'69 Marina' : a clear message on costs recovery

69 Marina is a block of six apartments, five of which had been let on 99-year leases that began in July 1985. The lessees had failed to pay service charges relating to repair works.

In April 2007, the landlord issued proceedings in the LVT, which determined that the leaseholders were liable to pay the charges. When, by December 2008, the leaseholders had still not paid, the landlord issued County Court proceedings to enforce the LVT’s decision.

The 69 Marina lease included a costs clause stating that the lessee is liable for:

“All expenses including solicitors’ costs and surveyors’ fees incurred by the Landlord incidental to the preparation and service of a notice under Section 146 of the Law of Property Act 1925” or “in contemplation of” Section 146 proceedings.”

The judge held that this wording entitled the landlord to the costs incurred in both the LVT and County Court proceedings.

After a first appeal in Hastings County Court was rejected, the leaseholders turned to the Court of Appeal, where in November 2011, Lord Justice Rimmer upheld the decision to award the landlord his costs incurred at both the LVT and County Court. The other two Court of Appeal members agreed, making the decision unanimous.

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Impact of 69 Marina on property managers

69 Marina adds significant clarity that the legal costs of pursuing a service charge debt can be recovered, so long as the lease includes the relevant costs clause.

Before this case, there was still some work to do to win the legal costs part of a claim at trial. It was usually necessary to explain to the judge how a service charge claim can be regarded as ‘incidental to’ or ‘in contemplation of’ a Section 146 notice or proceedings under Section 146.

This is the first Court of Appeal decision that clearly confirms the legal arguments with specific reference to service charge claims. Decisions made in the Court of Appeal bind the lower courts, and the benefit of 69 Marina on costs recovery is already evident, recovering full costs for the landlord or RMC in every case where cited.

This case is a clear and welcome decision on costs liability in service charge claims. It will continue to prove extremely useful for landlords and RMCs in claiming their legal costs.

Claire Brady is Managing Director of Brady Solicitors

To download the full decision please click here