A Small Victory for Landlords – Robinson and others -v- Oram and another [2011] EWCA Civ 1258
The recent Court of Appeal decision of Robinson and others -v- Oram and another [2011] EWCA Civ 1258 (8 November 2011) ("Robinson") represents a small victory for landlords in the ever tenant-friendly world of service charge disputes, and gives some hope that all may not be lost in recovering legal costs incurred in LVT proceedings.
In Robinson, the landlord carried out repairs to the property and the leaseholders complained that the amount charged in respect of the works by way of service was too high. The landlord therefore made an application to the LVT to determine the amounts payable by the leaseholders.
The LVT made its determination with no order as to costs, but the leaseholders failed to pay the amounts awarded. The landlord then brought County Court proceedings against the leaseholders. At first instance, the District Judge awarded Judgment for the landlord for the amounts due, including the landlord's legal costs of the LVT proceedings, and subsequently the landlord served a section 146 notice in respect of the service charges.
The leaseholders appealed.
On appeal, the Court of Appeal upheld the decision to award the landlord's costs incurred in respect of the LVT proceedings. The Court relied on a specific clause in the lease, common in most modern leases, in which the leaseholders covenanted:
"To pay all expenses including solicitors' costs and surveyors' fees incurred by the Landlord incidental to the preparation and service of a notice under Section 146 of the Law of Property Act 1925 or incurred in or in contemplation of proceedings under Section 146 or 147 of the Act notwithstanding in any such case forfeiture is avoided otherwise than by relief granted by the Court".
In reaching its decision, the Court held that section 81 of the Housing Act 1996 required the amount of the leaseholders' liability for the service charges to have been finally determined for the purposes of enforcement. Moreover, the enforcement of that liability was subject to the provisions of section 146 of the Law of Property Act 1925. As the determination of the LVT and a section 146 notice were effectively precursors to enforcement of the leaseholders' liability, the costs before the LVT were found to come within the scope of the tenant's covenant to pay such costs in the lease.
Robinson represents a victory for the landlord, and somewhat of a sea-change in the current run of cases where costs covenants have been interpreted harshly and in favour of the payer and not the payee! In this case, which was obviously decided on the specific facts and wording of the lease concerned, it is noted that the leases contained a protective costs covenant with specific reference to "solicitors'" costs and, in light of the recent decision of Greening (see our October 2011 e-Bulletin for further details), it is unlikely that the decision would have been quite so favourable had there not been an explicit reference to legal costs.
Nonetheless, Robinson is a positive result for landlords!
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