Claimant Fails to Obtain Costs After Rent Repayment Application Withdrawn

OUTCOME: Dismissed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference :

LON/00AN/HMG/2023/0016

HMCTS code : P:PAPER Property : [ADDRESS] [POSTCODE] Applicants : [redacted] Mr [COUNSEL] Ms [COUNSEL] : [COMPANY] ([NAME]) Respondents : [redacted] [COMPANY] of [COMPANY] : [COUNSEL] [NAME] (Mr [NAME]) Type of [NAME] : [NAME] for costs under Rule 13 of the Tribunal Procedure (First-tier Tribunal )(Property Chamber) Rules 2013, following the withdrawal of a [NAME]. Tribunal members : Judge [NAME] of decision : 17 June 2024

DECISION

2 Description of hearing This has been a remote hearing on the papers. The form of remote hearing was P:PAPERREMOTE, A face-to-face hearing was not held because the tribunal considered that the [NAME] might be determined by summary assessment, pursuant to rule 13(7)(a), without a hearing, on the basis of the written submissions from the parties unless any party requested a hearing and no party did. The decisions made and reasons are set out below. Decisions of the Tribunal 1. The tribunal makes no order for costs under Rule 13 (1)(a) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (the ‘Rules’).

2. The Tribunal makes no order for wasted costs under Rule 13(1)(b) of the Rules. Background

(1) The applicants applied to the tribunal for a Rent Repayment Order to be made against the respondents under Housing and Planning Act 2016. On 20 November 2023 the [NAME] against [COMPANY] was discontinued. Following a Hearing on 22 November 2023 the Tribunal consented to the withdrawal by the applicants on that date of the [NAME] against the other respondents. (2) By an [NAME] dated 20 November 2023 [NAME], solicitors to [COMPANY], sought an order for costs under Rule 13(1)(a) and/or Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (the ‘Rules’). The [NAME] referred to a claim for wasted costs but refers to the [NAME] being made under Rule 13(1)(b). (3) The costs’ [NAME] was made within the time limits prescribed by Rule 13(5). (4) Rule 13(1)(a) provides that the tribunal may order the legal or other representative of a party to meet the whole of any wasted costs or such part of them as may be determined in accordance with Tribunal Procedure Rules. (5) Rule 13(1)(b) provides that the tribunal may make an order in respect of costs if a person has acted unreasonably in bringing, defending or conducting proceedings in a residential property case or a leasehold case.

3 (6) Rule 13(6) provides that the Tribunal may not make an order for costs against a person (“the paying person”) without first giving that person an opportunity to make representations. (7) The Tribunal advised the parties at the Hearing that it would be issuing Directions in relation to the costs. These were originally dated 22 November 2023, amended on 23 February 2024. (8) The Tribunal directed that [COMPANY] should provide a statement of case (a) clarifying whether the [NAME] was under Rule 13(1) (a) or Rule 13(1) (b), and against whom the [NAME] was made,

(b) The reasons why it is said that the respondent has acted unreasonably in bringing, defending or conducting proceedings and why this behaviour is sufficient to invoke the Rule 13, dealing with the issues identified in the Upper Tribunal decision in [ADDRESS] Company (1985) [COMPANY] v Mrs [NAME] [2016] UKUT (LC) (‘Willow’) with particular reference to the three stages that the tribunal will need to go through, before [NAME] an order under Rule 13;

(c) The reasons why it is said that it is just and equitable to make an order under section 20C Landlord and Tenant Act 1985 . (d) Any further legal submissions;

(e) Full details of the costs being sought, including: • A schedule of the work undertaken; • The time spent; • The grade of fee earner and his/her hourly rate; • A copy of the terms of engagement with the applicant; • Supporting invoices for solicitor’s fees and disbursements; • Counsel’s fee notes with counsel’s year of call, details of the work undertaken and time spent by counsel, with his/her hourly rate; and • Expert witness’s invoices, the grade of fee earner, details of the work undertaken and the time spent, with his/her hourly rate. (9) The Directions directed that the party against whom the costs [NAME] was made should send the other parties a statement in response setting out: (a) The reasons for opposing the applications, with any legal submissions; (b) Any challenge to the amount of the costs being claimed with full reasons for such challenge and any alternative costs; (c) Details of any relevant documentation relied on with copies attached.

4 (f) The Directions provided for [COMPANY] to send the party against whom the costs [NAME] was made a statement in reply to the points raised. (g) The Directions stated that the Tribunal would determine the costs [NAME] without a hearing on the on 5 March 20basis of written submissions. Rule 13(7)(a) permits the tribunal to determine matters on the basis of written submissions from the parties and no party objected to this approach. (h) The Tribunal received a statement of case from [NAME[NAME] dated 20 November 2023. (i) The Tribunal received a statement of case from the applicants’ legal representative dated 21 November 2023. (j) Following receipt of the Tribunal’s amended Directions Mr [NAME] of [NAME] [NAME] e mailed the Tribunal that he had, ‘no instructions to take the costs argument further.’ He stated, ‘In the interest of not wasting any of the parties’ time I request that the costs matter is concluded’. [COMPANY] case 1. [NAME[NAME]’’s statement of case claimed ‘wasted’ costs under Rule 13(1)(b) [sic] to be ordered against the [NAME].

