Tenant Entitled to Reasonable Costs Under 1993 Act

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AW/OC9/2024/0096 HMCTS code : P: PAPERREMOTE Property : [ADDRESS] [POSTCODE] Applicant : [redacted] : [APPELLANT] Respondent : [redacted] : [APPELLANT] of [NAME] : Costs – payable by the applicant under s.60(1) Leasehold Reform, Housing and Urban Development Act 1993 (the ‘1993 Act’) Tribunal members : Judge Pittaway Mr K Ridgeway MRICS Date of decision : 3 December 2024

DECISION

2 Description of hearing This has been a remote hearing on the papers, the form of the hearing being P:PAPERREMOTE. The documents to which the Tribunal was referred in a bundle of 138 pages which included the Applicant’s Statement of Costs and the Applicant’s submissions on costs. The Tribunal has had regard to the documents before it in reaching its decision set out below. Decisions of the Tribunal The Tribunal determines that the amount of costs payable by the respondent under section 60 (1) of the 1993 Act are • Legal fees of £2,500 exclusive of VAT • Valuation fees of £1,250 exclusive of VAT • Disbursements of £25 exclusive of VAT. • VAT on all of the above costs if the VAT is not recoverable by the applicant. Background

(1) The applicant landlord seeks an order under section 60(1) of the Leasehold Reform, Housing and Urban Development Act 1993 (the “1993 Act”) as to the amount of costs payable in connection with negotiations for the grant by the applicant landlord of a lease of [ADDRESS] [POSTCODE] (the ‘property’). (2) The costs [NAME], dated 8 August 2024, stated that the applicant was content for the matter to be dealt with by way of a paper determination. The Tribunal’s Direction, undated but sent to the parties under cover of letters dated 17 September 2024, confirmed that the Tribunal considered the matter suitable for determination without an oral hearing but that either party could request a hearing. Neither party did. (3) The costs sought are • Landlord’s legal fees £3,900 (including VAT) • Landlord’s valuation fee £1,500 (including VAT) • Land registry fees

£14.40 (including VAT) • Courier fees

£15.60 (including VAT)

3 (4) By [NAME] the applicant landlord was directed to provide the respondent by 8 October 2024 a schedule of costs sufficient for summary assessment, invoices substantiating the costs and any other documents relied on. (5) [NAME] directed the respondent to provide the applicant by 29 October 2024 a statement of case, details of comparative cost estimates and any other documents she wished to rely on and giving the applicant the right to respond to the respondent’s case by 12 November 2024. (6) [NAME] required the applicant to prepare an agreed bundle and email it to the respondent and the Tribunal by 19 November 2024. (7) The bundle provided by [NAME] contains submissions by [NAME] dated 11 November 2024 in which they ask the Tribunal to note that the respondent had failed to comply with [NAME] and that by that date the applicant had received no submissions on behalf of the respondent. (8) Section 60 of the 1993 Act provides that

“(1)Where a notice is given under section 42, then (subject to the

provisions of this section) the tenant by whom it is given shall be liable,

to the extent that they have been incurred by any [NAME] in

pursuance of the notice, for the reasonable costs of and incidental to any

of the following matters, namely—

(a)any investigation reasonably undertaken of the tenant’s right to

a new lease;

(b)any valuation of the tenant’s flat obtained for the purpose of

fixing the premium or any other amount payable by virtue of

Schedule 13 in connection with the grant of a new lease under

section 56;

(c)the grant of a new lease under that section;

but this subsection shall not apply to any costs if on a sale made

voluntarily a stipulation that they were to be borne by the purchaser

would be void.

(2)For the purposes of subsection (1) any costs incurred by a [NAME] in respect of professional services rendered by any person shall

only be regarded as reasonable if and to the extent that costs in respect of

such services might reasonably be expected to have been incurred by him

if the circumstances had been such that he was personally liable for all

such costs.

(5)A tenant shall not be liable under this section for any costs which a

party to any proceedings under this Chapter before the appropriate

tribunal incurs in connection with the proceedings.

(6)In this section “[NAME]”, in relation to a claim by a tenant

under this Chapter, means the landlord for the purposes of this Chapter,

4

any other landlord (as defined by section 40(4)) or any third party to the

tenant’s lease.”

The applicant’s statement of costs and submissions 1. The submission on Costs gives a charge out rate for a partner in both the Leasehold Enfranchisement and Property departments at [COMPANY] of £520 per hour, increasing to £575 per hour in August 2023. The charge out rate, at the [NAME] time, for the assistant solicitor in the Leasehold Enfranchisement Department who considered the Notice of Claim is given as £425 per hour. The Statement of Costs gives a breakdown of the time spent by individual partners and assistant solicitor up to 9 August 2023 on work on the documents, communications with their client, the tenant and the tenant’s solicitors, communications with the valuer and considering matters relating to the inspection of the Property, calculated in total as 6.2 hours, amounting to fees of £3,280.50, exclusive of VAT ((£3,936.60).

