Stephen Richard Walsh v Star and Garter Mansions (Management Company)

A landlord may recover litigation costs through a service charge only where the lease, properly construed, covers them. A clause requiring a contribution to the landlord’s solicitors’ fees for rent collection and general management can include litigation without naming that particular type of litigation. Whether it does so depends on the wording and context of the lease and the connection between the proceedings and management of the building. Litigation about service-charge apportionment and possible repayment may fall within general management.

Walsh held leases of three residential flats in a building owned by the respondent freeholder. The leases required lessees to contribute a fair and reasonable proportion of the landlord’s solicitors’ fees for rent collection and general management. The respondent sought to recover through the service charge its costs of a pending county-court claim brought by the commercial lessee of two basement units, who was also Walsh in a separate capacity. The claim challenged service-charge apportionment and sought repayment. The First-tier Tribunal held the costs recoverable under the leases. Walsh appealed, arguing that the clause did not cover litigation costs. The central issue was whether those costs fell within the lease’s reference to solicitors’ fees for general management.

1. The appeal was dismissed. The First-tier Tribunal was right that the respondent’s costs of the county-court claim were recoverable under clause 2(2)(ix) of the leases.
2. Section 27A of the Landlord and Tenant Act 1985 gives the First-tier Tribunal jurisdiction to determine whether a service charge is payable. Here the issue was whether the lease authorised this type of charge, rather than whether the costs were reasonably incurred.
3. In construing the lease, the starting point was the natural and ordinary meaning of its words, with context and the parties’ background knowledge used to resolve ambiguity. The Tribunal adopted the approach in Arnold v Britton [2015] UKSC 36.
4. The clause expressly referred to the landlord’s solicitors’ fees for rent collection and general management. That showed legal costs were contemplated. A lease need not expressly name each kind of litigation: the requirement for clear and unambiguous wording did not require an express reference to every litigation cost. The Tribunal reaffirmed its approach in Triplark Limited v Howard [2025] UKUT 232 (LC). It distinguished Sella House Limited v Mears (1989) 21 HLR 147 and No. 1 West India Quay (Residential) Limited v East Tower Apartments Limited [2021] EWCA Civ 1119, whose relevant provisions did not mention legal costs and were in a different class.
5. The county-court proceedings challenged how service charges were apportioned, alleged over-recovery and sought repayment, with consequences for the building’s leaseholders. They struck at the heart of the building’s management, so the respondent’s costs were incurred for general management. The FTT’s reasoning had no flaw or gap, and Walsh’s separate role as commercial lessee had not led it astray.

1. Upper Tribunal (Lands Chamber): In [2026] UKUT 267 (LC) , dismissed the appeal and upheld the First-tier Tribunal’s decision that the costs were recoverable under the lease.
2. First-tier Tribunal (Property Chamber): Determined that the respondent’s costs of the county-court litigation were recoverable under clause 2(2)(ix). The appellant appealed with permission.