to contribute through the service charge to the cost of the damp proofing work. The FTT recorded that Ms Rettie’s share of the total estimated cost of the works was expected to be £11,771, while Mr Li would be asked to contribute £13,054. These figures include costs incurred by the appellant in providing temporary accommodation for the occupants of Flats A and B and of removing and storing their belongings while the works were undertaken. These costs were said by Ms Rettie to have totalled £16,397 for both flat A and B although the precise amount had not yet been demanded.

The respondents sought a determination from the FTT pursuant to section 27A of the Landlord and Tenant Act 1985 of whether they were liable to contribute through their service charges to the cost of the works as a whole (the FTT was not asked to determine whether the cost was reasonable as the total was not yet known when the application was made). Ms Rettie and Mr Li raised objections to the cost of the works themselves, which the FTT rejected. It was satisfied that all of the works for which the leaseholders had been charged fell within the appellant’s repairing obligations, and that the method it had chosen to remedy the dampness was reasonable having regard to its anticipated cost and efficacy. In particular, there was no evidence that any other damp proofing solution could have been achieved at lesser expense.

The respondents also challenged their liability to contribute to the costs of temporary accommodation, removal and storage for the occupants of the basement flats. The FTT found in their favour on that issue. Before considering its reasons, I will first refer to the relevant terms of the leases of flats in the building.

The lease I was shown was of one of the ground floors flats in the building which had been granted in 1981 for a term of 125 years.

The FTT described the leases as “eggshell leases”, meaning that the premises do not include any of the structure of the building, and that only the linings and surfaces of the interior of the walls were included in each demise. The structure of the building remains in the possession of the appellant, as Landlord.

By clause 4(1) of the lease the landlord covenanted:

“At all times during the said term to keep in good and substantial repair and in clean and proper order and condition those parts and appurtenances of the Building which are not included in this demise or in a demise of any part of the Building …”

The lease included a specific reservation in paragraph 1 of the Second Schedule of the right for the landlord to enter the flat for the purpose of executing repairs and alterations to any other part of the building. This reservation was supplemented by clause 3(7) by which the tenant covenanted to permit the landlord and persons authorised by it:

“at all treasonable times during the said term at convenient hours in the daytime on giving reasonable notice of not less than three days (except in the case of an emergency) to enter upon the flat for the purpose of executing repairs decorations alterations additions or improvements to or upon the building all such work being done with the maximum reasonable despatch and all damage thereby occasioned to the flat being forthwith made good.”

Finally, by clause 1(b) of the lease the tenant covenanted to pay as additional rent a proportion of the expenditure incurred by the landlord including in performing its obligations as to repair, maintenance and insurance contained in the lease, and, by clause 1(b)(iv):

“in providing such services facilities and amenities or in carrying out works or otherwise incurring expenditure as the landlord shall reasonably deem necessary for the general benefit of the Building and its tenants whether or not the Landlord has covenanted to incur such expenditure or provide such services facilities and amenities or carry out such works”

The FTT decided that the leaseholders were not liable to contribute to the costs of relocating the basement occupants and storing their possessions during the damp proofing works. It gave two reasons why, in principles, the leaseholders were not liable to contribute:

Additionally, the FTT determined that even if the costs were in principle recoverable, they had not been reasonably incurred. That again was for two reasons.

On behalf of the appellant Mr Maltz submitted that the appeal raised two issues. The first was whether in principle the cost of providing alternative accommodation for a tenant, and storing their possession, while remedial work was carried out in their flat was recoverable under any express or implied term of the lease. The second was whether in the particular circumstances of this case the disputed costs had been reasonably incurred.

As to the first issue, Mr Maltz relied on clause 1(b)(iv) of the lease which obliged the respondents, through the service charge, to reimburse costs incurred by the appellant in carrying out works or otherwise incurring expenditure it reasonably deemed necessary for the general benefit of the Building and its tenants whether or not it was obliged to do so.

Mr Maltz pointed out that the work involved hacking off plaster in every room, in some places to the full height of the wall and in others to a height of 1 or 1.5 metres. The original specification prepared in January 2022 provided that both flats A and B would remain occupied throughout and required the contractor to ensure access was available to the whole premises for their duration. But the scope of the work increased after the discovery of further damp (as the FTT had found) and the specification was revised in August 2022. Contractors were then asked to tender on the assumption that both flats would be fully vacated with all fixtures and fittings put into storage by others before the contract commenced. It was clear that the work could not have been done while the flats were occupied, and the relocation of the residents and their belongings was necessary. As removal was necessary, the cost of removal and ancillary costs associated with it included storage and accommodation should be regarded as part of the costs of the works. Alternatively, the appellant had acted reasonably in deeming it necessary for the occupants to vacate while the work was done, and the expense it incurred in facilitating their removal therefore fell within clause 1(b)(iv).

