PAS Property Services Ltd v Mr & Mrs S D Hayes [2014] UKUT 0026 (LC) Costs

The lessees applied for two orders.

First, an order that the landlord pay their costs of the appeal of £5,351.05. That sum reflected the time that they had spent in research and preparation for the appeal, appearing at the hearing and their disbursements.

Second, a section 20C order.

Having given the parties a very clear steer as to where to find the Upper Tribunal’s costs powers, HHJ Robinson observed that “it is disappointing that, despite … draw[ing] the parties’ attention to the Tribunal’s powers to award costs in rule 10 of the 2010 Rules as amended in 2013, the Tenants’ application for costs wholly fails to address this provision and the Landlord’s response fails to address the 2013 amendments”.

She therefore outlined the three types of costs orders that the Upper Tribunal has power to award on an appeal from the LVT/FTT:

(1)  A wasted costs order under s.29(4) of the Tribunals, Courts and Enforcement Act 2007: rule 10(3)(a),

(2)  A costs order made where the Tribunal considers that a party or its representative has acted unreasonably in bringing, defending or conducting the proceedings: rule 10(3)(b), and

(3)  The cost of any court fees: rule 10(14).

Wasted costs

No application for a wasted costs order had been made, nor, in her view, were there grounds for such an order.

Unreasonable conduct

As to rule 10(3)(b), the fact that the appeal was dismissed was insufficient to justify the landlord paying the lessees’ costs.

The landlord had not acted unreasonably in bringing or pursuing the appeal:

• Permission to appeal was granted by HHJ Walden-Smith. That suggested that the grounds of appeal were arguable;
• The construction of the lease had not been, by any means, straightforward;
• It had been reasonable for the landlord to take the matter to the Upper Tribunal, because the LVT’s decision under appeal conflicted with another LVT decision on the same point. The question of charging for the common heating costs needed to be resolved, and
• The lessees had made allegations of dishonesty and duplicity, but there was no evidence to support those assertions.

HHJ Robinson did however order that the landlord pay the £100 of photocopying costs incurred by the lessees because the landlord’s solicitor had unreasonably failed to provide a court bundle until the very last minute and as a result the lessees had had to make copies of documents themselves.

Court fees

HHJ Robinson determined however that it was appropriate that the landlord should pay the lessees’ court fees of £100 under rule 10(14) because they had been successful in the appeal.

The landlord was accordingly required to pay the lessees’ costs of £200.

The parties agreed that a section 20C order should be made.

Access to the rules

The internet is a wonderful thing, because it gives everyone equal access to the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010.

This means that when an Upper Tribunal judge asks for submissions on a particular rule, all of the parties, whether legally represented or not, can read the rule and address the Tribunal on it.

That at least appears to have been HHJ Robinson’s plan here on the question of costs. Unfortunately here the parties – literally – did not read the script, leading to HHJ Robinson’s expression of rather Chekhovian disappointment.

Rule 10

Moving from the general to the specific, I turn to rule 10 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010.

Rule 10 governs costs in the Upper Tribunal, and contains fourteen subrules, which makes it rather heavy reading.

The value of this judgment therefore is in its summarising of (nearly all of) the Upper Tribunal’s powers to make an award of costs.

That battery of powers is made complete by subrule (4), which provides:

“(4) Except in proceedings to which paragraph (5) or (6) apply, the Tribunal may—

“(a) with the consent of the parties, or

“(b) where there is a disparity of interest or resources between the parties,

“direct that an order for costs may be made in the proceedings against one or more of the parties in respect of costs incurred following such a direction”.

That subrule is not one that I have come across in practice, but it bears a passing resemblance to the elements of the costs capping rules in the Civil Procedure Rules.

On the subject of the Civil Procedure Rules …

Unrepresented parties’ costs

HHJ Robinson was not required to consider the amount claimed by the lessees in respect of their costs because she made no award.

If she had held that the landlord had acted unreasonably, were the lessees entitled to their costs?

–   Yes, to an extent.

Rule 46.5 of the Civil Procedure Rules allows for unrepresented parties to recover the cost of time spent preparing their case, capped at a maximum of “two-thirds of the amount which would have been allowed if the litigant in person had been represented by a legal representative”.

By rule 46.5(4) “the amount of costs to be allowed to a litigant in person for any item of work claimed will be—

“(a) where the litigant can prove financial loss, the amount that the litigant can prove to have been lost for time reasonably spent on doing the work; or

“(b) where the litigant cannot prove financial loss, an amount for the time reasonably spent on doing the work at the rate set out in Practice Direction 46”.

Practice Direction 46.nPD3 provides that the hourly rate for what the Ministry of Justice describes as “self-represented litigants” is £18.

These rules apply to proceedings before both the First-tier Tribunal and the Upper Tribunal by virtue of the Litigants in Person (Costs and Expenses) Act 1975. This pocket-sized Act has the cockle-warming attribute of being just two sections long. 

The rules are not the end of the story for lessees

As is evident from HHJ Robinson’s direction on the section 20C application, lessees should not forget that an escape from the clutches of rule 13 does not mean that they are free from liability to bear a landlord’s costs.

There is still the risk, if the lease permits, of a landlord seeking to recover the costs of the appeal either:

• Through the service charge, or
• Directly from the tenant by way of variable administration charge under the non-service charge covenants in the lease.

Such recovery can be which can be met by an application under section 20C of the Landlord and Tenant Act 1985 or pursuant to Schedule 11 of the Commonhold and Leasehold Reform Act 2002 respectively.

Click here for a printer-friendly version of this post.