Clause attached - Can FH charge ALL admin legal fees for FTT(Tribunal) to leaseholder

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    Hmm. I don't think freeholder would get very far with charging everyone collectively for suing you. I suspect any costs will be laid at your door.
    To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.


      I suggest you send a copy of clauses 3.25 and 3.26 to CMA ( Competition and Markets Authority ) and ask them to declare these clauses are unfair contract terms to impose on residential leaseholders.


        Originally posted by Gordon999 View Post
        I suggest you send a copy of clauses 3.25 and 3.26 to CMA ( Competition and Markets Authority ) and ask them to declare these clauses are unfair contract terms to impose on residential leaseholders.
        Will have a look.

        What happens if the freeholder fails to provide the necessary accounts (though I'm not sure how they can be specified) by the FTT's deadline?


          There seem to be 2 issues here:
          1. SC/AC - do they apply and if so the reasonableness of these charges
          2. Whether you have to pay Freeholder’s legal costs ets.

          Q1: I am not sure what the answer to Q1 is but I would have thought that if they apply and are reasonable then you will have to pay them - even if you inherited them + are were not aware of them at the time you purchased the property. You might have a claim against your solicitors(?) if they should have known this and didn’t point this out - I don’t know...

          Q2 is a separate issue and - unless I am missing something - the extract of the lease that you have provided does not seem relate to legal costs for service charges or admin charges UNLESS the Landlord/Freeholder has issued s.146 proceedings?

          On my reading of the lease – s.3.25 means the Tenant/Leaseholder has an obligation to pay the Landlord’s legal fees etc. that relate to either:
          -(i) s.3.25.1: a Tenant’s application for consent or license required under the lease – I am not sure if that is applicable here – I don’t believe you have applied for consent/licence - you have just acquired SC/AC arrears from previous leaseholder that they Freeholder is chasing you for; or
          - (ii) s.3.25.2: s.146 notice

          Section 3.26 is slightly unclear. It looks like an indemnity but is not clear as it says leaseholder must “be responsible for and keep the Landlord fully indemnified...”. If it is an indemnity - that is what you will argue then it is N/A in this scenario (as it relates to you/leaseholder reimbursing the Landlord for costs the Landlord has incurred as a result of pay-out to a third party as a result of your breach). There is case law for this – I will see if I can find it. I am in the middle of completing an application form for unfair AC so have been reviewing a lot of case law… Essentially, AC are not normally costs a freeholder has paid out to a third party as a result of your breach so do not fall within the indemnity (e.g if the Freeholder has to pay a painter to re-paint the walls or an engineer to fix the lift because of damage you personally caused then that is an example of where the indemnity applies...) but as I said this clause is ambiguous - it is not clear it is an indemnity clause.

          I am not saying you are not liable for the Freeholder’s legal charges – this may be contained elsewhere in the lease but if the Freeholder is relying on the extract you have provided then I believe their analysis of this section is wrong. Also, the Freeholder’s legal fees are not specifically referenced in section 3.26 and should be something you point out

          In any event, you can make an application for a s.20C order when you complete your application form – I believe this allows the Tribunal to determine whether the Freeholder’s legal costs can be added to communal service charge… I think you may be able to complete this application separately if you have not brought the application but not certain...

          The main issue here seems to be the inherited SC/AC - if they are properly incurred and reasonable and the landlord made proper demands then you will have to pay them - the payment of the Freeholder’s legal fees is a secondary issue and may or may not apply... Your focus should be on whether the SC/AC apply + are reasonable... I would speak to your solicitors that dealt with your conveyance or go to CAB


            Thanks Newdriver!

            The old arrears were passed on to me, I have accepted this now. The previous management made some errors, I was a tenant in the flat at the time so I know the issues.

            The main concern is really about whether the freeholder can definitely charge me for legal and "admin" fees. I have looked through the lease and I don't see any other section that talks about the retrieval of legal/admin costs. When the clause is "ambiguous", then I am thinking it is hard to'd think whoever wrote this lease would not want this to be ambiguous though!

