Leasehold enfranchisement — Leasehold Reform Act 1967 — Determination of landlord’s section 9(4) costs — Whether landlord’s in-house costs recoverable — Whether costs excluded under para 5 of Schedule 22 to the Housing Act 1980 — Whether costs reasonable
The appellant landlord was the freehold owner of a
house. The tenant served notice of enfranchisement under the Leasehold Reform
Act 1967. Following a decision of the leasehold valuation tribunal and the
making of an appeal, the enfranchisement price was settled by agreement. The
tenant applied to the leasehold valuation tribunal for the determination of the
landlord’s costs under section 9(4) of the Act. That tribunal determined that
the landlord was not entitled to recover any costs, mainly because they were
in-house costs. The landlord appealed contending that it should be entitled to
such costs.
£250 were allowed. There was no reason in principle why costs under section
9(4) should be restricted to costs paid out to a third party (out-of-pocket
expenses) and exclude costs in the form of expenditure of time and effort by
the landlord in carrying out the same activities (in-house costs). The
valuation prepared for the landlord was not prepared in connection with the
subsequent leasehold valuation tribunal proceedings, and therefore was not
excluded under para 5 of Schedule 22 to the Housing Act 1980. The claimed costs
of £440 were reduced to £250; two valuations had been made, where only one was
necessary, because the valuer had omitted an element in the first.
The following cases are
referred to in this report.
Agavil Investment Co v Corner unreported 3 October 1975
Buckland v Watts
[1970] 1 QB 27; [1969] 3 WLR 92; [1969] 2 All ER 985
Covent Garden Group Ltd v Naiva [1995] 1 EGLR 243; sub nom Naiva v Covent Garden
Group Ltd (1995) 27 HLR 295; [1994] EGCS 174
Jones v Avon
Estates (Birmingham) Ltd unreported 12 January 1996
London Scottish Benefit Society v Chorley (1884) 12 QBD 452; (1884) 13 QBD 872
Parkside Knightbridge Ltd v Horwitz [1983] 2 EGLR 42; (1983) 268 EG 49, CA
Skilleter v Charles
[1992] 1 EGLR 73; [1992] 13 EG 113, CA
Tate & Lyle Food & Distribution Ltd v Greater London Council [1982] 1 WLR 149; [1981] 3 All ER
716
Michael Daiches
(instructed by Grove Tompkins Bosworth, of Birmingham) appeared for the
appellant.
Giving his decision, MR PETER H CLARKE FRICS said: This is an appeal by the
landlord of a leasehold house against the decision of a leasehold valuation
tribunal determining the costs payable by the tenant under section 9(4) of the
Leasehold Reform Act 1967 (the 1967 Act) to be nil. The tenant did not respond
to the appeal.
Mr Michael Daiches, of counsel, appeared for the
appellant landlord and called Mr Dennis Fell and Mr Martin Fell.
Facts
The appellant, Cressingham Properties Ltd
(Cressingham), was the freehold owner and landlord of 359 Highters Heath Lane,
Hollywood, Birmingham, a house let for 99 years from 24 June 1955 at a rent of
£10
that she desired to have the freehold of the house. The price was not agreed
and application was made to a leasehold valuation tribunal on 8
1997. Following a hearing on 21 April 1997, a leasehold valuation tribunal of
the West Midlands Rent Assessment Panel fixed the price at £638 plus the
freeholder’s reasonable costs under section 9(4) of the 1967 Act and para 5 of
Schedule 22 to the Housing Act 1980 (the 1980 Act). Following an appeal to this
tribunal by the appellant landlord the price was settled by agreement.
On 19 November 1997 the tenant made application to
the leasehold valuation tribunal under section 21(1) of the 1967 Act for the
determination of the landlord’s costs. By a decision dated 9 June 1998, the
tribunal determined that the appellant landlord was not entitled to recover any
costs. On 25 June the landlord appealed to this tribunal. The tenant did not
respond to this appeal.
