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Recovery of service charges

publication date: Nov 15, 2007
author/source: Sian Evans
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Recovery of service charges is one of the most widely disputed areas between leaseholders and landlords. The recent case of Ferraro v. Halifax and The Albert Dock Company decided in October 2007 provides welcome guidance for both leaseholders and landlords if there are continued challenges by a leaseholder to the recovery of service charges.

Mr. Ferraro, the leaseholder of a flat in Liverpool’s Albert Dock had over the years has been involved in substantial litigation with his building society Halifax and the owners of the freehold The Albert Dock Company. The long (residential) lease of Mr Ferraro’s is subject to a mortgage granted by Halifax Building Society and the dispute is extended to them also.

From 2001 a suspended Possession Order had been made in favour of Halifax plc against Mr. Ferraro. The dispute between Mr. Ferraro and Halifax plc related to costs that had been added to Mr. Ferraro’s mortgage account. Mr Ferraro’s argument that all legal costs that had been deducted from his mortgage account be returned.

Three years later The Albert Dock Management Company had issued proceedings against Mr. Ferraro for payment of outstanding service charges. The Albert Dock Company was successful in that application and judgment was ordered against Mr. Ferraro. By 2005 Mr Ferraro had issued a claim by that the Albert Dock Management had breached the terms of the lease and also the Landlord & Tenant Act 1985 by failing to consult in relation to service charges. The claim was struck out by the Judge as an abuse of process.

In the 2005 claim Mr. Ferraro had alleged that:

  • the service charges failed to include a contribution by Albert Dock in respect of apartments that they owned l the Albert Dock Company had wrongly added legal costs to the service charges
  • that Albert Dock charged for terrorist insurance at a level which they were not entitled to charge
  • that Albert Dock Company wrongly charged Mr. Ferraro over a three month period
  • that Albert Dock Company had wrongly calculated Mr. Ferraro’s contribution to the estate charges for 1998.

In total there were at least seven applications that were made by Mr. Ferraro in different proceedings and they also included a number of appeals made by Mr. Ferraro which were unsuccessful.

The Judge in the application made in 2005 by Mr Ferraro said that many of the claims made by Mr. Ferraro were wholly unmeritorious and that Mr. Ferraro had taken up many days of court time and many days of additional preparation time. Mr. Ferraro appeared in person on all applications. The judge gave a warning in making his decision in 2005 that should he issue any further claims or make any further application which were considered to be without merit then the court would consider making an extended civil restraint order.

A further issue that had been raised previously by Mr Ferraro was in relation to the car parking space. He had argued that he had a legal interest in the car parking space when the Albert Dock argued he had a licence. Mr Ferraro’s case was dismissed but this didn’t stop him appealing that decision twice and then applying to judicially review the decision of the previous two judges. This application was refused.

By 2006 His Honour Judge Stewart had made an extended civil restraint order and this was to remain in effect until June 2008. This meant that he was not supposed to issue an application without permission of the judge. Mr. Ferraro however persisted in bringing applications including an application for permission to appeal against the extended civil restraint order.

The court decided in this particular case a general civil restraint order would be made preventing Mr. Ferraro from bringing any claim or making any application in the High Court or any County Court without first obtaining permission from a nominated Judge.

A general civil restraint order may be made by –

(1) a judge of the Court of Appeal;
(2) a judge of the High Court; or
(3) a designated civil judge or his appointed deputy in a county court,where the party against whom the order is made persists in issuing claims or making applications which are totally without merit, in circumstances where an extended civil restraint order would not be sufficient or appropriate.

Unless the court otherwise orders, where the court makes a general civil restraint order, the party against whom the order is made –

(1) will be restrained from issuing any claim or making any application in –
(a) any court if the order has been made by a judge of the Court of Appeal;
(b) the High Court or any county court if the order has been made by a judge of the High Court; or
(c) any county court identified in the order if the order has been made by a designated civil judge or his appointed deputy, without first obtaining the permission of a judge identified in the order;

It was held by the High Court that the extended civil restraint orders imposed by the Judge and by the Court of Appeal were not sufficient and Mr. Ferraro had persisted in making applications that were totally without merit.

The court felt that Mr Ferraro had exhausted all his routes of appeal and he had persisted in making applications which were totally without merit.

Sian Evans is a partner Weightmans solicitors and specialises in property litigation.
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