Leaseholders escape £55,000 legal bill dumped on the service charge by Triplark – as reforms seek to balance arms in leasehold litigation

The Upper Tribunal has thrown out an appeal by freeholder Triplark to dump its litigation and other legal costs on the service charge at Northwood Hall, in Archway, north London.

Some 68 leaseholders have escaped £55,492.23 legal costs run up by their controversial landlord, who among other matters is seeking to recoup expenditure authorised by a section 24 court appointed manager.

The decision is given added relevance as the government is consulting on reform to balance legal costs in leasehold litigation: so often landlords win disputes because of their ability to impose legal costs under the lease, while leaseholders can never receive legal costs osts, unless they can overcome the near impossible hurdle of proving unreasonable conduct by their landlord.

Norwood Hall has been in and out of the property tribunal for a decade, and the Upper Tribunal noted: “The litigation over the management of Northwood Hall is depressingly extensive.”

The site is a 1935 block of 194 flats: 159 under long leases and 35 held by Triplark, owned by the Berger family.

At one point the site was managed by chartered surveyor Bruce Maunder Taylor as a section 24 court appointed manager: indeed, that role is under litigation as the landlord is seeking to recover “sums said to have been spent by him negligently or in breach of trust”.

Although the lease does make leaseholders liable for some legal costs these are exclusively in relation to the management of the building rather than picking up the landlord’s bills for litigating against other parties.

Judge Elizabeth Cooke ruled: “The heart of the question here is whether legal costs are included within, or “ancillary” to, the concept of management …

“… the landlord’s costs cannot be recovered as part of the service charge. That applies to costs incurred in proceedings against leaseholders; it is even more applicable to disputes with third parties.”

Liam Spender, an LKP Trustee and Head of Real Estate Litigation at Velitor Law, says: “This is one of many examples of buildings locked in long-running litigation run by the landlord at the leaseholders’ expense regardless of the terms of the lease.  The reforms in LAFRA to stop this merry-go-round must be brought into legal effect as soon as possible.”

The full ruling is here

This case was referenced in the ruling:

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