            If one can argue that the tenant/leaseholder doesn't have to pay the freeholder's admin/legal costs for the FTT process, then that changes the whole picture. Right now it looks like the freeholder's lawyer has told the freeholder he has nothing to lose, and the more I dispute the more he makes...regardless of whether the charges are unfair


              The FTT will not normally consider charges which are more than the 6 years old so you can ask them to dismiss any such claim. You can also ask the FTT to deal with the matter of costs. You should consider though the risk: reward of pursuing this matter and my advice remains to try to settle.


                If the freeholder does not supply information which you require you can ask the FTT to issue a direction. If the freeholder does not comply with the directions, you can raise the issue with the FTT before or at the hearing.


                  The advice given by Eagle2 is something that you really should give proper consideration.
                  If the disputed amounts are relatively low, then the costs you may be charged for disputing them may make defending a point of principle a foolish and costly one.

                  I do understand that you obviously don't want to pay unreasonable costs, and won't want the freeholder to think they are free to demand whatever they want, but you need to pick your battles carefully.

                  I know nothing about how you would potentially go about getting clauses ruled to be unfair, but I would definitely follow up on gordon999's suggestion to see if you can get clause 3.26 altered or ruled void.
                  As I understand it, this clause can potentially allow the freeholder open access to your bank account to fund legal defence of anything that you do agree with.
                  You do have some protection in that you can ask a tribunal to rule on the costs that the freeholder can collect using this clause via orders following s20 of the Landlord and Tenant Act 1985, or paragraph 5a of s11 of the Commonhold and Leasehold Reform Act 2002. As clauses 3.25 & 3.26 of your lease seem to refer to admin charges, the latter may apply in your case.

                  What you must do immediately, since a tribunal hearing is already pending, is to get in touch with the relevant tribunal office from your area and make them aware that you (a) wish to apply for an order to limit the costs the freeholder can claim, and (b) need information from the freeholder, that you have asked for but they have not provided, for the defence of your position.
                  Do this immediately because the tribunal will not view it positively if they see it as a last minute attempt to avoid costs.
                  Contacting the tribunal regarding this does not prevent you from also trying to negotiate a compromise with the freeholder, but if they have been convincdd they can claim legal cost from you, they will likely be unwilling to accept anything less than payment of the arrears and payment of everything they have so far paid in pursuing the debt.

                  Make sure you check all service charge/ground rent demands that you have received to ensure that they fully comply with your lease and all relevant legislation. If they do not, you may be able to argue that you have already paid everything that is rightly due because payment that you have paid despite them not having been properly demanded cover all arrears (they will then have to invoice you again for the later charges that were incorrectly demanded).

                  Best advice is usually to pay all demands promptly, clearly informing the freeholder/management agent that payment is made 'under protest' if there is any dispute, and then apply for a tribunal determination at a later date.
                  Witholding service charge and/or ground rent payments is risky unless you know for a fact that you are currently under no obligation to pay them, and even then it may be best to ensure that you have evidence that you have done everything possible to be reasonable.


                    Farrella - Have you had a look at the guide to what fees/costs are recoverable at the FTT? This may help you decide:


                    The Freeholder’s solicitor should not be bullying you but as Eagle2 has said - you have to make a risk-reward analysis... Your primary concern should be whether you have a strong case and if you are prepared to pursue it as a matter of principle. If not - then try and settle... Even with a strong case you should consider settling as you may end up with the same result by going through with the Tribunal process...

                    Speaking from experience, I have started a claim for a similar amount against my MA . I thought I had a strong case but it is just me against my MA’s solicitors (a fairly well-known firm + I am up against a senior partner with a team and huge resources behind him) and they have tried to poke holes in every aspect of what I thought was a strong case. It is a lot of work preparing a case and going through all the correspondence, and presenting a clear and coheren argument... I am also preparing the bible of documents as per Tribunal’s instructions - my postage costs alone are about £100. And I had to take a day off work (unpaid) to work on my case...

