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By J
10/07/2011

Service charges and legal costs: a very short point

The Upper Tribunal (Lands Chamber) has recently handed down two cases on insurance premiums and service charges. I’m not going to deal in any detail with either of them, as both are entirely on their own facts. However, in one case Akorita v Marina Heights (St Leonards) Ltd [2011] UKUT 255 (LC), the Upper Tribunal did make a comment about the correct approach to s.20C, LTA 1985, that I do think is worth bringing to your attention.

In general terms, the LVT and Upper Tribunal have exceptionally limited powers to award costs. What is more important in most cases is where the lease gives the landlord the power to charge legal costs to a leaseholder as a service charge. In those circumstances, the LVT / Upper Tribunal has a power (s.20C, LTA 1985) to prohibit the landlord from relying on that clause in whole or part.

Now, the difficulty is that, at the end of the LVT hearing, it is vanishingly unlikely that anyone will be able to quantify the costs and some LVTs therefore take the view that they can leave s.20C to see if a demand is ever made and, if it is, they can then assess whether anything is contractually due under the lease and what sum would be reasonable.

HHJ Huskinson does not appear to agree with this analysis. In his view, an application under s.20C necessarily includes an application to determine whether there is any contractual power to claim the costs – see [33].

Useful to know at least, since it means that all landlords and managing agents who come to resist a s.20C application, should also be prepared to argue the contractual entitlement point.

J is a barrister. He considers housing law to be the single greatest kind of law known to humankind and finds it very odd that so few people share this view.

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