Cases - Mrs Patricia Fairbairn v Etal Court Maintenance Limited
Record details
- Name
- Mrs Patricia Fairbairn v Etal Court Maintenance Limited
- Date
- [2015]
- Citation
- UKUT 639 (LC)
- Legislation
- Keywords
- Service charges – legal costs – whether landlord’s cost of advice and representation and costs paid in settlement to a leaseholder recoverable through the service charge as costs of management and administration
- Summary
-
The appellant leaseholder appealed against the decision of the First-tier Tribunal that she was liable to pay through the service charge provision both the respondent landlord’s costs of and sums paid in settlement of a disrepair claim brought against it by another leaseholder.
Under the terms of the lease, the landlord was required to maintain the retained premises in good and substantial repair and condition. Further, pursuant to paragraph 10 of the Fifth Schedule to the Lease, the landlord was required to 'do all other acts and things for the proper management administration and maintenance of the blocks of flats as the Lessor in its sole discretion shall think fit'.
The landlord’s costs of obtaining a settlement with a leaseholder and the fees charged by its own lawyers in procuring it, would only be recoverable as a service charge if they could be brought within the scope of paragraph 10. The expenditure would only be recoverable if it was deemed as having been incurred in acts done 'for the proper management administration and maintenance of the block of flats'.
In principle the general charging provision set out in paragraph 10 was wide enough to cover expenditure on legal advice, and in appropriate cases, litigation. Yet, the language of the charging provision had to be sufficiently clear for the expenditure sought to be recovered to fall within it (Iperion Investment Corporation v Broadwalk House Residents Ltd [1995] 2 EGLR 47 and Assethold Ltd v Watts [2014] UKUT 537 (LC) approved). In the present case the expenditure in issue was incurred as a result of the landlord’s own breach of its obligations under the lease. It was because the proper management and administration of the building had been neglected that proceedings had commenced.
All of the landlord’s expenditure on professional fees arose out of the claim brought against it for breach of its repairing covenant under the lease. The sum paid in satisfaction of the leaseholder’s successful claim for damages for breach of covenant did not readily fall within the scope of expenditure on proper management and administration of the buildings. The same could be said of the legal costs incurred in reaching such a settlement. Such payments, although more appropriately described as having been incurred in the management and administration of the respondent company, had nothing to do with the management and administration of the building. They were costs incurred by the landlord in protecting itself from the consequences of previous omissions.
Appeal allowed.