Recovery of legal expenses through service charge

 

The Upper Tribunal (Lands Chamber), overturning the decision of the Leasehold Valuation Tribunal, has held that a residential landlord was entitled to recover legal expenses it had incurred in dealing with a party wall matter as part of the service charge.
The landlord held a headlease for 999 years of the building in which 13 tenants held flats on long leases. A developer wanted to carry out party wall works to the adjoining land and served the requisite notices on the landlord and the tenants.
The tenants appointed their own building surveyor, refusing the landlord's suggestion to use the same building surveyor as the landlord. The tenants reached an early settlement with the developer's surveyor. However, the landlord and the developer ended up in protracted litigation,...

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The Upper Tribunal (Lands Chamber), overturning the decision of the Leasehold Valuation Tribunal, has held that a residential landlord was entitled to recover legal expenses it had incurred in dealing with a party wall matter as part of the service charge.
The landlord held a headlease for 999 years of the building in which 13 tenants held flats on long leases. A developer wanted to carry out party wall works to the adjoining land and served the requisite notices on the landlord and the tenants.
The tenants appointed their own building surveyor, refusing the landlord's suggestion to use the same building surveyor as the landlord. The tenants reached an early settlement with the developer's surveyor. However, the landlord and the developer ended up in protracted litigation, which resulted in significant legal and surveyors' expenses. When the landlord attempted to recover these expenses via the service charge, the tenants sought a determination under section 27A of the Landlord and Tenant Act 1985.
The Deputy President of the Upper Tribunal held that the landlord was able to recover its legal expenses under a sweeper clause.
Although this case turned on the interpretation of a particular lease, it illustrates how the wording of the charging provision was examined, in its context and against all the admissible background and in the light of the apparent commercial purpose of the clause. It illustrates that the normal rules of contractual interpretation apply to leases and there are no special rules of interpretation when interpreting service charge clauses. (Assethold v Watts and others [2014] UKUT 0537 (LC).)

This weekly email update was originally published on PLC Property by Practical Law on 9 Janaury 2015 and is reproduced with the permission of Practical Law.  (www.practicallaw.com)

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