2. The bundle contains one invoice from [COMPANY], dated 29 April 2024 for legal fees of £2,500 (£3,000 inclusive of VAT).

3. The bundle contains evidence of the land registry disbursements of £12 and the courier fees of £13.

4. The bundle includes an invoice from [NAME], chartered surveyors, for £1,250 plus VAT. The narrative of the invoice suggests that this was an agreed fee for preparing a lease extension report following service of the section 42 notice on the applicant.

5. The applicant’s statement of case states the respondent’s claim on or around 27 September 2022 was suspended by reason of an ongoing collective enfranchisement claim which was completed on 13 June 2023, when the applicant became the respondent’s competent landlord. The applicant admitted the respondent’s claim on or around 8 August 2023. The respondent applied to the Tribunal to determine the terms of acquisition on or about 5 February 2024 but withdrew its [NAME] on 27 June 2024.

6. The applicant in its statement of case asked the tribunal to note the respondent’s failure to comply with [NAME] and that no submissions have been received from the respondent. The applicant therefore submits that the costs set out in the statement of costs are not disputed. 7. [NAME] have acted for the applicant for many years in enfranchisement matters. They submit that it is reasonable for fee earners with [NAME] experience to have conduct of the matter, and refer the Tribunal to cases which set out the principles the Tribunal is asked to consider in connection with the reasonableness of costs, in particular [COMPANY] v [COMPANY].

5 8. The statement of case refers the tribunal to various recent cases where the statutory costs are payable where Notices of Claim are withdrawn and to cases where the charge out rate of [NAME] has been approved. The respondent’s case.

9. There was no evidence or submissions from the respondent. Reasons for the tribunal’s decision 10. In the absence of any evidence from the respondent the Tribunal has reached its decision on the basis of the statement of costs and submissions from [COMPANY]. [NAME] stated, ‘If any party fails to comply with these directions the Tribunal may in any event determine the issues in dispute on the basis of such information and evidence as is available.’ The respondent has provided no statement of case, no details of comparative cost estimates nor any other documents it wishes to rely on, as it was directed to do.

11. The Tribunal has to decide whether the costs are costs recoverable under section 60(1) and if so whether they meet the test of reasonableness set out in section 60(2).

12. The cases cited by the applicant in which the level of fees charged by [APPELLANT] have been approved by other tribunals are instructive but are not binding on the Tribunal and each case must be determined on its own merits.

13. There are no submissions from the respondent before the Tribunal challenging the charge out rates of [COMPANY], the time spent on the transaction or the seniority of solicitors used for all aspects of the [NAME].

14. The Tribunal accepts that the applicant is entitled to instruct [APPELLANT], who are its long time solicitors, and that the rates charged by [COMPANY] are consistent with the usual charge out rates for solicitors in central London.

15. On the basis of the breakdown of costs provided by [COMPANY] the Tribunal find that the costs listed in that breakdown fall within section 60(1), as they relate to investigation reasonably undertaken of the tenant’s right to a new lease, the valuation of the tenant’s flat or the grant of a new lease. The Tribunal notes that they do not include any costs incurred in connection with any [NAME] to the tribunal, which are excluded under section 60(5).

16. However any costs incurred by the [NAME] in respect of professional services rendered are to be regarded as reasonable only if and to the extent that costs in respect of such services might reasonably be expected to have been incurred by him if the circumstances had been such

6 that he was personally liable for all such costs. There is only one invoice in the bundle for legal costs addressed to the Applicant and that is for £2,500 (plus VAT). The Tribunal finds, on the evidence before it, that it was [NAME] intention to charge its client £2,500 and not the total costs of £3,280.50 set out in the Statement of Costs. The invoice is dated April 2024. There is no suggestion in the bundle of any intention by the applicant’s solicitor to make any further charge to its client.

17. In the circumstances the tribunal finds the legal costs of [COMPANY] in the sum of £2,500 plus VAT and disbursements to be reasonable. It also finds the level of disbursements charged to be reasonable.

18. The respondent has not challenged the valuer’s invoice of costs of £1,250 plus VAT. In the absence of any challenge the Tribunal finds this cost to be reasonable.

19. The Tribunal notes that the applicant is seeking the costs plus VAT. The recovery of VAT from the respondent is only reasonable if the applicant is unable to recover the same. Name: Judge Pittaway Date: 3 December 2024

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and

7 the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).