Landlords Can Recover Their Legal Costs


In May I wrote a blog about the increasing importance of costs recovery clauses in leases and how landlords could still recover their legal costs despite the limitations of costs orders awarded by the courts and the tribunals.

These issues have now been comprehensively explored in a case (Chaplair v Kumari) which was decided in the Court of Appeal last month. In that case the tenant was one of 10 leaseholders in a block who had concerns with her service charge. Her landlord issued proceedings in the county court and, because of the sums involved, the case was allocated to the small claims track with the result that minimal costs were payable to the landlord.  The substantive action was eventually heard in the Leasehold Valuation Tribunal and the Tribunal also declined to add the costs of action to the service charge account.

However the lease between the landlord and the tenant contained a comprehensive costs recovery clause and the landlord therefore claimed his legal costs under that provision. The Court of Appeal said that it could. The court held that the costs recovery clause was a separate contractual provision which operated in addition to any costs orders made by the county court and leasehold valuation tribunal.

This decision provides reassurance to landlords that, providing there is a comprehensive costs recovery clause in a lease, there is now a way to recover legal costs regardless of the sum involved in a dispute. 

Rex CowellCommercial Leases