Issues
Section 9(4) of the 1967 Act provides as follows:
Where a person gives notice of his desire to have
the freehold of a house and premises under this Part of this Act, then unless
the notice lapses under any provision of this Act excluding his liability,
there shall be borne by him (so far as they are incurred in pursuance of the
notice) the reasonable costs of or incidental to any of the following matters:–
(a) any investigation by the landlord of
that person’s right to acquire the freehold;
(b) any conveyance or assurance of the
house and premises or any part thereof or of any outstanding estate or interest
therein;
(c) deducing, evidencing and verifying the
title to the house and premises or any estate or interest therein;
(d) making out and furnishing such
abstracts and copies as the person giving the notice may require;
(e) any valuation of the house and
premises;
but so that this subsection shall not apply to
any costs if on a sale made voluntarily a stipulation that they were to be
borne by the purchaser would be void.
Para 5 of Schedule 22 to the 1980 Act provides
that:
The costs which a person may be required to bear
under section 9(4)… of the 1967 Act… do not include costs incurred by a
landlord in connection with a reference to a leasehold valuation tribunal.
The appellant landlord seeks the following costs
under section 9(4) of the 1967 Act:
|
(i) |
£25 £25 |
|
(iv) receiving, investigating and verifying statutory |
£25 |
There are two questions for my determination:
(1) do the above costs fall within section 9(4) of
the 1967 Act and para 5 of Schedule 22 to the 1980 Act?
(2) are the amounts reasonable?
Allowable costs?
The leasehold valuation tribunal determined that
the landlord was not entitled to recover any of the costs claimed mainly on the
grounds that they were in-house costs and not, therefore, within section 9(4)
of the 1967 Act.
Appellant’s case
Mr Dennis William Spiers Fell is the chairman and
managing director of the appellant landlord. He has spent his working life
dealing with residential property, previously as clerk and managing clerk to
solicitors, and then, from 1959, with his own property companies.
He said that, when the 1967 Act was passed, he
realised that it would affect the properties owned by his companies. He studied
the Act and is now knowledgeable on leasehold enfranchisement. Soon after the
passing of the Act, Mr Fell decided to deal with notices served under the Act
himself rather than employ a solicitor. This facilitated a much quicker
handling of cases. Initially under the 1967 Act he instructed solicitors to act
on behalf of the company, but found that they lacked detailed knowledge of
leasehold enfranchisement and did not follow the timetable laid down by the
Act. Time and expertise are involved in dealing with tenants’ notices and Mr
Fell said that he follows a set procedure for each notice. 90% of them are
found to be invalid. He appoints a surveyor to carry out a valuation, using
Fell Estates Ltd and two other firms. Other matters within his procedure
include: close consideration of tenants’ notices; service of notices regarding
deposit, title and statutory declaration; service of notice under section 10 of
the 1967 Act; investigation of abstract of title; and investigation of
statutory declarations.
Mr Martin Anthony Fell is an unqualified surveyor.
He set up Fell Estates Ltd in 1993. He has been involved in residential
property all his working life, previously as property manager in a property
company, and then as partner in a firm of estate agents in Birmingham. He
became self-employed in 1989. Fell Estates Ltd deal predominantly with freehold
ground rents, mainly acting for the Dennis Fell group of companies and Covent
Garden Group, two separate organisations. He buys and sells ground rents for
these two clients, carries out leasehold enfranchisement valuations and appears
before leasehold valuation tribunals. Fell Estates also invests directly in
property in a small way.
Mr Fell said that, when the appellant acquired
larger offices in Henley-in-Arden, he was offered the use of surplus space. He
decided not to install a separate telephone and relies on the secretary to the
appellant to take messages when he is out of the office.
Mr Fell does not undertake work for other clients
unless they are personally known to him. He does not wish to carry out other
private client work and does not act for tenants to avoid a conflict of
interest.
Mr Fell said that he and his wife are the sole
directors and shareholders of Fell Estates Ltd; they do not have any financial
interest in the appellant. Similarly, the appellant does not have any financial
interest in, or control of, Fell Estates. The only connection between the two
companies is that the appellant is a family company and Mr Dennis Fell is his
father.
