[2007] EWCA Civ 164, 01 March 2007. The appellant tenant appealed against a decision upholding the claim of the respondent landlord for unpaid service charges. The landlord's policy in relation to the service charge was to build up a surplus to cover future expenditure by retaining the excess of the service charges paid by tenants over the amount actually spent. When the surplus reached a substantial sum the tenant refused to pay the last two quarters' service charge on the basis that the surplus held by the landlord more than covered those two quarters. The landlord sued and the judge held that the surplus was a reserve fund that had been built up for the benefit of the building and that the landlord was entitled to retain it at the end of the lease. The tenant submitted that the definition of the "total service cost" in the lease was such that it did not cover the making of any provision for future costs. ?Held?: the terms of the lease did allow the landlord to include in the total service cost a sum as reasonable provision for expenditure likely to be incurred, however, that provision could only extend to expenditure likely to be incurred during the currency of the lease. The lease did not provide for the creation of a reserve fund.