                    The cost to me in time, energy + money will be more than the £900 I am disputing in AC but it is worth it for me (as the MA essentially lied to me and tried to cover it up - they also lied to their solicitors about some important details and when I provided the relevant evidence I thought they would drop the case but they are still pursuing it). MA treated me so appallingly that I am determined to pursue this case purely as a matter of principle... But as Eagle2 has said - principles can be costly... In my case I think it is worth it - even if I lose (as I have exposed some of MA’s failings which will need to change)... I should also point out that at one point I did offer to settle for a quarter of the amount disputed but my MA declined my offer which is part of the reason I am now emboldened to see this through with the FTT... But you have to make your own cost-benefit analysis - that is why I said you should focus on whether you have a strong case and want to pursue it on principle (not whether you will have to pay the Freeholder’s solicitors costs if you lose)...

                    That’s my opinion - I hope it gives you some food for thought - good luck!


                      I would suspect (but could easily be wrong) that you will be expected to pay your own court/tribunal costs, and that if you lose at the tribunal, and it is decided that the arrears are payable, you will also need to pay most of, but perhaps not all, of the freeholders costs, including legal fees.
                      If you win at the tribunal, and the arrears are determined unplayable, you may get a ruling that the freeholder cannot recover fees, and if you have evidence that you asked for justification of the fees (accounts etc. before legal action was started, this might help justify costs as unreasonable).

                      As Newdriver has said, you need to understand that going to a tribunal will likely take up a lot of your time, including preparation, and will there will also be costs involved with copying/printing 'bundles' of documentation for use at the hearing (copies for each defendant + the members of the tribunal in addition to your own).
                      The costs Newdriver has stated for preparation seem high to me, significantly higher than I would say I paid for a previous tribunal, and higher than I expect to pay for one I will be applying for in the new year.

                      The dispute I will be applying to the FTT over is partly "on principle" because the managing agents have not been making demands in full accordance with the lease and applicable legislation, but I am also in a position where there is nothing in my lease allowing the freeholder to demand their costs and I have evidence that I have repeatedly told the managing agents that they have not been doing things properly.

                      I expect to 'win' more than I will pay out in costs, and hope that at least some of my costs will be reimbursed on the grounds that it is unreasonable for the freeholder to have defended the claim.
                      My main reason for applying to the tribunal isn't financial though, it's to make the freeholder understand that I expect the block to be managed properly.


                        Thank you for the advice. This forum is so great

                        I will try to negotiate, armed with all this new info. I don't think the Freeholder realises how much work it will be for him, and he probably doesn't know about the evidence I have for the errors of previous management. And he might not be aware that FTT won't want to entertain arrears from a decade ago. Meanwhile, I have written to CMA.


                          I doubt that there will be much work for the freeholder. If either party has named a representative, the FTT will communicate with them, and it is the representative who will likely do most of, if not all, the work preparing for the tribunal. The freeholder will not even need to appear at the tribunal, his solicitor can appear on his behalf.
                          The freeholder will be expecting you to pay his solicitors bill for all of this work.
                          It is the fact that clause 3.26 seems to give the freeholder the ability to use your money to pay unlimited costs in pursuit of even fairly small debts that, I.M.O., makes the clause an unfair contractual term.

                          I also wouldn't rely on the fact that the arrears are "a decade" old as a reason for the tribunal rejecting them.
                          If your lease states that service charges and other debts are "reserved as rent", then the time limit can be argued to be 6 years, the limit for other debts is 12 years. I would think that you would be better off trying to argue that the freeholder should have insisted on the debt being settled before acknowledging that the flat was assigned to you and that by not doing so they waved the debt. You will have a stronger case in arguing this if they didn't tell your solicitor there were arrears presale, but a much weaker case if they did state there were arrears and have repeatedly chased the debt since.


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