Mr Fell said that the majority of his Leasehold
Reform Act valuations are given to him by his father or his secretary. All
valuations are supplied to his clients. If terms cannot be agreed he usually
represents the freeholders at the leasehold valuation tribunal. He did not
prepare his valuation in this appeal specifically for the leasehold valuation
tribunal.
Mr Daiches said that the appellant seeks its costs
under three heads: investigating the tenant’s right to acquire the freehold;
deducing, evidencing and verifying title; and costs of valuation. The leasehold
valuation tribunal rejected the first two heads on the grounds that, having
regard to the decision in Jones v Avon Estates (Birmingham) Ltd unreported
12 January 1996, none of these charges was incurred within section 9(4) of the
1967 Act. As to the valuation fee, the tribunal gave as the reasons for
rejection that Mr Martin Fell was not independent of the freeholder, the date
of valuation could not be proved and it could have been carried out with
reference to the tribunal proceedings.
Mr Daiches submitted that the important question
in this appeal, in connection with costs under section 9(4)(a) and (c)
of the 1967 Act, is whether the words ‘costs of or incidental to’ in this
subsection are wide enough to include, not only money paid out, but any real
expenditure, whether of time or money, incurred by the landlord in connection
with the matters specified in this subsection? He submitted that the words
‘costs of or incidental to any of the following matters’ in section 9(4) of the
1967 Act are capable, on their ordinary meaning, of including time and labour
incurred by the landlord, in addition to money expended by him. Furthermore,
there is no reason why recovery of the cost of time and labour under this
subsection should be restricted to solicitors or any other particular type of
professional. Modern office arrangements permit the recording of management
time on particular projects (see Tate & Lyle Food & Distribution Ltd
v Greater London Council [1982] 1 WLR 149). The costs claimed can be
tested for reasonableness against the costs that would have been incurred by
professionals.
Mr Daiches supported these submissions by
authorities relating to the costs of litigation (London Scottish Benefit
Society v Chorley (1884) 12 QBD 452; (1884) 13 QBD 872, Buckland
v Watts [1970] 1 QB 27 and RSC Ord 62 r 18). He said that two principles
emerge from these decisions. First, the word ‘costs’ in litigation is capable
of including expenditure both in the form of money laid out and in the form of
time and labour, although in practice the courts did not historically allow a
litigant in person who was not a solicitor to claim for time and labour.
Second, the reason for this latter rule was that professional skill and labour
could be measured whereas private expenditure of labour and trouble by a layman
could not be measured. For litigation costs the only relevant profession involved
would be that of a solicitor. Mr Daiches also referred to Agavil Investment
Co v Corner unreported 3 October 1975 (meaning of ‘costs’ in a
lease) and Tate & Lyle (management time in a claim for damages in
tort).
Mr Daiches reviewed the evidence regarding the
valuation fee paid to Fell Estates Ltd. He said that this company was
independent of the appellant. He referred to Parkside Knightsbridge Ltd
v Horwitz (1983) 268 EG 49*. The local valuation tribunal was wrong to
decide that the valuation was carried out in-house, and did not consider
whether the landlords could have recovered the in-house cost of time and labour
in carrying out a valuation.
*Editor’s note: Also reported at [1983] 2 EGLR 42
Mr Daiches said that, even if Fell Estates had
been owned by the appellant or Mr Dennis Fell, the arrangements would not have
been in-house. Even if the valuation had been carried out by the appellant
company, this would not have excluded the cost from inclusion in section 9(4)(e)
of the 1967 Act. The tribunal referred to the decision of the county court in Jones,
which suggests that they regarded the valuation arrangements as a sham. There
is no evidence of this. The valuation was a genuine valuation. The evidence is
that Fell Estates has been an independent company since 1993; it has clients
other than the appellant; and Mr Martin Fell has extensive experience of
leasehold enfranchisement. It is not necessary for a valuer to be qualified to
carry out valuations under the 1967 Act. Mr Daiches said that, even if Fell
Estates had been owned by the appellant or Mr Dennis Fell, the arrangements
would not have been a sham. He referred to Skilleter v Charles
[1992] 1 EGLR 73.
