Legal fees can be quickly incurred by landlord’s dealing with residential disputes. Whether these fees are then legitimately recoverable under a service charge was a question the Upper Tribunal recently had to deal with in the case of Sinclair Gardens Investments (Kensington) Limited v Avon Estates (London) Limited  UKUT 317 (LC).
The lease required the landlord to manage the Estate and Block in a proper and reasonable manner and entitled it to employ, amongst others, solicitors in “connection with or for the purpose of or in relation to the estate and the Block”. The question was then whether this clause was wide enough to entitle the landlord to recover legal fees incurred in dealing with the proceedings before the tribunal claim to determine the tenant’s liability.
The tribunal held that the mere reference to solicitors in the clause did not mean the landlord could instruct solicitors for any purpose. It held that the limit to their employment was for the purpose of managing the Estate whereby their proper fees and costs could be recovered under the service charge. The costs incurred in ascertaining the tenant’s liability before the tribunal were not for the purpose of managing the Estate. Whilst the case turned on the particular wording of the lease, it is another case that provides clarification as to the Court’s approach to the construction of service charge clauses and in particular, those relating to the recovery of legal costs.