Reasonable Costs associated with RTM Claim

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    #16
    Originally posted by chris1544 View Post
    I think you're probably right in that we're unlikely to get away with paying nothing, however several hundred pounds or more seems completely unreasonable to me. I would say that even being generous, there is at most two hours of work for a solicitor in dealing with our claim.
    If a tribunal is asked to determine whether or not costs are reasonable, they will only look at whether it is reasonable for the 'work' to have been carried out and whether or not the costs are within a typical range that would be charged for the 'work' concerned.
    They are unlikely to suggest that It is unreasonable for the costs to be at the high end of whatever they consider the typical range of costs to be, and solicitors may charge £200-£300 per hour.
    In my experience, when a leaseholder will be responsible for paying the freeholders costs for something like this, the freeholders solicitors fees are more likely to be towards the high end (the person who will be paying the bill doesn't have the opportunity to chose to go to another solicitor so they often seem to charge the maximum they think they can get away with).

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      #17
      If that is the case, then would that not mean that the freeholder’s costs in cases such as this are never unreasonable, no matter how much they are? There surely must be a point at which they are.

      For example, a freeholder could ask a partner at a central London law firm to manage a basic RTM process for them, costing the leaseholders involved many thousands of pounds for the privilege. The same service provided by a junior solicitor might cost just a few hundred pounds.

      I would argue that the former example would be unreasonable and very hard for the freeholder or their lawyers to justify.

      Comment


        #18
        Chris1544,

        Does the wording in your lease say that " the freeholder's legal costs to objecting to RTM is paid by the leaseholders and payable by the service charge account ? If it is not specifically worded in the lease requiring you to pay, then you have grounds to object .

        Your RTM should pay £350 to bring to this matter FTT ( to judge the reasonableness of paying £1300 + £400+ VAT for landlord's costs ).

        The RTM should state the grounds for objecting : It is not worded in the lease etc .

        Ask your Local MP to write a letter to support the leaseholders side.

        Comment


          #19
          It would be wrong to charge to the service charge, and that sounds unlikely, but I don't think anyone is going to buy the idea that that a reasonable charge cannot be made for a service that is not provided for in the lease. The normal case where this issues arises is for sub-let fees, where the lease explicitly requires notification, but doesn't mention a fee.

          It was not the intent of the RTM laws to put the freeholder at any more of a financial disadvantage than results from the transfer of duties to the RTM.

          Comment


            #20
            Gordon999: The wording of the lease is not a relevant consideration in this circumstance.
            The liability of the RTM to pay the reasonable proffesional costs of the freeholder (and anyone else with a relevant interest) is written into the Commonhold and Leasehold Reform Act 2002 - the legislation that makes RTM possible.


            Originally posted by chris1544 View Post
            If that is the case, then would that not mean that the freeholder’s costs in cases such as this are never unreasonable, no matter how much they are? There surely must be a point at which they are.
            The test of reasonableness, as given in C&LRA 2002, section 88, is that the costs are reasonable if the landlord could be expected to incur them if he was liable to pay them himself.

            If the landlord was responsible for the costs he would not be expected to agree to pay any more than the hourly rate for a solicitor of an appropriate level - but the rate, and time, that it is considered reasonable will vary on a range from X to Z (X being the lowerest rate that a competent solicitor would charge, and the rate that a budget conscious consumer may shop around to find, Z being the upper limit that less budget conscious consumers will willing pay even if responsible for their own costs).

            The higher level of costs may be considered reasonable simply because the freeholder says they always use the same solicitor, or the chosen solicitor specialises in this type of issue. It only has to be deemed that the costs are at a level that the freeholder would be willing to pay themselves.

            Comment


              #21
              Just had a look at C&LRA 2002 section 88( 3) and copy shown below :

              (3) A RTM company is liable for any costs which such a person incurs as party to any proceedings under this Chapter before [F1the appropriate tribunal] only if the tribunal dismisses an application by the company for a determination that it is entitled to acquire the right to manage the premises.

              I read this clause S88(3) to mean "the RTM is liable for landlord's legal costs only if the application by RTM has been dismissed by the FTT".

              Comment


                #22
                That appears to be the costs of the tribunal case. It is presumably there to discourage people from wasting tribunal time if they could have discovered that the application was valid. I don't see that it intended to stop people recovering the costs of expert opinion as to whether the application was valid.

