??Any way to recover costs for covenant breach action??

[Utility333]

Dear all,

I am a leaseholder of a flat. I’m looking into the practicalities of asking the freeholder to take action for covenant breaches by another freeholder via the LVT. Breaches are around noise, nuisance and sub-letting conditions. Although I know nothing is certain, it is very likely that the LVT will rule that the breaches have occurred.

A big factor is, obviously, costs: specifically whether there is a chance to recover any of them from either the lessee in breach or via the general service charge.


From my lease:The lessor hereby covenants that……

……C) at the request and expense of the lessee (for which proper security shall be given) to enforce any covenants similar to those contained herein which may be entered into by a Lessee of any of the flats

The lessee hereby covenants that…….

…….Q) (i) The Lessee will pay to the Lessor all expenses (including solicitors costs and disbursements counsels fees and survey fees) incurred by the lessor and all VAT or other taxes thereon for the purposes of or incidental to the contemplation preparation and/or service of a notice under Section 146 of the Law of Property act or any enactment replacing or re-enacting the same notwithstanding that forfeiture is avoided otherwise than by relief granted by the court or incidental to the preparation and service of a dilapidations at the end or sooner determination of the term hereby granted.


Questions are:

1. Does this mean if the Lessor initiates action, the lessee in breach has to pay, but if I initiate action (via the freeholder), then I have to pay?
   
2. I know the LVT can’t award costs, but I have seen applicant requests for costs to be added to the service charge for the building. In what circumstances can this be requested? Should I be looking for another lease clause that covers this? (I’ve looked but there is nothing obvious to me).
   
3. Are costs considered as part of the lessee-in-breach’s subsequent (I presume) application for relief from forfeiture? If so, any view on whether they are usually awarded?
   
4. The fact is that the noise we suffer is ruining our home-life and has compromised the value of our flat (as an unresolved dispute) means I will probably take the risk of not recovering costs. However, am I totally at the mercy of the freeholder’s solicitors on this? They have been helpful so far, but are already taking about engaging a barrister etc. I suspect that, so long at the actions are not totally OTT, then I am.

As ever, any suggestions, experience or advice will be most gratefully received.

[jeffrey]

1. Not quite. If lessor (L) sues lessee (T1 ), L is liable for own fees at that stage. However:
a. if L's action is at the cost of another lessee (T2, the complainant), L will insist that T2 indemnify against costs ['(for which proper security shall be given)']; but
b. if L wins, L will ask the Court to hold that T1 is liable for L's costs- enforcing the covenant that you cite- so that T2 has nothing to pay.
2. LVT cannot make order re hearing costs (except if the grounds were frivolous).
3. Don't know.
4. Yes, although you could yourself sue T1 on grounds of tort (nuisance) external to what the leases provide.

[Utility333]

Thanks for that, Jeffrey. I did think about the tort action you raised, but the property is sub-let and it's not just these tenants we've had a problem with. It's the landlord who installs sharers and then doesn't accept there is a problem so the risk is he'll just replace the current ones with another lot of disco loving social elephants.

Could we do both? I thought that what constitutes nuisance in tort is higher (louder?!?) than for covenant action, so it would be easier to go down the LVT route. I was told I'd need to have proper sound measurment proof and that equipment costs hundreds a week to rent- sod's law I'd do it when they were away, or ill or something.

[leaseholdanswers]

LVT appointed manger option?

Thanks for that, Jeffrey. I did think about the tort action you raised, but the property is sub-let and it's not just these tenants we've had a problem with. It's the landlord who installs sharers and then doesn't accept there is a problem so the risk is he'll just replace the current ones with another lot of disco loving social elephants.

Isn't disco dead?

