[2024] UKUT 205 (LC)

The appellant’s primary argument is that taking legal advice falls within the scope of clause 5(4)(g). It relies on the FTT’s observation that the clause gives the landlord a discretion to employ professionals in connection with the meeting of its obligations, and says that all the fees concerned with one exception (item (a) in paragraph 5 above) related to claims in respect of damage to two flats in the building (the respondent’s and another leaseholder’s) which were said to be the responsibility of the appellant as a result of the landlord’s repairing covenants. The cost of the repairs was recoverable and equally, says the appellant, legal fees incurred in connection with them were recoverable.

Turning to the definition of Total Expenditure in the Fifth Schedule, the appellant argues that the wording is deliberately wide, and that the inclusion of legal fees of this kind would make commercial sense, given the proviso that costs have to be reasonably and properly incurred in connection with the building. The appellant says that there is nothing in Sella to compel a construction that it cannot recover legal fees, and that the FTT’s conclusion was contrary to the natural and ordinary meaning of the words in clause 5(4)(g) and the Fifth Schedule and contrary to the overall purpose of those provisions. Moreover the FTT’s conclusion fails to make commercial sense, because it leaves the original lessor, and the appellant as an RTM company, unable to get legal assistance or obliged to raise funds for it by way of voluntary contribution from its members.

The respondent relies on the reasoning in the FTT, and argues that the appellant’s construction of the relevant clauses would make them so wide as to be meaningless. He observes that the landlord, as a sophisticated property company, would have had legal advice when the lease was drafted, and if it was the intention that legal fees were to be recoverable the lease would have said so explicitly.