Service Charge Disputes & costs under small claims track

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    Service Charge Disputes & costs under small claims track

    I am in dispute with the Freeholder of a property where I own a leasehold about the service charges due.

    The case went to the county court was allocated to the LVT and then referred back to the country court and was eventually ruled in the freeholders favour but additionally the court awarded full costs even though the case was brought under the small claims track.

    The freehold cited a CPR part 70 as the justification for this which the judge accepted.

    The part 70 seems to say the small claims court can enforce a tribunals judgement, but the tribunal did not award any costs? So I am confused. I will be seeking legal advice on this but would be interested in an views on this.

    #2
    Originally posted by EastHalf View Post
    The freehold cited a CPR part 70 as the justification for this which the judge accepted.
    How do you know that this is why the Judge awarded costs? What did you say when the LL put this argument to the Judge?

    If it was small claims then the Judge should only award costs on the basis of unreasonable behaviour. Was this mentioned? Was anything mentioned in the LVT decision in regard to the strength of your case/arguments? Did the LL apply for costs at the LVT?

    Some Judge's appear to be swayed by covenants in the lease relating to costs but I'm not convinced that they can take this into account in a summary judgement on costs. Perhaps if there is a separate detailed assessment of costs.

    I would add that if your lease does allow costs for such things to be passed on to you then there's very little point contesting the decision as they can persue costs that way even if the CC decision is overruled.
    I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

    Comment


      #3
      Thanks for taking time to reply.


      How do you know that this is why the Judge awarded costs?
      The counsel for the freeholder raised it at the hearing. I raised the issue of the case being on the Small Claims Track but the Jusge said that lease allows costs and they have applied for it so it stands.

      If it was small claims then the Judge should only award costs on the basis of unreasonable behaviour. Was this mentioned?
      No.

      Was anything mentioned in the LVT decision in regard to the strength of your case/arguments?
      The LVT from their visit and admission of the freeholder said the property had been poorly managed but my arguments were not specific enough. That I needed to have highlighted specific items.
      They said that in their opinion what I was seeking was "performance" but that was not something within their remit.

      Equally the judge said that I may have grounds to counterclaim on specific items but she would not allow that as part of the existing case.



      The counsel to the Freeholder did present a list of items that made up the cost.

      Did the LL apply for costs at the LVT?
      They did not and the LVT found the Service Charge and Admin fee payable but was silent on any other costs.

      Comment


        #4
        Originally posted by EastHalf View Post
        The counsel for the freeholder raised it at the hearing. I raised the issue of the case being on the Small Claims Track but the Jusge said that lease allows costs and they have applied for it so it stands.
        OK, so that was the reason the Judge awarded costs.

        What does the lease actually say in regard to costs? When did they apply for costs? What costs were awarded? Was the amount of work charged for reasonable?
        I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

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          #5
          What does the lease actually say in regard to costs?
          "To pay to the landlord all proper and reasonable cost charges and expenses (including legal costs and fees payable to a surveyor) which may be incurred by the Landlord in or in contemplation of any
          (a) proceeding against the Tenant under sections 146 and 147 of the Law of Property Act 1925 notwithstanding forfeiture may be avoided otherwise than by relief granted by the court"

          (b)Other court or arbitral proceedings against the Tenant notwithstanding that the same may be avoided otherwise than by the institution of the same or in the proper and reasonable contemplation of other enforcement action whether in respect of any breach of an leasehold convenant or otherwise"

          When did they apply for costs?
          They initially applied for cost when they first lodged their claim with the county court, were silent on costs when the matter came to the LVT, and then raised the issue of costs again when the matter was referred back to the county court.

          What costs were awarded? Was the amount of work charged for reasonable?
          The Judge reduced the costs initially applied by about 20%. The legal costs are twice the amount owed in Service Charge and Admin fees.

          I consider the amount still to be unreasonable. I was charged for instance for phone calls apparently made to find out why the case file's transfer from the LVT to the county court was delayed, but the Judge waved away my objections.

          Comment


            #6
            Originally posted by EastHalf View Post
            "To pay to the landlord all proper and reasonable cost charges and expenses (including legal costs and fees payable to a surveyor) which may be incurred by the Landlord in or in contemplation of any
            (a) proceeding against the Tenant under sections 146 and 147 of the Law of Property Act 1925 notwithstanding forfeiture may be avoided otherwise than by relief granted by the court"

            (b)Other court or arbitral proceedings against the Tenant notwithstanding that the same may be avoided otherwise than by the institution of the same or in the proper and reasonable contemplation of other enforcement action whether in respect of any breach of an leasehold convenant or otherwise"
            This looks like an administration charge which they can make against you personally so you are probably wasting your time if you appeal the CC decision. You may technically have an argument in regard to your small claims track point but it will get you nowhere because they can invoice you for the charges if they need to.

            The only point in appealing might be if the costs were unreasonable. You'd have to look at them in detail. I'm not sure the telephone calls would be considered unreasonable. I suppose it depends on how long the LVT were taking.

            I'm sorry I can't provide a more positive outlook. What are your concerns in regard to performance? You may also be able to seek damages if the landlord has been in breach. Talk them into making a settlement perhaps.
            I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

            Comment


              #7
              Originally posted by siva View Post
              This looks like an administration charge which they can make against you personally so you are probably wasting your time if you appeal the CC decision. You may technically have an argument in regard to your small claims track point but it will get you nowhere because they can invoice you for the charges if they need to.

