Are In House Solicitors Costs recoverable as service charges or administration fees?

In OM Property Management Limited v. Mr Olajide Olaleye [2012] UKUT 102 (LT) the Upper Tribunal (Lands Chamber) had to consider whether legal costs incurred by an in house solicitor of dealing with an application to the Leasehold Valuation Tribunal (“LVT”) could be recoverable as a service charge. At first instance the LVT determined these were not a “cost” and therefore the legal costs were not recoverable. The respondent appealed this decision. They sought to rely upon Re Eastwood (deceased) [1985] 1 Ch 112 which set out the principle that the costs of an in house solicitor are to be dealt with on the same basis as if the costs were incurred by an independent solicitor. The Upper Tribunal agreed there was no reason to depart from this authority. As a result the costs incurred by the in house solicitor were recoverable.
What this decision means is that whilst a person is entitled to challenge the rate charged for work carried out, it will be up to the solicitor to demonstrate how the rate has been calculated and that it is fair. It is not correct or acceptable to say no costs are payable because an in house lawyer is used. Whilst this decision applied to a service charge dispute it seems there is no reason why this cannot apply to all matters under which costs may be an issue in a matter heard before the LVT. This decision is likely to apply to Leasehold Reform Housing and Urban Development Act 1993 claims for costs of enfranchisement or lease extensions made by a freeholder. Simply because a freeholder or managing agent decides to use in house expertise will not necessarily prevent them from recovering the reasonable costs of such an arrangement.

Filed under: England & Wales, long lease, service charges

Routes of Appeal in Possession Claims

There has recently been a useful case dealing with the routes of appeal in a possession claim. The case in question is the London Borough of Southwark v. Ofogba [2012] EWHC 1620 (QB) which dealt with this point.

The background was that a claim was made by a local authority against a secure tenant based upon rent arrears. Initially the matter was compromised on terms that the possession claim was adjourned generally. The matter progressed with the Defendant not paying the rent and the instalments of rent arrears which were due; and the Defendant appointing new solicitors. As a result an application was made to the County Court to restore the proceedings.

The claim was restored and allocated to the multi track with permission for the Defendant to rely upon an amended Defence and Counterclaim and consequential directions given. The matter came on for trial and an Order was made giving a money judgement with the possession claim adjourned generally with permission to restore by a fixed date in the future.

The Defendant tried to appeal the terms of the Order lodging an Appellant’s Notice with the Court of Appeal and with the High Court. The Appellant pursued the Appeal in the High Court. Mr Justice Hichinbottom considered the matter and gave an assessment of the law relating to Appeals in possession proceedings generally.

To appeal direct to the Court of Appeal the claim must have been issued under Part 7 of the Civil Procedure Rules allocated to the multi track route. Until October 2001 possession claims were Part 8 claims but since then they have been treated as Part 7 claims. Further the decision appealed against must be a “final decision”.

As a result the Judge determined that the appeal against the money judgement was a matter relating to a “final decision” and that fell to be decided by the Court of Appeal. The decision in respect of adjourning the possession claim was not a “final decision” and could be dealt with by the High Court but in Mr Justice Hichinbottom’s opinion on the facts of this case this should also be transferred to the Court of Appeal under Rule 52.14(1)(b) of the Civil Procedure Rules.

The Judge also expressed some concern that the White Book is not as clear as it could be in connection with such appeals. (The White Book is re-printed annually and contains all the rules which are used by solicitors, barristers and judges governing procedures). He made clear that if there was a “final decision” whether made by a District Judge or a Circuit Judge and the other criteria applied (i.e. Part 7 claim allocated to the multi track) then the route of appeal is direct to the Court of Appeal. Further any decision of the County Court made on appeal (i.e. by a Circuit Judge from a District Judge) also lies directly to the Court of Appeal.

The case is useful in reminding everyone as to which Court an appeal lies. Care needs to be taken in ensuring that an appeal is made to the correct Court and consideration given to the route to follow. It is also often worth clarifying and making sure appropriate Directions regarding allocation have been made before the start of any trial so that no issue arises concerning the correct route to follow thus avoiding excessive costs or delays.

Filed under: England & Wales

HELPLINE RENEWALS

Just a quick reminder to all those people who subsribe to our Helpline that it is time for subscription renewal. If you have not received a reminder please contact us so we can get this through to you and make sure that your subsrcription is renewed without delay.

For those people who are not currently subscribers our Helpline runs from 1st August each year at a cost currently of £235+VAT for a single office. The service comprises a telephone helpline 9am to 5.30pm Monday to Friday and access to certain standard legal documents. Full details of what service is provided can be found here.

Filed under: England & Wales

Electronic Signatures: Can we use them?

We have over the past few months seen a rise in the number of enquiries we receive about the use of “electronic signatures” for the signing of tenancy agreements.

This area is complicated and not 100% clear. For the purposes of this article when we refer to a tenancy agreement we mean an assured shorthold tenancy (“AST”). Historically the rule has always been that you should obtain a “wet” signature on the tenancy agreement from both the Landlord (or the Landlords agent) and the Tenant before commencement. Many agreements are also drawn up that they are a deed and the signatures are witnessed. Generally for a valid AST of 3 years or less this does not have to be by deed and so does not strictly require a witness.

There are various providers of electronic signatures which have a method of encryption and digital certificate which can be used to provide an audit trail of how, when and by what address/information they were created. It is obviously important that before opting for any electronic signature system that you ensure you are satisfied as to the system and that it can, if required, provide to you the proof and evidence which a Court may seek. EU Directive 1999/93/EC sets out the standard which should be met.

The Electronic Communications Act 2000 provided that electronic signatures can be used as evidence of a signature (see section 7 of this Act which provides a definition). This Act came into force in July 2000. The Land Registry also indicated it would be looking at adopting electronic signatures but at this time this appears to have been shelved for the time being.

What the Act means is if you have an electronic signature you can rely upon this as evidence in a Court of Law. This means is if you can satisfy a Court that there is a valid electronic signature you will then have a valid tenancy. If this was an agreement which had to be completed as a deed to comply with the Law of Property (Miscellaneous Provisions) Act 1989 (i.e. for a tenancy of more than 3 years) then this system would probably not work and you will probably need wet signatures. To satisfy a Court you would need to produce an audit trail and be able to explain how the system worked. Unless challenged by a party it is likely that a Court would accept this at face value.

It is worth bearing in mind that since of course a tenancy agreement does not have to be in writing even if a party did challenge the validity of the electronic signature it may well still be possible to show that the “agreement” was evidence in writing of the terms which had been agreed. This would be in the same way that when agreements are challenged you would often look to rely upon the conduct of the parties and correspondence/emails to satisfy a court as to the terms.

All of the evidence appears to be that there is no reason why a tenancy agreement can not be signed electronically provided you use a reputable form of electronic signature. There may be other issues relating to making sure you have correctly identified the parties but your existing procedures hopefully would cover this. We do, however, expect that it is likely that there will be some case law and no doubt at some point the Courts will give guidance on what they will expect to see but for the moment we are not aware of any such guidance.

What seems clear is that this form of completing agreements is going to become the norm. If anyone has any experiences relating to the use and interpretation by the Courts please do let us know. In the meantime if and when we hear we will blog further!

Filed under: England & Wales, contracts, legislation, litigation, regulations, tenancy agreements