The decision in Jones can be distinguished.
In that case the in-house arrangements for valuation were completely
artificial: the valuer did not visit the premises; he did not carry out
valuations for any other person; and the valuation fee was artificially
incurred to help the landlord’s case before the tribunal. The court appears to
have decided that only out-of-pocket expenses were recoverable under section
9(4) of the 1967 Act, and therefore did not consider whether the landlords
could have recovered their in-house cost in carrying out the valuation.
In this current appeal the tribunal was plainly
wrong to conclude that the valuation could have been carried out in connection
with the tribunal proceedings due to the lack of date. This was contrary to the
evidence put before it . The valuation was carried out on 30 October 1996. The
valuation fee is recoverable under section 9(4)(e) of the 1967 Act.
Decision
I look first at the costs under section 9(4)(a)
(investigation of right to enfranchise) and (c) (deducing etc title).
The material words in subsection (4) are ‘there shall be borne by [the tenant]
(so far as they are incurred in pursuance of the notice) the reasonable costs
of or incidental to any of the following matters’. The question is whether
‘costs of or incidental to’ the matters in paras (a) and (c) can
be said to have been ‘incurred in pursuance of the’ tenant’s notice to
enfranchise when they were not paid out by the landlord but were internal costs
in the form of expenditure of time and effort?
I can see no reason in principle why the costs to
be borne by the tenant should be restricted to costs paid out to a third party
(out-of-pocket expenses) and exclude costs in the form of expenditure of time
and effort by the landlord in carrying out the same activities (in-house
costs). It must be borne in mind that leasehold enfranchisement is a form of
compulsory purchase. Parliament has given the tenant the right to purchase his
landlord’s interest at a price that is statutorily defined and has allowed the
landlord to recover his costs in effecting the transaction. It would be unfair
and contrary to common sense to restrict those costs to the expenditure of
money to a third party (eg solicitors) and exclude the notional cost to the
landlord of carrying out the same activity, perhaps at a lower cost to the
tenant, where the landlord has the necessary knowledge and resources to carry
out the work himself. The tenant is protected from excessive or unwarranted
costs by the requirement in section 9(4) that the costs shall be ‘reasonable’.
I can see no objection in principle to the recovery of in-house costs under
section 9(4) of the 1967 Act. I now consider the authorities referred to by Mr
Daiches. None relates to the 1967 Act, but I have found some of them of
assistance.
In Agavil Investment Co v Corner the
issue was whether a notional rent for a caretaker’s flat was recoverable from
the tenants under a covenant to reimburse the landlord the costs, expenses,
outgoings and matters in connection with the employment of a caretaker,
including outgoings payable in respect of the caretaker’s accommodation. In the
county court the deputy judge found in favour of the landlord and the Court of
Appeal dismissed the tenants’ appeal. Cairns LJ said at p6D:
When I come to construe this lease, on the face
of it it does seem to me that the loss to the landlord by giving up this flat
for the occupation of a caretaker, and therefore being unable to let the flat
to a tenant, falls reasonably within the words in para 1 of the Schedule ‘costs
or expenses incurred by them in carrying out their obligations’ under Clause
3(b)(v) of the lease.
He also gave guidance as to the meaning of ‘costs
and expenses’ and ‘incurred’. As to ‘costs and expenses’ he said at p5B:
In the court below dictionary meanings were cited
as to the word ‘costs’ and, I think, the word ‘expenses’. I do not find such
definitions helpful. These are words in common use, but with variable meaning,
the meaning depending on the context. For, if one spoke of the cost of a hat
one would not be likely to include in that cost the bus fare for going to the
shop to buy it; nor would one be likely to include something in respect of the
loss of time while one was visiting the shop. On the other hand, if a man who
had served on a jury were asked how much it had cost him, he would be very
likely to include, in addition to the actual fare to and from court, the amount
that he had lost by way of losing a day’s work. So it is not the dictionary
that will help on these matters, but consideration of the context and what the
parties could reasonably have taken to have intended by the words in that
context.
