The recent case of Greening-v-Castelnau Mansions, decided by the Upper Tribunal, provides a timely reminder of the increasing difficulty landlords face in recovering legal costs and other professional fees in the absence of a clear covenant in the lease.

Greening restates the principles laid down in Stella House-v- Mears [1989] and makes it clear that for a landlord to be confident that legal fees can be recovered the lease covenant needs to contemplate the recovery of legal costs with specific reference to legal fees, fees payable to solicitors or the cost of litigation or proceedings.  A general covenant providing for recovery of professional fees will not always suffice.

Having said that, what is clear, is that each case must be decided on its own facts and the specific provisions of the lease.  From a practical perspective, in cases where the provisions are ambiguous, or at least arguable, on the question of the recoverability of costs, most landlords will want to charge costs to the service charge fund and see whether there is a subsequent challenge.  It is also worth bearing in mind that the leases in a block may not all be in identical terms and it is a useful exercise to carry out an audit of the leases in the building to see what the scope is for recoverability of costs.

It is encouraging that modern leases are much better at providing for the recovery of legal costs and we have seen some very helpful clauses specifically referring to Court litigation and Tribunal costs.  Long may it continue!