Freeholder filed money claim for non-payment of ground rent/services - CCJ?

eddddy

Grizebeck said:

eddddy said:

Grizebeck said:

Legal costs cannot be reclaimed in normal circumstances on the small claims track. People should look over the relevant parts of the civil procedure rules

That's seriously misleading advice to give the OP.

The OP's lease (and the law) almost certainly says that the freeholder can charge the OP legal costs associated with unpaid service charges.

So the freeholder is claiming a debt of £3813.16 owed to them under the lease. 

The debt that is owed has nothing to do with civil procedure rules.

If you want to read some relevant legislation, it's the Commonhold and Leasehold Reform Act 2002  (start with section 11) - combined with the wording of the lease.

Legal fees cannot be recovered on the small claims track and FYI I have dealt with these on a number of occasions where the costs have been disallowed as its not been tracked correctly.  If the claim is on the correct track then it is not an issue claiming legal costs.
https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part27#27.14
To the OP yes if you lost then paid within the timescale you will be fine.
I would tell them to seek professional advice.

You're looking in completely the wrong direction. I'll try explaining in a different way to see if that helps.

• What you say is correct - but it doesn't apply to the OP's situation.

• The OP's freeholder is not attempting to claim any costs associated with the MCOL claim

• The OP's freeholder is claiming a debt of £3813.16
  
  
• The debt of £3813.16 is a 'Service Charge' payable under the OP's lease 

• (The freeholder is not claiming anything else - just a 'Service Charge' payable under the lease)

• The 'Service Charge' already includes an 'Administration Charge' of £2200 - relating to work the OP's solicitor has done

• 'Service Charge' and 'Administration Charge' are terms that are defined in the legislation 

So your link to the civil procedure rules is the wrong place to look.

To determine whether the 'Service Charge' of £3813.16 (including the 'Administration Charge' of £2200) is reasonable, the OP should be looking at...

• Landlord and Tenant Act 1985 - https://www.legislation.gov.uk/ukpga/1985/70/crossheading/service-charges
• Commonhold and Leasehold reform act 2002 - https://www.legislation.gov.uk/ukpga/2002/15/schedule/11
• Their lease

If you want an analogy, it would be like if you signed a contract saying..

I, Grizebeck, agree to pay George the plumber £100 for fitting a new washer.

I also agree that, if I fail to pay George the £100, I will pay all George's legal costs associated with taking me to court to claim the £100.

Grizebeck said:

FYI I have dealt with these on a number of occasions where the costs have been disallowed as its not been tracked correctly.  If the claim is on the correct track then it is not an issue claiming legal costs.

Did those claims relate to claims for Leasehold Service charges / Leasehold Administration Charges - where those costs were 'Administration Charges'?

Grizebeck said:

To the OP yes if you lost then paid within the timescale you will be fine.

Except that the freeholder could charge further 'Administration Charges' in the meantime.  So the OP could receive an additional bill, if they wait until after the court case to pay.

Grizebeck said:

I would tell them to seek professional advice.

The Government funded Leasehold Advisory Service offers a free 15 minute phone consultation:

https://clients.lease-advice.org/#/

I've included a screenshot of their advice above:

• I am not happy with the amount demanded What Should I Do?
• Pay demand under protest 
• Can still challenge payability and/or reasonableness of the service charge at court or the appropriate tribunal

eddddy

Just to add...

• The OP says they received no reminder letters from the freeholder, before a solicitor was instructed...

• Typically, that would be a strong argument for saying that it was not reasonable for the freeholder to instruct a solicitor without sending any reminder / warning letters first.

• But perhaps the Freeholder will say that they did send reminder / warning letters - so that would then be a key part of the dispute between the OP and the freeholder

But it also sounds like the OP sent a letter to the freeholder saying something like "I'm only paying part of the service charge, because I'm selling the property".  Depending on what exactly the letter said, that might have weakened the OP's case.


(And FWIW, there is no legal basis for saying "I'm only paying part of the service charge, because I'm selling the property".  It's completely irrelevant.)

bertie1979

Unfortunately, it seems no communication from leaseholder to say can't/won't pay, just missed the deadline and then alleged LBA sent and as that wasn't responded to obviously, then the costs for the pack.

So he wants to pay the £1370ish, obviously the solicitors are saying pay the full amount to them asap.
But can he pay the £1370ish via MCOL, he owes for the actual service charges by partially accepting the claim, then challenging the other fees in his defence pack?

Thanks eddddy, he's booked an appt for weds.

Grizebeck

No you always pay the claimant/claimaints solicitor director

eddddy

bertie1979 said:

Unfortunately, it seems no communication from leaseholder to say can't/won't pay, just missed the deadline and then alleged LBA sent and as that wasn't responded to obviously, then the costs for the pack.

So he wants to pay the £1370ish, obviously the solicitors are saying pay the full amount to them asap.
But can he pay the £1370ish via MCOL, he owes for the actual service charges by partially accepting the claim, then challenging the other fees in his defence pack?

Thanks eddddy, he's booked an appt for weds.

Doing that would risk the freeholder adding more Admin Charges to the Service Charge. For example...