In this current appeal, therefore, it is necessary
to consider what parliament meant by the words ‘costs of or incidental to’ in
the context of section 9(4) of the 1967 Act and leasehold enfranchisement.
In section 9(4) the costs recoverable from the
tenant must have been ‘incurred in pursuance of the notice’ served by the
tenant. As to the meaning of ‘incurred’, Cairns LJ said at p8C:
It is suggested that that word is appropriate in
connection with some payment out of pocket and not with any other kind of
burden accepted by the landlord. I confess that I do not so interpret that
word. It appears to me to be an appropriate word to use in connection with any
cost falling upon the landlord, including the cost that consists in foregoing
an advantage they would otherwise have had.
In my view, the decision in Agavil supports
the principle that ‘costs’ in section 9(4) of the 1967 Act may include in-house
costs. They are not restricted to out-of-pocket expenses paid to a third party.
I turn now to costs in litigation. In London
Scottish Benefit Society v Chorley the issue was whether the
successful defendants, who were solicitors and conducted their own defence,
could recover only out-of-pocket costs (as any other defendant in person) or
could recover the same costs as a successful defendant who employs a solicitor,
other than such costs rendered unnecessary by reason of instructions to
themselves and like matters. It was held in both the High Court and the Court
of Appeal that they were entitled to the whole of their costs as successful
defendants and were not restricted to out-of-pocket expenditure.
Watkin Williams J, after reviewing the statutes
that first gave a right to costs, said at p460:
It seems to me that the word ‘costs’, though a
technical term now, may very well have been used to include, not merely money
expended, but any real expenditure, whether of time or money, incurred by the
party in defending himself against an unjust claim. If that expenditure takes
the form of employing skilled persons to do the work necessary to insure
success, this would fall within the expression ‘costs’ in its primary sense:
but, if the defendant be himself a person of skill, and devotes that skill and
valuable time and legal knowledge to the doing of that for which he would
otherwise have been obliged to employ and pay some one else, it seems to me
both upon principle and on the ground of expediency that time so spent, and
skill so devoted, and professional knowledge so applied, should be compensated
for under the name of ‘costs’.
A distinction is, however, made between a layman
and a solicitor litigant in person. In Buckland v Watts it was
held that the former was not entitled to claim costs in respect of the time
expended in preparing his case, but only his out-of-pocket expenses. In the
High Court, however, Donaldson J observed that the reasoning that supports the
decisions that a solicitor litigant in person should recover more than his
out-of-pocket expenses seems to support a similar decision in favour of lay
litigants in person. Subsequently, RSC Ord 62 r 18(1) gave a litigant in person
the right to recover costs that would have been allowed if the work and
disbursements to which the costs relate had been done or made by a solicitor on
his behalf: see now Civil Procedure Rules, r
The leasehold valuation tribunal in this current
appeal relied on Jones v Avon Estates (Birmingham) Ltd to support
its decision that none of the costs claimed was incurred within the meaning of
section 9(4) of the 1967 Act. This was a decision of Judge Hall sitting in
Stratford-on-Avon County Court. Mr Daiches urged me to treat the written
judgment with caution because it appeared to be merely a note of the judgment
not approved by the judge. With regard to costs under section 9(4)(a), a
claim by the landlords for ‘say’ £100 fees was rejected on three grounds.
First, there was no evidence as to why the costs were £100 and why they were
described as fees. Second, none of the items claimed necessitated any payment
by the landlords and none of the activities involved anybody being paid by the
landlords. Third, many of the items claimed would have incurred no costs
whatsoever. It is clear that this claim failed for lack of evidence. The judge
regarded it as a spurious claim — a sham. There appears to have been no legal
argument as to the meaning of ‘costs’ in section 9(4). The costs were described
as ‘fees’, which implied that they were paid to a third party, but there was
no evidence that they were paid nor even how they were calculated. It is not
surprising that they were rejected, but, even if I am bound by this decision, I
do not regard it as good authority for the proposition that in‑house
costs are not within section 9(4). Furthermore, it can be readily distinguished
from this appeal on the facts, where I have evidence as to the calculation of
the costs claimed.