1: You need to decide if you are going to see this through or sell up. If the former the disputes will be discloseable to a purchaser and may be public record.
2: Does the lease have any restrictions on subletting such as one family only?
3: You have the option of local authority and private action backed up with diaries and sound monitoring, and while noiselevels are relevant, the frequency, timing and landlords response or lack of, is also relevant for persistant breaches.
4: On question 3 , yes the costs incured for relief are borne by the person seeking it, however it is possibler for costs to be awarded against the applicant if say the action was vexatious or unreasonable. Or the judge has an odd perspective, as they so often do.

Depending on 2 and 3( for the landlords responses to date), and if the other flats are held on long leases, you may well have a case to apply to the LVT to appoint an independant manager and relieve the landlord of management duties as a breach of covenant to you, possibly including quiet enjoyment ( no not on noise but their actions preventing you from enjoying your home without interference) if you can show they are closely or directly involved in the letting of the properties.

That said reveiwing compliance with repair and accounting covenants including reasonable charges may allow you to achieve "LVT manager" by a much easier route.

This is a better long term solution as it seems the breach when resolved is more than likley to re occur.

[Gordon999]

1. Make a complaint of "excessive noise" to your local council and they may help you. Some councils may have investigators to visit complaint sites at weekends to record noise problems. Ask your local council what help/advice they can give such as what instrument to measure noise ?

2. Check out your local branch of Maplins for noise meters.

3. Check at Land Registry if the noisy flat is mortgaged and which bank is the mortgage lender. Then write to freeholder and point out the noise problem which is a breach of the lease. Request the freeholder to serve formal notice on the offending leaseholder (plus his mortgage lender ) to terminate the subletting due to causing a breach of the lease or action will be commence to forfeit the lease.

[Utility333]

Thanks again for the replies. I'll try to address the points raised in a logical order - I can't seem to make the proper quotes thing work.

Leaseholdanswers:
Isn't disco dead? You'd think.

1: Stay or go? In my view, I think we're past that point (certainly morally) and the dispute is discloseable already. The issue has been going on for almost 3 years, although it's only recently got litigious, and had been minuted in the management company AGM etc. And selling will be over £10k in stamp duty alone, which I’d sooner avoid.

2: Does the lease have any restrictions on subletting such as one family only? Yes, and we've told the leaseholder this, but we didn't realise until this last lot was already installed.

3: local authority and private action. I have 8 months of detailed diaries and emails from the other neighbour who can also hear them, and the noise abatement notice, assuming it is a public record. The problem is it's mostly bass noise, which isn't a 'loud' noise to record. I’ve been looking at various councils guides to private action for nuisance via s82 of the Environmental Protection Act, but this is only something I discovered yesterday after Jeffrey’s post. They make the whole process look DIY-able – is this true? I was thinking about this route for the actual current tenants to try to shut them up as the LVT thing progresses. Is this a good idea?


4: costs. Does this mean that there is no way for me to be awarded costs, even if a breach is established? I'm very keen to keep costs low for both parties' benefit, but having to go via the freeholder is not going to be cheap.


LVT management application. Although we don’t own the freehold, there is a management company and all leaseholders own a share. This is referred to in the lease, but is not a ‘right to manage’ management company. I’m actually one of 3 directors and we’re quite ‘hands on’ although we do have an agent for the administration. I’ve been extra careful to keep my dispute as a leaseholder separate from my role as a director of the management company so I can’t be accused of abusing my position. I understood that even a RTM co does not get the power to enforce covenants between the freeholder and the leaseholders? Is there anything I could legitimately do to help myself in my position?

And I get your point about the breach happening again. I have been advised that, although we’d have to go through the whole thing again, forfeiture relief may be harder to secure a second time round.

Gordon999

1. Complain to council. They already issued a noise abatement order in the summer and were helpful, but I live in a 'challenging' part of London and I think they prioritise the crack-dens etc. Also, it's not so much full on parties these days and it's hard to know how long they'll be at it. I will call them again though.

2.Maplins for noise meters. Would these be okay? I thought they had to be fancy-pants official ones.

