Richard Fowler will be appearing at the Supreme Court on Tuesday (8 November 2022) in the appeal of Blacks Outdoor Retail Limited -v- Sara & Hossein Asset Holdings Limited. Richard is acting for the Respondent Sara & Hossein Asset Holdings Limited and is instructed by Pinsent Masons.

The case concerns the construction of service charge provisions in two commercial leases, but has potentially wide commercial implications.

S&H was landlord and Blacks was tenant of commercial retail premises under two successive leases. In relation to service charge, the leases permitted the landlord to serve a certificate on the tenant each year of “the amount of the total cost and the sum payable by the Tenant and in the absence of manifest or mathematical error or fraud such certificate shall be conclusive” (“the Certification Provision”).

S&H claimed arrears of service charge and applied for summary judgment, relying on the Certification Provision. The application failed before the Deputy Master and Deputy Judge, but succeeded in the Court of Appeal. The Supreme Court will need to consider whether the fact that the landlord’s certificate is stated by the leases to be “conclusive” ousts the jurisdiction of the court to consider defences raised by the tenant, unless the tenant can advance a defence of manifest or mathematical error or fraud (which it did not in this case). The Court may also need to consider the scope of those permitted defences.

“Conclusive certification” clauses and the reservation of “manifest error” defences are very common in a range of commercial contracts. Guidance from the Supreme Court on these topics will thus have a broad resonance.