I find on the evidence that the internal
arrangements in the appellant company for dealing with applications for
enfranchisement under the 1967 Act are not a sham. I hold that the words ‘costs
of or incidental to’ in section 9(4) of the 1967 Act can, on principle and
authority, include in-house costs incurred by the landlord in dealing with the
matters in this subsection and are not limited to payments for dealing with
these matters made to a third party. The costs claimed by the appellants are
within section 9(4)(a) and (c) of the 1967 Act. I deal with the
amounts of those costs, namely whether they are ‘reasonable’, under the second
issue in this decision.
I look now at the valuation costs claimed under
section 9(4)(e) of the 1967 Act. These are for the making of ‘any
valuation of the house and premises’. They were rejected by the leasehold
valuation tribunal on the grounds that Mr Martin Fell is not independent of the
landlord, the valuation was carried out in-house, the date of the valuation
could not be proved and it could have been carried out in connection with the
tribunal proceedings.
The tribunal appears to have relied on the
decisions in Jones and Naiva v Covent Garden Group Ltd [1994]
EGCS 174*. In Jones the valuation arrangements were clearly artificial,
described by the judge as ‘Gilbertian in its complexity and artificiality’.
Furthermore, the valuation was a ‘scrappy note on 2 sides of a card index’; it
was not proved that the premises were visited for the purpose of the valuation
and no fee note was produced for nearly a year. The valuer did not carry out
valuations for any other company. He said in evidence that he gives the highest
possible value in order to help the landlords’ argument at a tribunal. It is
not surprising that the judge disallowed the valuation fees as unreasonable and
as a sham.
*Editor’s note: Also reported sub nom Covent
Garden Group Ltd v Naiva [1995] 1 EGLR 243
This current appeal can be distinguished from Jones.
Although Mr
Cressingham, and Fell Estates Ltd are separate companies, although sharing the
same premises and using the same secretary. Fell Estates also acts for Covent
Garden Group and buys and sells ground rents and invests directly in property.
Mr Fell’s initial valuation was prepared on 30 October 1996; the tenant’s
application to a leasehold valuation tribunal to fix the price was made on 8
January 1997. His valuations comprise two single sheets with calculations
giving the values as £1,000 and £1,100 respectively.
I was referred by Mr Daiches to the decision of
the Court of Appeal in Skilleter v Charles. This concerned the
relationship between two companies. This was a dispute as to whether certain
costs should be included in a service charge, including management fees. They
were paid to a company formed by the respondent landlord and his wife to manage
the particular block of flats and other flats. The court held that this
arrangement was not a sham. The lease expressly permitted the employment of a
manager and for that manager to be paid. In the absence of evidence that this
arrangement was a sham, there was no reason why the landlord should not employ
a company and charge for payments to that company, even if he owned the
company.
The leasehold valuation tribunal relied on the
decision of the Court of Appeal in Naiva to support its decision that Mr
Fell’s valuation could have been carried out in connection with tribunal
proceedings. The evidence from Mr Fell was that he received instructions to
prepare a valuation of 359 Highters Heath Lane on 15 October 1996 and carried
out his first valuation on the following 30 October 1996. This was two months
before the tenant referred the question of price to the leasehold valuation
tribunal. I am satisfied that this valuation was not prepared for the purposes
of the tribunal proceedings and is not excluded under para
22 to the Housing Act 1980. In Naiva it was clear from the evidence that
the valuer was instructed to set down the matter for hearing before a leasehold
valuation tribunal, not to prepare a valuation. The landlords did not need a
valuation to assess their position, they had given the valuer the price for
which they were contending. These facts are completely different to those in
this appeal. I am satisfied that Mr Fell’s first valuation was not prepared in
connection with the subsequent proceedings before the leasehold valuation
tribunal, and that the cost thereof is not excluded under para 5 of Schedule 22
to the 1980 Act. I find that the valuation fee paid to Fell Estates is within
section 9(4)(e) of the 1967 Act. I consider whether the amount is
reasonable in the second part of this decision.
Reasonable costs?
