Service charge dispute win ends up costing £18k?

Service charge dispute win ends up costing £18k?

16:10 PM, 15th March 2023, About 12 months ago 8

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Hi everyone, We took our Freehold Landlord to the small claims court for £3k and then it was transferred to the first-tier tribunal

The Freeholder lost and was made to refund us £2520 in service charge overpayments we had made.

His solicitors made no application for costs, and neither did we, we just thought it was an excellent £300 legal expense to win the case.

Now, Our service charge demands have arrive and we are billed 18k for legal fees as the lease states we are responsible for any legal fees incurred

What would anyone advise, please?

Paul


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Comments

Blodwyn

11:57 AM, 16th March 2023, About 12 months ago

Read the Lease!!!!

Seething Landlord

11:58 AM, 16th March 2023, About 12 months ago

https://www.lease-advice.org/article/recovering-legal-costs-through-the-service-charge-a-recent-decision-of-the-upper-tribunal-lands-chamber/

includes "Recovery of costs and expenses whether it is in the context of litigation or other matters depends on the wording of the particular lease. Neither side should readily assume that because the landlord digs into its pockets to pay for an item that it can be added to the service charge account."

Unfortunately you probably need to take professional advice on the interpretation of your lease, also to consider whether the landlord might be responsible for any costs that you incur if you win - potentially an interesting but expensive situation.

Susan Bradley

12:05 PM, 16th March 2023, About 12 months ago

Errrrmmmm perhaps you ought to have read the lease before taking Court action. You must be a "right fighter" by that I mean you always want to be proven right. Well, this time you are right but is has cost you money but it doesn't matter because you were right.

This is not the first time I have heard of this, my husband's friend was taken to Court and won but the other person had legal aid and the friend did not. It cost him 100K but he won so that was alright then.

Lawyers love "right fighters" and come across them most in divorces. There are countless couples that have decided quite amicably on who should get what but the lawyers can’t have that so they stir up trouble. Sometimes you have to let the other person be right because it is cheaper and this is one of those times.

Roy Bush

12:12 PM, 16th March 2023, About 12 months ago

What was the Tribunals determination? It should normally state who pays the costs. It is fairly standard for the Tribunal to determine that each party pays its own cost. But, where one party wins the case it may be that the party is also awarded costs. It would be unusual if not ridiculous for a losing party (the Freeholder) to then claim their legal cost &/or the determination refund) of the Leaseholders via the Services Charge:
Check the working of the Determination and put the Freeholder on notice that you will charge them your further legal cost to resolve the matter. Then if they don’t capitulate, follow through. Be sure to give a time frame that you
give them to respond, say 14 days.

Kizzie

12:48 PM, 16th March 2023, About 12 months ago

Quite often a lease qualifies when the lessee liable for legal fees known as Administration Charges under Commonhold & Leaeehold reform act .Look up on internet so hollow victory. The Freeholder will argue that service charge only source of income and paying out legal fees means Freeholder goes bust. Probably better to have tackled issue by demanding right to be consulted under Section 20 LTA 85 and sight of contractors invoices under section 21(1) LTA 1985

Crossed_Swords

12:57 PM, 16th March 2023, About 12 months ago

The legal fee clauses usually only relate to breaches of the lease not any costs, you need to check. Can you post the clauses here?

Seething Landlord

13:16 PM, 16th March 2023, About 12 months ago

Further guidance at

https://www.lease-advice.org/faq/if-an-application-is-made-to-the-tribunal-can-a-landlord-recover-their-legal-costs-through-the-service-charge/

"You should refer to the terms of your lease to establish whether legal costs can be recovered through the service charge from all the lessees. If legal costs are recoverable as a service charge under the lease, you can make an application to the Tribunal under Section 20C of the Landlord and Tenant Act 1985 requesting an order that the landlord should not be allowed to recover such costs."

but please do your own research and take proper advice before embarking on any further legal adventures. It's always the unknown unknowns that lie in wait to trap litigants with limited understanding of the law.

David Smith

14:08 PM, 16th March 2023, About 12 months ago

If the Lease states you are liable for the Freeholder’s costs then I would say that’s in relation to you loosing your claim.
As this is not the case I can’t believe that you will have to pay the other sides cost.

Make an application to the First Tier tribunal for their opinion.

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