Yes says the Court of Appeal in a recent judgment that will come as a relief to all estate management companies.
Canwell Estate Company Limited is responsible for the maintenance and upkeep of private sewers and roads on the Canwell Estate near Lichfield Staffordshire. In a not uncommon arrangement each of the 40 landowners on the estate paid an annual service charge to Canwell as part of a scheme of contribution.
One landowner, Smith Brothers Farms Limited refused to pay its share of the service charge on the grounds that it was being asked to pay towards the maintenance of roads over which it had no right to use.
In the Court of Appeal Smith Bros argued that the scheme of contribution fell foul of the Rentcharges Act 1977 because it derived no direct benefit from the roads it could not use. Consequently the whole service charge scheme must fail.
In only the second case on the Rentcharges Act 1977 in over 30 years the Court of Appeal unanimously disagreed. Lord Justice Mummery giving the lead judgment held that the rentcharge was valid because the benefit to Smith Bros’ land could be both direct and indirect. The focus of the Rentcharges Act 1977 was on the overall beneficial purpose of the rentcharge for the estate, not on specific direct benefit for the particular pieces of land affected. In this case the scheme of contribution did serve an indirect beneficial purpose for Smith Bros’ land together with other land and was therefore a valid and enforceable scheme of contribution. [Smith Brothers Farms Ltd v Canwell Estate Company Limited  EWCA Civ 237]
Canwell Estate Company Limited was successfully represented by Lichfield and Cannock law firm Ansons LLP. For further information contact the Property Litigation Team on 01543 263 456.