The relevant factual background is both interesting and a bit unusual. The Respondent, Ms Oliver, held a long lease of a flat that she had acquired from the Council pursuant to the right to buy. Under that lease she covenanted to pay by way of a service charge a contribution to the cost of carrying out major repairs to the building containing her flat. The terms of Ms Oliver’s lease required her to contribute a “fair proportion” of the service charge expenses “incurred” by the Council. That proportion fell to be determined by a representative of the Council.
The Council entered into a contract to undertake major repair works, including repairing the external cladding of the building containing Ms Oliver’s flat. Through the Electricity and Gas (Community Energy Saving Programme) Order 2009 (CESP Order) energy suppliers were incentivised as part of the government’s policy of reducing carbon emissions to finance works that would have the effect of improving the energy efficiency of domestic energy users in arears of low income. In furtherance of the CESP Order NPower entered into an agreement with the Council whereby the energy supplier contributed to the cost of specified works undertaken by the Council which had the effect of improving energy efficiency. One such class of works was the repair works to the external cladding of the building containing Ms Oliver’s flat. The agreement quantified Npower’s contribution by reference to a specified price per flat. The Council used the total fund provided by NPower under its agreement across the entire project of works. The works extended into areas that were not classified as “arears of low income” for the purposes of the CESP Order. It followed that those arears of “low income”, which included the area of Ms Oliver’s flat, did not exclusively receive the benefit of the NPower funding. Whilst the Council recognised that this was the effect of its decision to spread the benefit of the cost more widely, it achieved a similar end, it said, by not charging Ms Oliver (and other like leaseholders) the full cost of all expenses otherwise recoverable in respect of the major works, for example the cost of project managing the programme of works.