The High Court has ruled that a clause in a commercial lease for Beacon Court, Sandyford, allows the lessor or management company to change the method used to calculate a tenant’s share of the service charge, provided the resulting share is just and equitable.
The judgment, delivered by Miss Justice Laffoy on 20 July 2010, concerned a lease for Suite One, The Avenue, Beacon Court, Dublin 18. Beacon Court (Sandyford Management) Limited brought proceedings against Dennis Cleary and Susan Cleary seeking construction of the lease. The defendants represented the interests of the Beacon Court Occupiers’ Association, which the judgment said comprised 19 owner-tenants.
The dispute followed a change, notified in September 2006, to the method used to calculate unit owners’ service-charge liabilities. Before then, the parties had applied a percentage based on gross internal floor area, although the lease’s definition referred to net internal floor area. The defendants did not object to that earlier departure from the lease wording.
The management company argued that clause 9.6 permitted it to alter the calculation method after changes to the Park’s development. The defendants said the contribution should continue to follow the methodology reflected in the lease’s definition of “Tenant’s Proportion”. They objected to a new “footprint” formula based on each building’s ground-floor area compared with the total ground-floor area across the Park.
The defendants’ evidence said that formula would favour owners or tenants in taller buildings, including the hospital, hotel and apartments. For a proposed 2009 budget of €1,477,647, a table in the defendants’ affidavit put the combined liability for specified blocks at €548,207.05 using gross internal area, compared with €919,835.25 using the footprint method. The court described the evidence as scant and did not decide whether the proposed formula produced a just and equitable result.
Justice Laffoy held that clause 9.6 had become operable because the Park’s development had changed. It allowed variation both to the service charge and to the lessee’s proportion, including a change in the calculation methodology. But the resulting determination had to be just and equitable. The judgment said whether the footprint method met that requirement was outside the proceedings and for another day.
The court also held that the lease imposed liability to pay a service-charge share properly determined under clause 9.6. It did not settle the precise form of its order: the judge said she would hear further submissions if the parties wished.