As to the second issue, Mr Maltz submitted that the FTT had been wrong to place weight on views expressed by Mr Ormiston the appellant’s surveyor, before the full scope of the required work was known. The work had subsequently been specified with the assistance of a specialist contractor, Renlon, and the original suggestion that the occupants could remain while it was carried out was abandoned. Mr Ormiston had confirmed in his response to the leaseholder’s case to the FTT that it had been necessary for both flats to be vacated.

In her response to Mr Maltz’s submissions Ms Rettie said that the cost of storage and accommodation, which she said was more than £16,000, was unreasonable. The tenants of Flat B could have been given notice to quit and made to leave. Mr Li suggested that one of the rooms in Flat A could have been used to store the contents of both flats while the work was done.

There is no doubt, on the FTT’s findings, that the appellant was obliged to remedy the problem of damp which affected both basement flats. The FTT was satisfied that the method it had chosen was reasonable and that it fell within the scope of its repairing covenant.

The question which this appeal raises is not about the obligations of the appellant, as landlord. The real question is about the obligation of the leaseholders and, in the case of Flat B, their tenants. Were they under an obligation to vacate?

The FTT referred to the decision of the Court of Appeal in McGreal v Wake which explains authoritatively when a tenant will be under an obligation to vacate the demised premises to enable their landlord to carry out repairs. Both the FTT and the parties seem to have misapplied the principles which this case illustrates and, even on the appeal, each side argued in favour of an appreciation of the facts which produced an outcome contrary to their interests

In McGreal v Wake a landlord had failed to repair a tenanted house. The local authority eventually served a statutory notice requiring the landlord to carry out repairs and, when he failed to do so, the authority appointed its own contractor to carry out the work. While the work was being done the tenant moved out and incurred the cost of alternative accommodation for herself and storage charges for her belongings. She brought a claim for damages against her landlord for breach of covenant and included her removal and accommodation expenses in her claim. These were disallowed by the trial judge but the Court of Appeal (Donaldson MR and Browne-Wilkinson LJ) allowed the tenant’s appeal.

The Court of Appeal held that where a landlord covenants to repair, it acquires a right as well as a duty to do so. The right includes an implied right to enter and occupy the premises for a reasonable time to carry out the work covered by the covenant. But the right to enter and occupy is not unqualified, as the Court explained at page 114:

“However it does seem to us that this right to enter and occupy must be limited to that which is strictly necessary in order to do the work of repair. The obligation to allow the landlord to enter and occupy in order to effect repairs does not seem to us to involve a further obligation to give the landlord exclusive occupation unless this is essential for the execution of the repairs. Nor does it involve an obligation to give him access to all parts of the house at the same time unless again this is essential.”

The Court interpreted the evidence in McGreal as showing that the work could have been done while the tenant remained in residence, although it would have taken longer and been more expensive. On that basis the tenant had not been obliged to move out. For that reason, if the landlord had done the works himself he would have been faced with a choice:

“He could have asked the tenant to move out, but if this was not essential — and it does not seem to have been — he could not have compelled her to do so. He would have had to make the same choice as that which confronted the tenant — pay more for getting the work done in circumstances in which the contractors could only tackle one room at a time and had to protect the plaintiff's furniture and carpets or pay less and meet the plaintiff's expenses.”

The Court of Appeal in McGreal considered that the tenant was under an implied obligation to allow the landlord to enter and carry out works. In this case the parties have provided expressly that the tenant must allow entry, and the landlord has reserved the right to do so. I do not think the fact that the tenant’s obligation is express rather than implied makes any difference to the qualification that the tenant will only be obliged to allow the landlord to occupy the premises and to exclude her if that is essential for the execution of the works. That is an example of the general rule that the law will only force the parties to a contract to cooperate with each other to the extent that it is necessary to make the contract workable. The best known statement of that principle is Lord Blackburn’s in Mackay v Dick (1881) 6 App Cas 251 at 263, but other examples can be found in Lewison, The Interpretation of Contracts 8^th Ed., at para 6.137

The principle established by McGreal is therefore that a tenant can only be obliged to vacate the premises if it is necessary for her to do so so that the work of repair can be carried out. If it is necessary for the tenant to vacate, then she is under an obligation; if she is under an obligation, she must do so at her own expense, and the landlord is under no obligation to compensate her by paying for temporary accommodation or storage charges. On the other hand, if the work can be done while the tenant remains in occupation, she is under no obligation to vacate, and the landlord has no right to insist that she do so even if the work will cost more and take longer if she remains in occupation. If the landlord wants the tenant to move out, it will have to obtain her agreement, and the tenant may require that her expenses are paid as the price of her cooperation.

