section 20c
📖 What is section 20c? Meaning and definition
Section 20C is a provision under the Landlord and Tenant Act 1985 that grants a tribunal the power to make an order preventing a landlord from passing on their legal costs, incurred during tribunal proceedings, to tenants via service charges. This means that if a tribunal makes a Section 20C order, the landlord cannot include these specific legal costs when calculating the service charges that tenants are required to pay.
The tribunal's decision to make such an order is not automatic; it is a discretionary power exercised only after careful consideration. The tribunal must assess what is 'just and equitable' in the circumstances, taking into account the practical and financial consequences for all parties involved – both the landlord and the tenants. This involves weighing factors such as the amount of costs incurred, whether either party has insurance cover, and the overall outcome of the application.
An order under Section 20C is considered a significant step because it interferes with the contractual rights and obligations between landlords and tenants. Therefore, tribunals are advised not to make such orders lightly or as a matter of course. They must consider all relevant circumstances and the potential impact on everyone affected before deciding whether to limit the landlord's cost recovery.
For self-represented litigants, understanding Section 20C is crucial because it offers a potential avenue to protect themselves from bearing the landlord's legal expenses in tribunal disputes, especially if they are wholly successful in their application or if the landlord's costs are deemed excessive.
📋 Requirements
- An application must be made under Section 20C of the Landlord and Tenant Act 1985.
- The tribunal must consider what is 'just and equitable' in the circumstances.
- The tribunal must assess the practical and financial consequences for all affected parties.
- The order should not be made lightly or as a matter of course, as it interferes with contractual rights.
📝 Procedure
- An application under Section 20C is submitted to the tribunal.
- The tribunal considers the application, often after substantive claims have been determined.
- The tribunal evaluates factors such as the costs incurred and the financial impact on parties.
- The tribunal makes a decision, either granting or refusing the Section 20C order.
💡 Examples
- A tenant applies for a Section 20C order to prevent their landlord from adding substantial legal costs from a previous tribunal case to their service charge.
- The tribunal refuses a Section 20C application because the tenant was wholly unsuccessful in their primary claim, and the landlord's costs were modest due to insurance.
- A tribunal considers the landlord's very substantial litigation costs, potentially exceeding £2,000,000, when deciding whether to limit their recovery through service charges.
- Long leaseholders apply for a Section 20C order against their landlord, who is also a co-shareholder in the company responsible for managing the property.
📚 Legal basis
- Landlord and Tenant Act 1985
❓ Frequently asked questions
What does a Section 20C order actually do?
A Section 20C order prevents a landlord from recovering their legal costs incurred during tribunal proceedings by adding them to the service charges paid by tenants. This means tenants won't have to pay those specific legal costs.
When can I apply for a Section 20C order?
You can apply for a Section 20C order in connection with tribunal proceedings, often after the main issues of the case have been decided. The application is made to the tribunal handling your case.
Will the tribunal automatically grant a Section 20C order if I win my case?
No, the tribunal's power to make a Section 20C order is discretionary. It is not granted automatically, even if you are successful in your primary application. The tribunal must consider what is 'just and equitable' in all the circumstances.
What factors does the tribunal consider when deciding on a Section 20C application?
The tribunal considers factors such as the practical and financial consequences for all parties, the amount of costs incurred, whether parties have insurance cover, and the overall success or failure of the original application.
Can a Section 20C order affect my contractual agreement with the landlord?
Yes, an order under Section 20C interferes with the parties’ contractual rights and obligations regarding cost recovery. This is why tribunals do not make such orders lightly and consider all consequences.
What if the landlord's costs are very high?
The level of the landlord's costs, especially if they are very substantial, is a relevant factor for the tribunal to consider when exercising its wide discretion under Section 20C.