Decision Nº LRX 45 2013. Upper Tribunal (Lands Chamber), 08-12-2014
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Date | 08 December 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 45 2013 |
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2014] UKUT 0537 (LC)
UTLC Case Number: LRX/45/2013
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – SERVICE CHARGES – landlord’s costs of litigation against neighbouring owner over party wall – interpretation of service charge covenant – whether specific reference to legal costs necessary before recovery permitted - appeal allowed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL
BETWEEN:
ASSETHOLD LIMITED
Appellant
and
MR N M WATTS
and others Respondents
Re: Flats at 4 Westport Street
London E1
Before: Martin Rodger QC, Deputy President
Sitting at: Royal Courts of Justice, Strand, London WCA 2LL
on
13 November 2014
Philip Sissons of counsel, instructed by Conway & Co, solicitors for the Appellant
Justin Bates of counsel, instructed by Blake Morgan, solicitors for the Respondent
© CROWN COPYRIGHT 2014
Arnold v Britton [2013] EWCA Civ 902
Attorney General of Belize v Belize Telecom [2009] 1 WLR 1988
Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101
Francis v Philips [2014] EWCA Civ 1395
Freetown Ltd v Assethold Ltd [2012] EWCA Civ 1657
Gilje v Charlegrove Securities [2002] 1 EGLR 41
Greetings Oxford Koala Hotel Pty Ltd v Oxford Square Investments Ltd (1989) 18 NSWLR 33
Hamilton v National Coal Board [1960] AC 633
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896
Iperion Investment Corporation v Broadwalk House Residents Ltd [1995] 2 EGLR 47
McHale v Earl Cadogan [2010] 1 EGLR 51
Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900
Reston v Hudson [1990] 2 EGLR 81
Sella House Ltd v Mears [1989] 1 EGLR 65
St Mary’s Mansions Ltd v Limegate Investment Co Ltd [2003] 1 EGLR 41
DECISION
Introduction
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In this appeal against a decision of a Leasehold Valuation Tribunal of the London Rent Assessment Panel (“the LVT”) made on 21 January 2013 the appellant landlord claims to be entitled to recover from the respondent tenants legal expenses incurred by the appellant in a dispute with the owner of neighbouring land over work to a party wall. The LVT made a determination under section 27A, Landlord and Tenant Act 1985 that the appellant was entitled to recover the costs of employing a surveyor in connection with the party wall dispute through the service charge payable by the respondents, but that the terms of the leases did not cover the costs of employing solicitors and counsel in the same dispute. With the permission of the Tribunal the appellant now challenges that decision.
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The sums in issue before the LVT comprised solicitors’ and counsels’ fees of £55,600 and surveyors’ fees of £4,188, all of which had been incurred in the year ending 31 December 2011. These amounts are only a relatively small proportion of the total sums at stake, because, as I will explain, the dispute between the appellant and its neighbour continued into subsequent service charge years through several further rounds of litigation.
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At the hearing of the appeal the appellant was represented by Philip Sissons of counsel, instructed by Conway & Co, solicitors, while Justin Bates of counsel, instructed by Blake Morgan, solicitors, appeared for the respondents.
The facts
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From the decision of the LVT, the primary documents and a helpful statement of facts agreed between the parties, I take the following facts as the basis of my decision in this appeal.
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The appellant is the head leasehold owner of a modern block of 14 flats known as 4 Westport Street, London E1 which was constructed in about 2008 (“the Building”). The appellant’s own lease is for a term of 999 years. The respondents are the leasehold owners of 13 of the flats in the Building, with the appellant as their immediate landlord. A full list of the respondents appears in the appendix to this decision. The leases of the flats were granted in or around 2009 each for a term of 125 years from 1 January 2008 and are in a standard form.
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The land on which the Building stands adjoins other land at 12 Westport Street which at the beginning of 2011 was a cleared site awaiting development. The flank wall of the Building is constructed on the boundary between the two properties.
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On 20 January 2011, Freetown Limited, the owner of 12 Westport Street, served notices on the appellant under sections 2 and 6 of the Party Wall etc Act 1996 (“the 1996 Act”) informing it of Freetown’s intention to exercise its right to carry out works on the boundary between the two sites as part of the development of its land. Similar notices were also served on the individual respondents.
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The appellant appointed a surveyor (Mr Simon Levy) to act for it in connection with the party wall notices, and in a letter from its agent to the respondents dated 21 January 2011 it suggested that it would make sense for the respondents to appoint the same surveyor. The respondents do not appear to have followed this advice and those who chose to be represented appointed a different firm of surveyors, McBryer Beg.
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The respondents’ surveyor reached agreement with the surveyor acting for Freetown and they jointly published a party wall award under the 1996 Act on 5 May 2011. Agreement between the appellant’s surveyor, Mr Levy, and the surveyor acting for Freetown proved more difficult. Before agreement was reached between them Freetown commenced works on its land, including trial excavation for new foundations adjoining the wall of the Building.
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The appellant instructed solicitors (Greenwood & Co) who issued proceedings against Freetown in the Chancery Division of the High Court on 30 June 2011 seeking an injunction to prevent further work from taking place until agreement had been reached between the party wall surveyors. Greenwood & Co immediately applied for an interim injunction and at a hearing held on the day the proceedings were issued, and at which only the appellant was represented, Mr Justice Vos granted an injunction forbidding Freetown from continuing with works of construction within 6 metres of the boundary with the appellant’s land for 7 days or until an award had been settled under the 1996 Act. The interim injunction was continued by further orders until 22 July 2011, when it was automatically discharged on the publication of an award under the Act which had eventually been settled by a third surveyor nominated by Mr Levy and Freetown’s surveyor.
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Despite the publication of the award the dispute between the appellant and Freetown continued. Freetown was dissatisfied with the award itself, and also maintained that it had been entitled to proceed with the work when it did and that therefore the injunction ought never to have been granted.
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It was not until 13 March 2012 that the appellant applied to the High Court for permission to discontinue its claim under CPR 38.2(2). Where civil proceedings are discontinued the usual consequence is that the defendant is entitled to its costs, but the court may make a different order. In this case the appellant invited the court to order that the costs of the proceedings be paid by Freetown. Freetown resisted that application and made its own applications to enforce the cross-undertaking in damages given by the appellant on the grant of the interim injunction and to recover the costs of the proceedings from the appellant.
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Those applications were tried before a Chancery Master over 3 days in April, July and August 2012. On 27 September 2012, Master Marsh delivered a judgment in which he held that the original injunction had been properly granted and that the appellant could withdraw its proceedings. The Master ordered that Freetown should pay the appellant’s costs of the proceedings up to 30 November 2011, but took the view that the application to discontinue ought to have been made earlier and that the appellant should pay Freetown’s costs from 1 December 2011 to 13 March 2012. Freetown was ordered to pay the costs of the applications before the Master and was required to pay £40,000 on account pending a detailed assessment of those costs.
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The appellant made it clear through its counsel, Mr Sissons, that any sums which it succeeds in recovering from Freetown will be credited to the service charge account for the benefit of the respondents in the year in which the sum is received.
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Freetown also sought to challenge the party wall award made by the third surveyor by way of an appeal in the County Court which it commenced on 8 August 2011. Before the merits of the appeal could be considered a difficult procedural question arose, namely whether the appeal had been commenced within the permitted period of 14 day...
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