In Assethold v Watts and others [2014] UKUT 0537 (LC), the Upper Tribunal (Lands Chamber) decided that a landlord was able as part of the service charge to recover legal expenses it had incurred in dealing with a party wall matter.
Mr Watts and others were the lessees of flats in a building owned by Assethold Limited. As a result of litigation by the landlord against a neighbouring owner over party wall works party that would have affected the building, the landlord incurred various costs, including legal, surveying, etc. Assethold sought to recover these fees from the lessees through the service charge. The lessees objected that while the lease allowed for certain types of fees to be passed on to them, legal costs were not covered.
The Leasehold Valuation Tribunal agreed with the lessees but the landlord subsequently appealed to the Upper Tribunal who considered that the costs in respect of pursuing the litigation against a third party were not recoverable under a general repairing and maintaining obligation but would be under the general words concerning the cost of taking steps for the maintenance, safety, amenity and administration of the building and it did not matter that the clause made no specific reference to legal costs.
