Fairhold Mercury Ltd v Merryfield RTM Co Ltd [2012] UKUT 311 (LC)

Merryfield issued two claims under the Leasehold and Commonhold Reform Act 2002 seeking to exercise its statutory right to manage a block of flats owned by Fairhold. The claims were subsequently withdrawn and Fairhold sought to recover its costs from Merryfield in accordance with section 88 of the 2002 Act. Fairhold had engaged its managing agent to undertake the necessary work, which had been carried out by the agent’s in-house solicitor. The Leasehold Valuation Tribunal (LVT) held that the cost of the work was not recoverable as the managing agent was not a firm of solicitors and was therefore not lawfully entitled to charge for legal work.

The Upper Tribunal allowed Fairhold’s appeal on two grounds. First, the LVT had taken the point of its own motion without giving Fairhold an opportunity to respond to it. This was a procedural impropriety which justified setting the decision aside. Secondly, the LVT’s decision was incorrect. Fairhold had contracted with its managing agent to carry out the work and was liable to pay for it. The fact that a solicitor had in fact carried out the work had no bearing on that liability. The work carried out was not a reserved legal activity (that only a regulated solicitor could carry out) and even if it was and so there had been a breach of the Solicitors’ Code of Conduct, the managing agent could not contravene those rules because it was not a firm of solicitors. Fairhold should therefore be able to recover its costs.