3. Tell mortgage co. It is mortgaged with a BTL company. Would they take notice of me? I'm wary of giving him 'one last chance' as he'd probably rent it to a family of tap dancers. I feel we're in a strong position to get this sorted out once and for all at the moment.

Does anybody know if there is a way to find out what happens to all the LVT cases where a breach is decided? I think relief from forfeiture is a county court application, but can’t find any details.

Thanks again all. I really appreciate your guidance.

[leaseholdanswers]

Can I just be clear is the person subletting the flat also the freeholder of the building?

If not and they are merely a leaseholder then the man co has the power under the lease to enforce covenants such an enforcing the subletting restrictions and nosie nuiance.

At that point you apply to the LVT to determine that a breach has occured, and then enlist the FH's support as, with the LVT ruling the proceedings and costs for the county court application are relatively low and relatively risk free. You may have to indemnify the Man co their costs if only you are affected.

[Utility333]

sorry - I just realised my error in the original post.

To clarify: I am a leaseholder and so is the neightbour who is renting out his flat. Neither of us are freeholders, although each own a share of the managment company. I'm a director of this, but he isn't.

I know that a management company does not have the right to take forfeiture action, but I had taken this as not being able to apply to the LVT for a desision. Am I wrong? I really hope so as this will be much cheaper for everyone (despite my feelings towards the other leaseholder, I just want him to stop the noise etc rather than to inflict high legal bills).

Again, this is not a 'right to manage' company, but a mgt company mentioned in the lease. Not sure if this matters, but I think their remit is slightly different (for example, we currently have to take the Freeholder's insurance, but if we had the RTM we could arrange our own).

[jeffrey]

I know that a management company does not have the right to take forfeiture action.

Yes, it does, if it owns a reversionary interest superior to that of the defaulting leaseholder.
No, it doesn't, if its role is contractual only.

[Utility333]

So far as I know the mgt co doesn't have any reversionary interest.

I also looked at S168 (1) and (4) of the Commonhold and Leasehold Reform Act 2002, which only talks about action by a landlord.

(4) A landlord under a long lease of a dwelling may make an application to a leasehold valuation tribunal for a determination that a breach of a covenant or condition in the lease has occurred.

So looks like it all needed to be done via the freeholder.

[leaseholdanswers]

So far as I know the mgt co doesn't have any reversionary interest.

I also looked at S168 (1) and (4) of the Commonhold and Leasehold Reform Act 2002, which only talks about action by a landlord.

(4) A landlord under a long lease of a dwelling may make an application to a leasehold valuation tribunal for a determination that a breach of a covenant or condition in the lease has occurred.

So looks like it all needed to be done via the freeholder.

No, the term landlord is not simply one who is the reversioner. Your ManCo can apply to the LVT to establish the breach, and if upheld rope in the freeholder- but what are teh teerms of thelease in relation to their involvement?

This is key as some older leases leave ManCo's with no right to compel or request their involvement, reserving it solely to protect their
ground rents reversions and premises from alterations etc.

Let us know, and accept that private action or local authority enforcement for noise is the only option.

[Gordon999]

1. Its 35 pds for maplin's noise meter but before you buy, I suggest you ask or consult with staff in the Environmental Section of your local council to advise if this meter is suitable ( it may need calibration and where to get it done ). Or You may be able to ask the Physics Teacher of a local secondary school about calibration.

http://www.maplin.co.uk/Module.aspx?ModuleNo=46362#spec

2. The freeholder can appoint the Management Co ( you) to bring this matter to the LVT for judgement . You should attach the council's notice abatement notice and your meter reading on specific dates with your application to LVT.

3. If you work near to Tottenham Court Road area , then you should visit the LVT office in 10? 1/Fl , Alfred Place ( in side street , on opposite side to Goodge St Tube Station. ). The ground floor entrance hall has boxes of LVT judgement reports and you may find a box on cases of breach of lease . The sign outside may show - Residential Property Tribunal Service . You can get info on making application to LVT at the office
reception on 1/fl.