Hospitality, Retail and Leisure

Wilkinson and Others v Kerdene Limited

The recent Kerdene case has given helpful support to Park owners seeking to recover the costs of communal expenditure from the owners of freehold chalets within their Park.

The difficulty for Park owners in recovering communal expenditure is the long established legal position that positive obligations do not, as a general rule, bind subsequent purchasers of a freehold chalet. So the general rule is that a subsequent purchaser would not be liable to contribute to costs on site, despite an obligation to do so being included in the original sale agreement.

As with every rule, there are exceptions, and the Kerdene case dealt with and clarified one of the exceptions – the rule in Halsall v Brizell. In broad terms this exception is that, where a benefit is taken by the subsequent owner the burden will also be enforced. So, for example, if a subsequent owner uses the estate roads to get to his/her chalet then an obligation to contribute to the cost included in the original conveyance will be enforced.

The Kerdene case looked at how closely the benefit and burden had to be aligned. The original conveyances contained an obligation to pay a fixed annual sum with an annual RPI increase by way of a contribution for a number of facilities and services. Over time a number of the facilities, for example the swimming pool, ceased to exist. Additionally, some of the maintenance envisaged had not been carried out. The chalet owners said that as the original obligation to pay had been for a basket of facilities and services, some of which no longer existed, there was no longer an alignment between the charges and the services. Both Parties had agreed that there was no way of pricing the individual services within the fixed annual charge and, this being the case, the chalet owners argued that none of the charge could be recovered. The Court did not accept this argument. The Court said that, provided the charge related to at least some of the benefits taken and the chalet owners had (at least in theory) the option to decide not to take those benefits, then the whole charge was payable. Of course it would have been rather difficult for the chalet owners to decide not to take the benefit of using the estate roads!

In summary, this will make it easier in certain circumstances for Park owners to enforce charges levied in the original conveyance for communal services and facilities against subsequent chalet owners.

Clarke Willmott LLP has a team specialising in acting for leisure and holiday parks. For more information
please contact Bonnie Martin and Kary Withers.