How do these principles apply in this case? It is not very clear whether the FTT thought it was necessary for the occupants to move out or not, but I read its decision as concluding that it was not necessary. In paragraph [28], it recorded the argument of counsel who was then presenting the appellant: “He argued that as it was reasonably necessary for the occupants to vacate the flats while the works were ongoing, the costs were recoverable as part of the costs of the works themselves.” It was that argument that the FTT rejected in paragraph [29] where it relied on the principle in McGreal which is to the opposite effect. The FTT did not find that it was necessary for the occupants to vacate or that they were obliged to move out at their own expense. On the contrary, it said at paragraph [30] that the cost of alternative accommodation had not been reasonably incurred because there was no evidence that it was “strictly necessary” for the occupants to vacate.

I therefore take it to have been the FTT’s view that the work could have been done while the occupants remained in residence, as had originally been specified. That was the argument of the respondents before the FTT and on the appeal, and although the FTT’s acceptance of it was less than clearly expressed, I am not inclined to disturb it. It is consistent with the original specification of works and while the addition of further work would no doubt have made it less convenient for the occupiers’ belongings to be moved around the flats, each of them had two rooms one of which could have been used for storage while the other was worked on.

Because it was not essential for the occupiers to move out, they were not obliged to do so at their own expense. The appellant was in the position described by the Court of Appeal in McGreal. It had to choose whether to do the work while the flats were occupied, which would presumably have been slower and more expensive, or persuade the occupants to move out by paying their expenses. It chose the latter course.

The FTT thought that, for the costs of relocation to have been reasonably incurred, it would have to have been necessary for the occupiers to move out, but that is the opposite of the principle established by McGreal and is not supportable. The landlord had a choice how to perform its covenant. The FTT did not explain why it thought the cost was not reasonably incurred other than that it was not essential, but expenditure may be reasonably incurred even if it is not necessary. Some expenditure was essential, and it might have been increased or reduced depending on the choices made about how the work would be done. It is impossible to say that the choices made by the appellant in this case were unreasonable. The work would obviously have cost more and taken longer if it had had to be done while the occupiers of the flats remained in residence. Whether the cost of accommodation and storage was more or less than the additional cost if the work had been done while the tenants remained in occupation is unknown, but even assuming that relocating the occupants was the more expensive option, cost alone was not the only relevant consideration.

The FTT also thought that the accommodation and storage costs were not expenditure incurred by the appellant “in performing the landlord’s obligations as to repair maintenance and insurance” (clause 1(b)) because that obligation would not be understood by a reasonable person to extend beyond the cost of carrying out the works of repair and maintenance themselves”. I take this to have been the FTT’s primary reason for holding that the disputed costs were not recoverable, but I do not agree. The parties to the lease would expect the landlord to incur all sorts of ancillary costs if it had to carry out significant repairs, such as the costs of professional supervision, or the cost of disposing of waste material, or obtaining a permit to erect scaffolding on the pavement or place a skip on the road. The cost of removing and storing the contents of the premises, and rehousing the occupants temporarily, would readily fall into the same category of incidental or ancillary expenditure. Such expenditure is incurred in the performance of the landlord’s repairing obligations just as much as the cost of injecting the new damp proof course.

In my judgment the accommodation and storage costs incurred by the appellant do therefore fall within paragraph 1(b)(i) of the lease and the respondents are obliged to contribute towards them.

Additionally, under clause 1(b)(iv), the appellant was entitled to pass on to the leaseholders any discretionary expenditure it incurred “for the general benefit of the building and its tenants”. It was for the appellant to determine whether it was for the general benefit of its tenants that the work be completed in as short a possible time, even if it might be more expensive.

The other reason given by the FTT for thinking that the costs had not been reasonably incurred was that the appellant would have had a defence to a claim for breach of covenant if the occupants of the basement flats refused to move out voluntarily. That seems to me to be an irrelevant consideration. The appellant and all the leaseholders had an interest in seeing that the building was kept in repair. The appellant had both an obligation and an entitlement to carry out the work required to remedy the damp problem. Whether it could have defended itself against a claim for damages is neither here nor there.

For these reasons I am satisfied that the FTT came to the wrong conclusion on the view it took of the facts. The occupants of the basement flats were not obliged to move out. The appellants decision to pay their expenses when they agreed to move was a reasonable one and the costs it incurred are part of the costs of performing its repairing obligation. They are therefore recoverable from the respondents through the service charge.

I allow the appeal and set aside the FTT’s decision, substituting a determination that the respondents are obliged to contribute to the accommodation and storage costs paid on behalf of the occupiers of the basement flats. The FTT was not asked to quantify the respondents’ liability and there therefore appears to be nothing further to be decided in these proceedings.