              The only point in appealing might be if the costs were unreasonable. You'd have to look at them in detail. I'm not sure the telephone calls would be considered unreasonable. I suppose it depends on how long the LVT were taking.

              I'm sorry I can't provide a more positive outlook. What are your concerns in regard to performance? You may also be able to seek damages if the landlord has been in breach. Talk them into making a settlement perhaps.
              There are quite a few issues, the development as a whole has deteriorated significantly, we (the Leaseholder collectively) are currently pursuing a RTM.

              Comment


                #8
                Originally posted by EastHalf View Post
                There are quite a few issues, the development as a whole has deteriorated significantly, we (the Leaseholder collectively) are currently pursuing a RTM.
                Well that's probably the best way to go about resolving ongoing performance. Financially speaking you may be able to make a claim for damages. I know this is theoretically possible but have no personal experience in that regard or know of any other cases.

                Others may be able to advise if that's something you are interested in pursuing. I'm sure there will be more posts tomorrow when everybody is back at work.
                I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                Comment


                  #9
                  The costs weren't mentioned at the LVT as they might have been limited or eliminated by the panel. Where an LVT has made a determination in favour of the landlord on balance a court is likely to award costs, and there is no appeal unless that arose out of a procedural irregularity or legal error, eg they misinterpreted the lease wording.

                  Reasonableness doesn't come into it, the courts determination is in and of itself reasonable ( even if to any normal person's r minds they aren't ) An appeal affords the chance to revisit the award, but at far more cost than the costs or the original sum!
                  Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                  Comment


                    #10
                    Originally posted by leaseholdanswers View Post
                    The costs weren't mentioned at the LVT as they might have been limited or eliminated by the panel. Where an LVT has made a determination in favour of the landlord on balance a court is likely to award costs, and there is no appeal unless that arose out of a procedural irregularity or legal error, eg they misinterpreted the lease wording.
                    I wasn't suggesting that the reasonableness should be disputed at appeal in the CC.

                    I've seen the CC award costs in this way but I know if it was me I'd argue/appeal on the technicality that costs shouldn't be awarded in a small claims case unless there is unreasonable behaviour. That an award by the Court deprives a leaseholder of their rights. If the LL wanted to make an administration charge then it should invoice for it and attach a summary of tenants' rights. The reasonableness could then be disputed at a LVT hearing.

                    But as I said, if the costs are not clearly unreasonable then there's no point.
                    I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                    Comment


                      #11
                      http://www.barristershub.co.uk/archi...l-claims-track

                      Reading this it suggests that there is a ground for appeal against the full costs being awarded.

                      Comment


                        #12
                        ah no there is a difference between awarding and determining-re my last post. if the claim was for a money judgement then cpr 27,or 26 too late to look it up, applies. if and to be honest i assumed the lvt referal meant that the proceedings were for forfeiture,then they would determine the costs, which the ll can invoice you for and you cannot appeal those to the lvt or a higher court, save as posted.

                        wqhich were the proceedings?
                        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                        Comment


                          #13
                          The original claim was at the county court and was for outstanding Service charge (which I presume is is a money judgement claim).

                          It was referred to the LVT by the County Court to ascertain if the Service Charge was payable.

                          Comment


                            #14
                            Originally posted by EastHalf View Post
                            http://www.barristershub.co.uk/archi...l-claims-track

                            Reading this it suggests that there is a ground for appeal against the full costs being awarded.
                            Good find! This is what I've always been saying on here.

                            However, like I have posted earlier, even if you win the appeal you don't necessarily get anywhere if costs are reasonable because they can just bill you for the costs.

                            The article suggests claimants use the fact that there is a contractual obligation for costs as an argument to have the case allocated on a higher track. I think the argument against this, for leaseholders, would be that the LL can bill for costs and the leaseholder has the right to dispute them in a "no costs" LVT case.
                            I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                            Comment


                              #15
                              Originally posted by siva View Post
                              However, like I have posted earlier, even if you win the appeal you don't necessarily get anywhere if costs are reasonable because they can just bill you for the costs.
                              Actually, having read the article again, I'm not so sure this is actually the case. There does seem to be an argument to the contrary:

                              "Once liability has been decided, s.51 would override the contractual term thus extinguishing the contractual cause of action pursuant to r.27.14. This last point could be disputed, but given the dicta in Graham there is a risk that the contractual costs claim would be struck out."

                              So perhaps the costs clauses in leases become unenforceable when a case is assigned to the small claims track?

                              Also, something else I didn't spot the first time, the argument against having a case assigned to a track other than the small claims track is actually stronger than I thought:

                              "However, it is respectfully submitted that the likelihood of (what would otherwise be) small claims being allocated to the fast track is slim. Whilst not exhaustive, CPR rule 26.8(1) sets out the principal factors that will be considered when allocating a matter to a track. Costs (being something which cannot be determined until after the proceedings have concluded) is not among them. Furthermore, the practice direction to part 26 specifically states that the small claims track is designed to be proportionate and to prevent “large legal costs”. For most contracts, then, there is little practical difference for the claimant between allocating to the fast track based on likely costs, and allowing contractual costs on the small claims track. One is strongly discouraged, the other prohibited outright. However, this will no doubt lead to extensive argument (and increased costs) at allocation, rather than at the costs stage."
                              I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                              Comment

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