The appellant landlord seeks to recover from the
tenant £440 comprising costs under section 9(4)(a) and (c) of
£100, for nine letters at £90 and a valuation fee under section 9(4)(e)
of £250. In order to be borne by the tenant these costs must be ‘reasonable’.
Appellant’s case
Mr Dennis Fell said that he followed a set
procedure for each tenant’s notice seeking enfranchisement. It is difficult to
estimate the exact time involved for each step in the procedure, but on average
each case involves about three hours work. He has inquired of solicitors their
charges for this type of work and has been given figures in the region of £250
to £300 plus VAT, in excess of his in-house costs. He put in evidence letters
from three firms of solicitors in Birmingham in support. Mr Fell said that he
has calculated from experience that for each of the four matters under section
9(4)(a) and (c) (except the service of landlord’s notice in
reply, for which no charge is made), a charge of £25 is appropriate. This does
not fully compensate for the time and work involved but is a reasonable charge
to the tenant. A further charge is made of £10 for each letter. No charge is
made for instructing valuers and solicitors. Dealing with enfranchisement
notices occupies a considerable amount of time, restricting the time available
for normal business activities. Staff time and overheads are also involved.
This time and cost would have been used for the benefit of the companies in
other aspects of the business. From the inception of the 1967 Act until section
115 of the Housing Act 1996, the fees have been agreed and paid by applicants
without demur, including solicitors and valuers dealing with this matter. It is
only in a few cases since the latest amendment that costs have been challenged.
Mr Martin Fell said that he received instructions
to prepare a valuation of 359 Highters Heath Lane on 15 October 1996. He
inspected and prepared his valuation on 30 October. He subsequently revised the
valuation following receipt of a copy of the lease, which included an insurance
covenant of value to the landlord. When preparing his valuation he obtained
comparable evidence, including the sale of 371 Highters Heath Lane. His initial
valuation took one and a half to two hours to prepare and his amended valuation
took a further half an hour. Mr Fell submitted an invoice to the appellant on
22 April 1997 for £250 and payment was received in full.
Mr Daiches submitted that the costs claimed by the
appellant under section 9(4)(a) and (c), totalling £190 inclusive
of the letters, are reasonable having regard to the evidence of solicitors’
costs and other leasehold valuation tribunal decisions. He referred to the
decision of the Court of Appeal in Parkside Knightsbridge Ltd v Horwitz,
where the landlords were permitted to recover management and supervision
charges incurred by an associated company, and the reasonableness of those
charges was tested against the charges quoted by professional management
companies.
Decision
The second question for my determination is
whether the costs claimed of £440 are reasonable?
I look first at the costs under section 9(4)(a)
and (c), totalling £100. I have seen copies of the documents served by
the tenant and the landlord comprising the tenant’s notice to enfranchise; the
landlord’s notice regarding deposit, title and statutory declaration; title;
and the
I accept this amount as reasonable and allow the claim for £100.
I now consider the separate claim for letters
written by the landlord. I have seen copies of nine letters written mainly to
the tenant’s solicitors and mainly dealing with the alleged inadequacy of the
tenant’s notice to enfranchise. I consider these letters to be part of the cost
of dealing with the tenant’s notice and the landlord’s notice in reply, for
which I have allowed the claim in full. They do not justify an additional cost.
I allow no costs for these letters.
Finally, I deal with Mr Fell’s valuation fee in
the sum of £250. He prepared two valuations, each of one page, following his
inspection of the house and the collection of comparable evidence. He said that
the first valuation took one and a half to two hours to prepare and the second
valuation half an hour. I do not think that the tenant should be required to
pay for the second valuation. This was made necessary by Mr Fell’s failure to
take into consideration the effect of the insurance covenant in his first
valuation, prepared before he had seen a copy of the relevant lease. As to that
valuation, having regard to the short time spent in preparation and the brevity
of the valuation report, I regard a fee of £250 as excessive. A reasonable
amount is £150.
The appeal is allowed to a limited extent. I
determine that the costs payable by the tenant under section 9(4)(a), (c)
and (e) of the 1967 Act are the sum of £250 (two hundred and fifty
pounds).
I make no order as to
the costs of this appeal.
