Legal costs Amanda Gourlay Barrister Tanfield Chambers Tanfield

Legal costs Amanda Gourlay Barrister Tanfield Chambers @Tanfield. Law @Lawandlease

Legal costs: the entitlement to claim Arnold v Britton [2015] UKSC 36 • The natural and ordinary meaning of the words • Other relevant provisions of the lease • The purpose of the words and the lease • The facts and circumstances known to the parties when the lease was executed • Commercial commonsense

Legal costs • Service charges – Section 18, Landlord & Tenant Act 1985 • Variable administration charge – Paragraph 1, Schedule 11, Commonhold & Leasehold Reform Act 2002

Legal costs as service charges Section 18, Landlord & Tenant Act 1985 (1) …an amount payable by a tenant of a dwelling as part of or in addition to the rent— (a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord’s costs of management, and (b) the whole or part of which varies or may vary according to the relevant costs.

Legal costs as service charges (2) The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable. (3) For this purpose— (a) “costs” includes overheads, and (b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period.

Examples, I • Sella House Ltd v Mears (1989) 21 HLR 147 (CA) • Greening v Castelnau Mansions Ltd [2011] UKUT 326 (LC) • (i) To employ at the Lessors' discretion a firm of Managing Agents and Chartered Accountants to manage the Building and discharge all proper fees salaries charges and expenses payable to such agents or such other person who may be managing the Building including the cost of computing and collecting the rents and service charges in respect of the Building or any parts thereof • (ii) To employ all such surveyors builders architects engineers tradesmen accountants or other professional persons as may be necessary or desirable for the proper maintenance safety and administration of the Building. ”

Examples, II • Iperion Investments Ltd v Broadwalk House Residents Ltd (1996) 71 P&CR 34 (CA) • “‘The Landlord's costs' means all costs sums payments charges and expenses properly incurred by the Landlord in carrying out its obligations under the Seventh Schedule and also under the covenants and conditions contained in the Head Lease (but not so as to include any sum reserved by way of rent in the Head Lease) and in the proper and reasonable management of in and about [Broadwalk House]. The items comprising and included in the Landlord's costs are set out (but not by way of definition) in the Eighth Schedule. ”

Examples, III • Assethold Ltd v Watts [2014] UKUT 0537 (LC) • “All works installations acts matters and things as in the reasonable discretion of the Landlord may be considered necessary or desirable for the proper maintenance safety amenity and administration of the Development” • Geyfords Ltd v O’Sullivan [2015] UKUT 0683 (LC) • “All other expenses (if any) incurred by the Lessors or their managing agents in and about the maintenance and proper and convenient management and running of the Development”.

Examples, IV • Fairbairn v Etal Court Maintenance Ltd [2015] UKUT 0639 (LC) • “To do all other acts and things for the proper management administration and maintenance of the blocks of flats as the Lessor in its sole discretion shall think fit. ”

Legal costs as a variable administration charge Paragraph 1, Schedule 11, Commonhold & Leasehold Reform Act 2002 (1) An amount payable by a tenant of a dwelling as part of or in addition to the rent which is payable, directly or indirectly— (a) for or in connection with the grant of approvals under his lease, or applications for such approvals,

Legal costs as a variable administration charge (b) for or in connection with the provision of information or documents by or on behalf of the landlord or a person who is party to his lease otherwise than as landlord or tenant, (c) in respect of a failure by the tenant to make a payment by the due date to the landlord or a person who is party to his lease otherwise than as landlord or tenant, or (d) in connection with a breach (or alleged breach) of a covenant or condition in his lease.

Legal costs as a variable administration charge Paragraph 3, Schedule 11, Commonhold & Leasehold Reform Act 2002 … “variable administration charge” means an administration charge payable by a tenant which is neither— (a) specified in his lease, nor (b) calculated in accordance with a formula specified in his lease.

The s. 146 costs recovery clause • Freeholders of 69 Marina, St Leonards on Sea v Ghooram, Oram [2011] EWCA Civ 1258

The s. 146 costs recovery clause The Lessee covenants to pay: • “all proper and reasonable costs (including legal costs and fees payable to a surveyor)” incurred by the Lessor in contemplation of any proceedings under section 146 of the Law of Property Act 1925”. • “all expenses including solicitors costs a surveyors’ fees incurred by the Landlord incidental to the preparation & service of a notice under Section 146 of the Law of Property Act 1925”

The indemnity clause The Lessee covenants: • “To pay and compensate the landlords fully for any cost expense loss or damage incurred or suffered by the landlords as a consequence of any breach of the agreements on the part of the tenant in this agreement and to indemnify the landlords from and against all actions claims and liabilities in that respect”.

Indemnity clauses: case law • Church Commissioners for England v Ibrahim [1997] 1 EGLR 13 • Urban Splash Work Ltd v Ridgeway [2018] UKUT 0032 (LC)

The general enforcement clause The Lessee covenants: • “To pay all reasonable and proper costs and expenses of or incurred by the Lessor in enforcing the payment by the Lessee of any monies payable by the Lessee under the terms of this lease”

Two worlds collide • Chaplair Ltd v Kumari [2015] EWCA Civ 798 • Lease contained a s. 146 costs recovery clause • County court claim for arrears of service charge allocated to the small claims track • Transferred for determination to the F-t. T • When transferred back to the county court, which took precedence – the s. 146 contractual entitlement or the small claims track limit?

The radical view • Avon Ground Rents Ltd v Child [2018] UKUT 0204 (LC) • Holgate J, Chamber President, and HHJ Hodge QC “On the argument we have heard, the costs of the proceedings in the FTT fell within the scope of [the county court costs rules] as forming “costs of and incidental to” the proceedings in the County Court, since the case had been sent to the FTT by order of that Court”.

Specific limits on legal costs • Section 20 C, Landlord & Tenant Act 1985 prevents the landlord putting the costs of the proceedings through the service charge if it is just and equitable to make such an order • From April 2017, paragraph 5 A, Schedule 11, Commonhold & Leasehold Reform Act 2002 prevents the landlord charging the costs of the proceedings as a variable administration charge if it just and equitable to make such an order • • Tenants of Langford Court v Doren Ltd LRX/037/00 St Johns Wood Leases Ltd v O’Neil [2012] UKUT 374 (LC)

Tribunal rules • Rule 13, First-tier Tribunal (Property Chamber) Rules 2013/1159 • Rule 10, Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010/2600 • Unreasonable conduct • Wasted costs • Reimbursement of fees

Unreasonable conduct: the key case Willow Court Management Company Ltd v Alexander & ors [2016] UKUT 0290 (LC) • Has there been unreasonable behaviour? • Should an order be made? • • Proportionality Conduct of the parties generally • How much? • (Ir)relevance of causation

Tribunal rules Rule 10(4), Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010/2600 Except in proceedings to which paragraph (5) or (6) apply, the Tribunal may— (a) with the consent of the parties, or (b) where there is a disparity of interest or resources between the parties, direct that an order for costs may be made in the proceedings against one or more of the parties in respect of costs incurred following such a direction.

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