                The reason you, Gordon, so like creating RTMs is because they generally create a disadvantage for the freeholder. It is only reasonable that, if the freeholder can be forced to do things to their disadvantage, that they should be able to cover reasonable costs of making sure that that they really can be forced into that position.

                Comment


                  #23
                  Originally posted by Gordon999 View Post
                  Just had a look at C&LRA 2002 section 88( 3) and copy shown below :
                  ...

                  I read this clause S88(3) to mean "the RTM is liable for landlord's legal costs only if the application by RTM has been dismissed by the FTT".
                  Yes - but look at section 88(1) and 88(2).

                  Comment


                    #24
                    betpharaoh, I'm really interested in your case. I'm in the process at the moment and the landlord's solicitor has come up with exactly the same complaint that the premise has not been identified. Unfortunately, I also fell foul of the fact that the leaseholders of the other flat held it jointly, and, not realising they had to act as one, I only registered one of them as a director of the RTM, otherwise, having seen your post, I'd have yanked them straight off to tribunal and used your case as precedent. Really annoying, but it meant having to withdraw the notice and immediately issue a new one with the corrections made.
                    However, it has brought up an interesting point regarding the solicitors' costs (which they've invoiced for VERY quickly). Although employed by the landlord, as we have to pay the bill, don't we have rights regarding the competence of said solicitor, especially as they're charging hundreds of pounds an hour? As precedent is the fundamental basis of the English legal system, throwing up the same blocking tactic as has already been dismissed in your case would constitute incompetence. As it happens, this was not the only dubious thing the solicitors did. They also made a couple of pretty basic errors in serving the counter notice. I commented to my co-director at the time we received our third copy (one by post, one by registered which didn't get to us because it had no name on it, and one by hand) that it looked like they'd given it to a junior clerk and he was getting his ears boxed.
                    Anyway, does anybody know where we'd stand challenging the costs on the grounds they were at the rate for a skilled professional, but the service received was not of sufficient competence to justify that?
                    Also, betpharaoh, do you know if the details of your judgement are on line anywhere? I'd love to wave a copy in their face.

                    Comment


                      #25
                      Grendel:
                      In UK law any previous decisions made by a court of the same level are not necessary binding when similar cases are decided. The court will likely come to similar decisions, and follow the outcome of prior cases, but they might come to a different conclusion (especially if they consider some aspects of tge case to be different in some way).
                      Also, while similar former tribunal decisions might help to sway a tribunal, it is not reasonable to expect a solicitor to be aware of all recent FTT decisions that might be relevant.

                      Regarding competence, it is possible for you to get the landlords solicitors costs reduced if you can show that they did not carry out their work with sufficient competence to justify the fees charged - but you would have to make a good case.
                      Mistakes in addressing letters, and receiving crumpled hand delivered letters, would likely be considered irrelevent as these tasks would be expected to have been delegated to an office secretary, not done by the solicitor. You would likely have to show that the solicitor didn't address legal aspects competently.

                      I'm also curious about what you mean when you say you had to jointly register joint leaseholders as directors.
                      Do you mean that you registered them both as separate directors?

                      Each property should have equal decision making and voting rights in the RTM company, regardless of how many leaseholders share the lease. I see no reason why they would have to be jointly registered as directors.

                      Comment


                        #26
                        Macromia, thanks for that. My feeling is that anybody charging £300 an hour should be responsible for the activities of their underlings. Passing the buck down the line is scurrilous, and far too often used by senior management. As for not knowing about recent relevant FTT decisions - well I found it in ten minutes, and I'm a layman and not being paid through the nose. I think that makes it totally reasonable, but I understand where you're coming from. It's probably the way a tribunal would think. There's a kind of ring fence round professionals (apart from doctors - the most honest and useful of them!) that protects them far too often from answering for their failures.

                        Regarding the joint leaseholders, the solicitor said that joint leaseholders must act as one. Originally on the notice there were just the two directors of the company listed (two flats out of three), myself and one from the flat above. The solicitor insisted that as the guy upstairs was a joint lease holder, his vote didn't count without his partner being a director too, and therefore the notice was invalid as only my flat out of the three counted. It took me ten minutes to register his partner, but couldn't really see any alternative then but to withdraw the notice and issue a new one. I have a horrible feeling the landlord will now start the process afresh and dump us with a whole new solicitors' bill.

