Iperion Investments Corporation v Broadwalk House Residents Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 23 November 1994 |
| Date | 23 November 1994 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Staughton, Lord Justice Waite and Lord Justice Peter Gibson
Costs - landlord and tenant - whether recoverable from service charge
The court's discretion under section 20C of the Landlord and Tenant Act 1985, as inserted by section 41(1) of and paragraph 4 of Schedule 2 to the Landlord and Tenant Act 1987, to direct that costs incurred by a landlord in litigation with his tenant should be excluded from a service charge payable by the tenant would be properly exercisable in a case where the tenant had been successful in litigation against the landlord, albeit that under the lease the costs in question were within the service charge recoverable from the tenant.
The Court of Appeal so held in a reserved judgment dismissing an appeal by the defendant landlord, Broadwalk Residents Ltd, against that part of the order made by Mr Bruce Mauleverer, QC, sitting on official referee's business, which directed, inter alia, that certain costs incurred by the landlord in litigation with the plaintiff tenant, Iperion Investments Corporation, were not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant.
Mr Simon Berry, QC, for the landlord; Mr David Neuberger, QC and Mr Stephen Jourdan for the tenant.
LORD JUSTICE PETER GIBSON, having held, contrary to the judge, that on a true construction of the underlease the litigation costs in question fell within costs recoverable by way of the service charge, said that section 19 of the 1985 Act prevented a landlord from recovering so much of a service charge as consisted of costs unreasonably incurred.
Section 20C went further: "(1) A tenant may make an application to the appropriate court for an order that all or any of the costs incurred, or to be incurred, by the landlord in connection with any proceedings are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the tenant or any other person or persons specified in the application; and the court may make such order on the application as it considers just and equitable in the circumstances."
Thus it was apparent that the court had a discretion to direct that litigation costs be excluded from a service charge, even if the costs had passed the test of section 19 and had been reasonably...
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