Service charge — Litigation costs of defending challenge to earlier service charges — Whether terms of lease permitting recovery of litigation costs from tenants — Para 4 of Schedule 12 to Commonhold and Leasehold Reform Act 2002 — Claim allowed
The defendants held a 125-year lease of a flat in a block. The lease required the tenants of the flats to pay a service charge to the claimant landlord. By para 2(a) of schedule 4 to the leases, the charge included a due proportion of the landlord’s expenses incurred in “providing the several services and amenities specified in the 7th schedule hereto”. Schedule 7 included, in its list of items for contribution, the cost of employing legal or professional advisers in connection with activities such as “the collection of rents” and the carrying out of “the landlord’s rights and obligations”.
The claimant sought to include in the service charges its costs of successfully defending proceedings brought by the defendants before a leasehold valuation tribunal and the Lands Tribunal to challenge the amount of previous service charges. The defendants refused to pay, and the claimant brought proceedings to recover the service charge arrears.
The central issues were whether: (i) on a correct construction of the lease, the tenants were obliged to pay a proper proportion of the claimant’s litigation charges in defending the LVT proceedings and the appeals from that decision; and (ii) such charges could be recovered from the defendants in the light of para 4 of Schedule 12 to the Commonhold and Leasehold Reform Act 2002, which provided that a person should not be required to pay another party’s costs in respect of LVT proceedings except by a determination under that paragraph.
Held: The claim was allowed.
On the true construction of the lease, the claimant could recover the sums that it sought from the defendants. On the Schedule 12 point, parliament had not intended a tenant whose actions had led to a landlord incurring costs in the LVT to be excused from paying the latter’s appropriate proportion while tenants whose behaviour had not contributed to those costs being incurred were required to pay by way of service charge. There was no reason for the defendants to be spared paying the proportion of the service charge attributed to them, a charge that had been paid by the other tenants in the block.
Michael Buckpitt (instructed by Comptons Solicitors) appeared for the claimant; Martin Westgate (instructed by the Bar Pro Bono Unit) appeared for the defendants.
Sally Dobson, barrister