                        Comment


                          #27
                          Originally posted by Grendel View Post
                          My feeling is that anybody charging £300 an hour should be responsible for the activities of their underlings. Passing the buck down the line is scurrilous, and far too often used by senior management.
                          I would tend to agree - but you would still need to demonstrate incompetence, which may be very difficult to do.


                          Originally posted by Grendel View Post
                          As for not knowing about recent relevant FTT decisions - well I found it in ten minutes, and I'm a layman and not being paid through the nose. I think that makes it totally reasonable, but I understand where you're coming from. It's probably the way a tribunal would think.
                          You found the tribunal decision from betpharoah's case? How do you know that it was that particular decision when (as the rules of this forum require) the freeholder has not been identified and
                          betpharoah is not using their real name?
                          Besides, you need to take into account the fact that even small differences in the facts of a case can mean that it is decided that precedent from previous cases doesn't apply (especially when the precedent isn't binding because it doesn't come from a decision by a higher court).

                          It is reasonable to assume that a competent solicitor will know that there have been prior tribunal decisions relating to the same issue, unless they are very recent, but that may not mean it is unreasonable to challenge the RTM.


                          Originally posted by Grendel View Post
                          Regarding the joint leaseholders, the solicitor said that joint leaseholders must act as one. Originally on the notice there were just the two directors of the company listed (two flats out of three), myself and one from the flat above. The solicitor insisted that as the guy upstairs was a joint lease holder, his vote didn't count without his partner being a director too, and therefore the notice was invalid as only my flat out of the three counted. It took me ten minutes to register his partner, but couldn't really see any alternative then but to withdraw the notice and issue a new one. I have a horrible feeling the landlord will now start the process afresh and dump us with a whole new solicitors' bill.
                          Is this advice that was given only by the freeholder's solicitor?
                          I would think that you have been wrongly advised here. Joint leaseholders will jointly own a share in the RTM but there is no reason whatsoever why both would have to be registered as directors of the company. I would suggest that it may be better not to have them both registered as directors. With both of them as directors they will have full control over any RTM company decisions that are decided by the directors because they can out vote you whenever they wish.
                          As members of the company they would only have a single vote between them, so why should they be given two votes in a qurom of directors by making them both directors?

                          Comment


                            #28
                            I didn't find the formal tribunal decision, Macromia, just the reference on this site. I see no reason why a solicitor couldn't do the same, then use their knowledge to follow it up to source though.

                            Regarding the directorship, I was thinking along the same lines when I put the company and notice together - one director per flat. Looks like I've been led down the garden path by a devious solicitor and am now going to have to stump up nine hundred quid for the pleasure. It wasn't advice, by the way, it was the grounds for the counter notice, along with the address of premise thing.

                            Comment


                              #29
                              This thread doesn't go into betpharaoh's case in sufficient detail to either show that a relevant precedent has been set, or to enable the case to be easily found.

                              You don't need to have one director per flat (two directors could act on behalf of all the flats in a block), I just wouldn't like the idea of one flat having two directors votes - especially when that is enough to give them control of a quorum of all directors.

                              You should have told the solicitor that they were wrong regarding the directors.
                              Whether they have a point or not regarding identification of the property is another matter, and I think that it should be fairly easy to convince a tribunal that this objection falls under the "technical points which are of no significant consequence to the objector" mentioned in this Court of Appeal case:https://www.bailii.org/ew/cases/EWCA/Civ/2017/89.html

                              The specific errors dealt with in this case are different, but I think it could be argued that the principle applies (the freeholder must know what property is being referred to if he knows that one of the leases within the property is jointly held).

                              If any additional solicitors fees are charged because you changed the application following their objection to the named directors, I think you have a good argument that these are unreasonable (especially as one of the couple who jointly own the lease would be able to resign as a director immediately that the RTM was granted).

                              Comment


                                #30
                                Grendel,

                                The RTM company with 2 directors should be legally acceptable. What matters is that both flats should be members of the RTM company and all the leaseholders have signed some list/sheet to show the freeholder that they support the claim for right to manage of their own money held in the service charge bank account.

                                If you have some evidence for complaint against a solicitor, make a complaint to the SRA ( Solicitors Regulation Authority ).

                                The Fraud Act 2006 Section 4 ( Fraud by abuse of position ) may apply in your situation of having to pay £900 extra ..

                                Comment

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