• More admin charges for the freeholder sending more letters
• More admin charges for the solicitor's preparation of the case
• More admin charges for the solicitor to attend court

Also, be careful about getting too hung-up about the LBA.  The leaseholder would be liable to pay the freeholder's solicitor's fees. Most of the solicitor's work would be done before sending out an LBA. So the solicitors fees are still payable.



Instead of the leaseholder trying to follow their own creative ideas, on how to handle this...

I think it would be better to follow the tried and trusted approach that every leaseholder advice organisation recommends..

• Pay the full £3813.16 Service Charge under protest
  

• That will stop the MCOL action

• That will stop the freeholder adding more Admin Charges to the leaseholder's Service Charge

• The leaseholder then pays £100 to take the freeholder to tribunal to challenge the 'Service Charge'

At tribunal, the leaseholder can use arguments like...

• It was not reasonable for the freeholder not to send me reminder letters

• In particular, It was not reasonable to instruct solicitors without sending reminder and/or warning letters first - therefore it is not reasonable to re-charge the solicitor's fees to the leaseholder.

The tribunal will decide whether all the fees are reasonable. If they're not, the tribunal will order some/all of them to be repaid. If the leaseholder wins the case (to a lesser or greater extent), the tribunal can also order the freeholder to pay the £100 application fee back to the leaseholder.

eddddy

Am I misreading - or is the leaseholder changing the story they're telling you.

bertie1979 said:

Did the leaseholder fail to pay the service charge by the due date? made a couple of payments, but is selling his flat and was waiting to sell before paying the remaining balance.

The above sounds like the leaseholder made a conscious (but foolish) decision to stop paying service charge installments. 

bertie1979 said:

Unfortunately, it seems no communication from leaseholder to say can't/won't pay, just missed the deadline 

But then the above sounds like the leaseholder simply forgot to pay.


On that basis, are you 100% sure that the leaseholder is giving you 100% of the facts. For example, if the leaseholder really did receive reminder letters, but they're too embarrassed to admit it, they could be digging themselves into a deeper hole.

user1977

eddddy said:

Am I misreading - or is the leaseholder changing the story they're telling you.

bertie1979 said:

Did the leaseholder fail to pay the service charge by the due date? made a couple of payments, but is selling his flat and was waiting to sell before paying the remaining balance.

The above sounds like the leaseholder made a conscious (but foolish) decision to stop paying service charge installments. 

bertie1979 said:

Unfortunately, it seems no communication from leaseholder to say can't/won't pay, just missed the deadline 

But then the above sounds like the leaseholder simply forgot to pay.

On that basis, are you 100% sure that the leaseholder is giving you 100% of the facts. For example, if the leaseholder really did receive reminder letters, but they're too embarrassed to admit it, they could be digging themselves into a deeper hole.

The OP suggested there was originally some form of payment plan agreed, so presumably the leaseholder did have money problems earlier on.

And if they still have an ongoing sale (do they?) then the buyer will presumably want this settled too before completion?

eddddy

user1977 said:

The OP suggested there was originally some form of payment plan agreed, so presumably the leaseholder did have money problems earlier on.

Yep...

Or some of the larger freeholders / managing agents routinely offer all their leaseholders a "side deal", which lets them pay monthly.

For example, in simplified terms...

• According to the lease, the advance Service Charge payment of £1200 is due on 1st Jan.

The freeholder / managing agent offers the following optional agreement...

• The freeholder agrees not to take enforcement action for the £1200 service charge debt, if monthly payments of £100 are made for the next 12 months

• If a monthly payment is not made, the freeholder will take immediate enforcement action for the outstanding balance of the £1200 service charge debt

If that's the case, the OP also needs to look at the wording of that agreement as well.


 

bertie1979

No I have the full facts, he's been disgruntled with the management company since day 1.

It's a buy to let property, he doesn't have money worries, quite the opposite. He was trying to play hard ball with their shoddy service and so he's found out the hard way of "f**k around and find out"

Advice has been very helpful, as I said pay the initial amount and then dispute the rest in court, didn't realise there was a tribunal.

So when he pays the solicitor, does he say he'll be taking it to tribunal?
Or just pay then do the tribunal route after hia sale has gone through?
Actually can he take them to tribunal if he no longer owns the property?

As said he has a phone call scheduled for Wednesday, so will ask the questions then as well.

EDIT to add, his solicitor he's using to sell the flat actually told him to not worry about the outstanding amount "we'll deal with that later". I have said to him to address that with his solicitor to see if he has any redress with that advice.

bertie1979

eddddy said:

user1977 said:

The OP suggested there was originally some form of payment plan agreed, so presumably the leaseholder did have money problems earlier on.

Yep...

Or some of the larger freeholders / managing agents routinely offer all their leaseholders a "side deal", which lets them pay monthly.

For example, in simplified terms...

• According to the lease, the advance Service Charge payment of £1200 is due on 1st Jan.

The freeholder / managing agent offers the following optional agreement...

• The freeholder agrees not to take enforcement action for the £1200 service charge debt, if monthly payments of £100 are made for the next 12 months

• If a monthly payment is not made, the freeholder will take immediate enforcement action for the outstanding balance of the £1200 service charge debt

If that's the case, the OP also needs to look at the wording of that agreement as well.


 

Think it pretty much says that regarding the of payment isn't made by end of July, then they'd look to take legal action.