Introduction

The case Dashwood Properties Ltd v. Chrisostom-Gooch ([2012] UKUT 215 (LC)) presents a significant examination of the reasonableness of costs incurred by intermediate landlords during leasehold enfranchisement claims under section 60 of the Leasehold Reform, Housing and Urban Development Act 1993 ("the 1993 Act"). The appellant, Dashwood Properties Limited, appealed against the Leasehold Valuation Tribunal's (LVT) decision regarding the costs awarded, raising three primary grounds of appeal. The respondent, Beril Prima Chrisostom-Gooch, sought to uphold the original decision, contesting the appellant's claims and procedural conduct.

Summary of the Judgment

The Upper Tribunal (Lands Chamber) deliberated on the appeal brought by Dashwood Properties Limited against the LVT's decision dated 13 June 2011 concerning the costs awarded under section 60 of the 1993 Act. The appellant challenged the procedural handling of submissions, the consideration of the lease extension price in determining costs, and the alleged duplication of costs between intermediate and competent landlords.

The Tribunal upheld the first two grounds of appeal, deeming that any procedural oversight did not materially prejudice the appellant and that the LVT was justified in considering the lease extension price in assessing reasonable costs. However, the Tribunal allowed the third ground of appeal, finding that the LVT erred in reducing the appellant's costs due to duplication with the competent landlord's costs.

Ultimately, the judgment resulted in a partial adjustment of the costs awarded to Dashwood Properties Limited, recognising the validity of independent investigations by intermediate landlords while curbing undue duplication of expenses.

Analysis

Precedents Cited

The judgment references several key cases that influence the court’s reasoning:

• Daejan Properties Ltd v Parkside 78 Ltd LON ENF 1005/03
• Daejan Properties Ltd v Twin LON/00BK/0C9/2007/0026
• Daejan Properties Limited v Allen LON/00AH/OLR/2009/0343

These cases collectively establish that landlords are entitled to instruct solicitors of their choice without an obligation to select the cheapest or most local firms. This precedent supports the LVT's authority to evaluate solicitors' costs based on reasonableness rather than cost minimization alone.

Legal Reasoning

The Tribunal applied a structured approach to determine the reasonableness of the appellant's costs:

• Procedural Considerations: The Tribunal acknowledged the procedural oversight in not allowing the appellant to respond to the respondent's submissions but determined that this did not materially prejudice the appellant, given the minor cost implications.
• Cost Assessment Based on Lease Extension Price: The Tribunal affirmed that the value of the dispute and the financial stakes are pertinent factors in assessing reasonable costs under section 60 of the 1993 Act.
• Duplication of Costs: The pivotal issue was whether the appellant's costs duplicated those of the competent landlord. The Tribunal concluded that while independent investigations are lawful, the concurrent use of separate solicitors for conveyancing and title investigation constituted unnecessary duplication, thereby rendering some costs unreasonable.

The Tribunal emphasized that costs must reflect what would have been reasonably incurred if the landlord bore them personally, ensuring that tenants are not unduly burdened by inflated or unnecessary expenses.

Impact

This judgment has notable implications for future leasehold enfranchisement cases:

• Cost Reasonableness: Reinforces the necessity for landlords to justify their costs in relation to the dispute's value and the actual work required.
• Avoidance of Duplication: Highlights the courts’ willingness to scrutinize and sanction duplicated costs, promoting efficiency and fairness in cost allocation.
• Procedural Fairness: While procedural adherence is important, minor oversights may not always result in successful appeals if they do not cause substantial prejudice.

Landlords must henceforth be more diligent in avoiding overlapping legal expenses and ensure that each cost incurred is directly attributable to necessary actions related to the enfranchisement claim.

Complex Concepts Simplified

Section 60 of the Leasehold Reform, Housing and Urban Development Act 1993

This section outlines the framework for assessing and awarding costs in leasehold enfranchisement cases. It specifies that tenants, who undertake actions such as applying for lease extensions, are liable for reasonable costs incurred by relevant persons (typically landlords) in relation to various aspects of the claim, including legal investigations, valuations, and the grant of new leases.

Intermediate vs. Competent Landlords

An intermediate landlord holds a lease from the freeholder and, in turn, grants subleases to tenants. A competent landlord is the direct lessor to the tenant and has the primary responsibility for enfranchisement matters. When both exist, issues may arise regarding which landlord should bear certain costs.

Duplication of Costs

Duplicated costs occur when multiple parties incur similar expenses for the same purpose, leading to an unnecessary redundancy in billing. In this case, appointing separate solicitors for conveyancing and title investigation resulted in overlapping costs that were deemed unreasonable.

Conclusion

The Dashwood Properties Ltd v. Chrisostom-Gooch [2012] judgment underscores the importance of proportionality and reasonableness in the assessment of legal costs within leasehold enfranchisement disputes. By allowing the appeal on the ground of duplicated costs, the Tribunal reinforced the principle that costs must be directly related to the necessary work required by the landlord, without imposing undue financial burdens on the tenant.

Landlords are thus reminded to meticulously evaluate their legal expenditures, ensuring that each cost is justified and non-redundant. This judgment serves as a pivotal reference for both landlords and tenants in navigating the complexities of cost assessments under the 1993 Act, promoting fairness and efficiency in leasehold transactions.

In essence, the decision promotes a balanced approach to cost allocation, safeguarding tenants from excessive charges while acknowledging the legitimate expenses landlords may incur in defending or asserting their leasehold interests.