Leasehold and Freehold Reform Act 2024

50 Costs of right to manage claims

(1) The CLRA 2002 is amended as follows.

(2) In section 82 (right to obtain information before right to manage claim)—

(a) in subsection (2)(b), omit “on payment of a reasonable fee”;

(b) after subsection (3) insert—

“(4) The RTM company is liable for the reasonable costs incurred by a person in complying (in accordance with this section) with a notice under this section.

(5) Any question arising in relation to the amount of the costs payable by the RTM company is, in default of agreement, to be determined by the appropriate tribunal.”

(3) After section 87 insert—

“87A Costs: general

(1) An RTM company and a member of an RTM company are not liable for any costs incurred by any other person in consequence of a claim notice given by the company in relation to any premises, except as set out in this section.

(2) A lease, transfer, contract or other arrangement is accordingly of no effect to the extent it would provide to the contrary.

(3) An RTM company is liable to a member of the company in respect of costs incurred by the member to the extent agreed between the company and the member.

(4) A member of an RTM company—

(a) is liable to the company in respect of costs incurred by the company to the extent agreed between the member and the company;

(b) is liable to another member of the company in respect of costs incurred by that other member to the extent agreed between the two members.

(5) An RTM company or a member of an RTM company are liable for costs incurred by another person in connection with proceedings before a court or tribunal if—

(a) the court or tribunal has power under another enactment to order that they pay those costs, and

(b) the court or tribunal makes such an order.

(6) An RTM company and a member of an RTM company are liable for costs incurred by another person in the circumstances referred to in section 87B.

(7) For the purposes of this section, “member”, in relation to an RTM company, means each person who is or has been a member of the RTM company.

(8) See also sections 20CA and 20J of the Landlord and Tenant Act 1985, which prevent costs in connection with a claim under this Chapter being recovered by way of a variable service charge (within the meaning of section 18 of that Act).

87B Power of tribunal to order costs where claim ceases

(1) The appropriate tribunal may, on the application of a person (“the applicant”) that incurs costs in consequence of a claim notice given by an RTM company, order that the RTM company is liable to the applicant for the costs if all of the conditions in subsection (2) are met.

(2) The conditions are—

(a) the claim notice—

(i) is at any time withdrawn or deemed to be withdrawn by virtue of any provision of this Chapter, or

(ii) at any time ceases to have effect by reason of any other provision of this Chapter;

(b) the RTM company acts unreasonably in—

(i) giving the claim notice, or

(ii) not withdrawing it, causing it to be deemed withdrawn, or causing it to cease to have effect sooner;

(c) the applicant is—

(i) a landlord under a lease of the whole or any part of the premises,

(ii) party to such a lease otherwise than as landlord or tenant, or

(iii) a manager appointed under Part 2 of the 1987 Act to act in relation to the premises, or any premises containing or contained in the premises;

(d) the costs are incurred before the claim notice is withdrawn, is deemed withdrawn, or ceases to have effect;

(e) the costs are incurred other than in connection with proceedings before a court or tribunal;

(f) the costs are reasonably incurred.

(3) Where the appropriate tribunal orders that an RTM company is liable under subsection (1), each person who is or has been a member of the RTM company is also liable (jointly and severally with the RTM company and each other such person).

(4) But a person is not liable if—

(a) the lease by virtue of which they were a qualifying tenant has been assigned to another person, and

(b) that other person has become a member of the RTM company.

(5) The reference in subsection (4) to an assignment includes—

(a) an assent by personal representatives, and

(b) assignment by operation of law where the assignment is to a trustee in bankruptcy or to a mortgagee under section 89(2) of the Law of Property Act 1925 (foreclosure of leasehold mortgage).”

(4) Omit sections 88 and 89 (costs of right to manage claims).