2. The costs sought by [COMPANY] are under Rule 13(1) are set out in the statement of case as • Costs of [NAME] [NAME] [COMPANY] of £2,300 • Council’s fee of £1,000 In each case without VAT as [COMPANY] is a Guernsey registered company. 3. [COMPANY] submits that in light of the decision in [NAME] v [NAME] & Ors [2023] UKSC 9 (’[NAME]’) the [NAME], as declared experts in the field of Rent Repayment Orders, should have known that a claim against [RESPONDENT], as superior landlord, should fail, and that the entire costs of defending the [NAME] are wasted and are claimed against the applicants and/or their solicitors.

4. Mr [NAME] referred the Tribunal to his letter to Represent Law of 25 May 2023 in which he had stated that the agreement [COMPANY] had with Mr [NAME] was not a sham ‘Rent to Rent’ agreement, to which letter he had not received a reply, despite chasing for one.

5. Mr [NAME] submitted that the claim for wasted costs was being made against [COMPANY], not the applicants who are now resident in Italy.

5 The applicants’ case 6. In response to [NAME] statement of case Ms [NAME] of [COMPANY] confirmed that [COMPANY] are a firm specializing in Rent Repayment Orders. Having regard to [NAME] it did not purport to advance a case that [RESPONDENT] would be liable as a superior landlord. It had joined [RESPONDENT] as a respondent to ascertain whether or not there was some relationship between [COMPANY] and the other respondents such as to make it the immediate landlord of the applicants.

7. Ms [RESPONDENT] submitted that the nature of the relationship was not ascertainable before it received relevant evidence, and that this was only received during the ‘without prejudice’ negotiations with the other respondents, at which point it had discontinued the [NAME] against [COMPANY], on 14 November 2023. [NAME] submitted that the nature of the relationship in a rent-to-rent scheme, including potential sham agreements can only properly be explored following evidence, submissions and cross-examination, and that it is therefore not unreasonable to bring an action against the registered title owner. Reasons for the Tribunal’s decision 8. In reaching its decision the Tribunal has had regard to the documentation referred to above and to the decision in [ADDRESS] Company (1985) [COMPANY] v Mrs [NAME] [2016]UKUT 290 (LC) (‘Willow’). Rule 13(1) costs 9. Rule 13 provides, ‘13.—(1) The Tribunal may make an order in respect of costs only— (a) under section 29(4) of the 2007 Act (wasted costs) and the costs incurred in applying for such costs; (b) if a person has acted unreasonably in bringing, defending or conducting proceedings in— (i) an agricultural land and drainage case, (ii) a residential property case, or (iii) a leasehold case; or (c) in a land registration case.’ 10. Section 29 Tribunals, Courts and Enforcement Act 2007 provides ‘(1)The costs of and incidental to— (a)all proceedings in the First-tier Tribunal, and

6 (b)all proceedings in the Upper Tribunal, shall be in the discretion of the Tribunal in which the proceedings take place. (2)The relevant Tribunal shall have full power to determine by whom and to what extent the costs are to be paid. (3)Subsections (1) and (2) have effect subject to Tribunal Procedure Rules. (4)In any proceedings mentioned in subsection (1), the relevant Tribunal may— (a)disallow, or (b)(as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with Tribunal Procedure Rules. (5)In subsection (4) “wasted costs” means any costs incurred by a party— (a)as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative, or

(b)which, in the light of any such act or omission occurring after they

were incurred, the relevant Tribunal considers it is unreasonable to

expect that party to pay. (6)In this section “legal or other representative”, in relation to a party to proceedings, means any person exercising a right of audience or right to conduct the proceedings on his behalf.’ 11. The parties appear to have conflated ‘wasted costs’ which are dealt with in Rule 13 (1)(a) and the costs where a party has acted unreasonably referred to in Rule 13 (1)(b).

12. The Tribunal has considered whether to make an order for costs under both Rule 13(1)(a) and Rule 13(1)(b).

13. The decision in Willow is of paramount importance in whether the Tribunal should award costs under Rule 13(1). The Tribunal has had regard to the decision as a whole in reaching its decision, including paragraph 62 of Willow in which the Tribunal stated, ‘……The residential property division of the First-tier Tribunal is a costs shifting jurisdiction by exception only and the parties must usually expect to bear their own legal costs.’ 14. The decision in Willow sets a high threshold as to what constitutes unreasonable behaviour, the Upper Tribunal’s approach being set out in paragraph 24 of that decision,

7 “An assessment of whether behaviour is unreasonable requires a value judgment on which views might differ but the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level…..“Unreasonable” conduct includes conduct which is vexatious, and designed to harass the other side rather than advance the resolution of the case. It is not enough that the conduct leads in the event to an unsuccessful outcome. The test may be expressed in different ways. Would a reasonable person in the position of the party have conducted themselves in the manner complained of? Or Sir [NAME] “acid test”: is there a reasonable explanation for the conduct complained of?” 15. Costs under Rule 13(1)(a)

16. For the Tribunal to make an order against [COMPANY] under Rule 13(1)(a) [COMPANY] would have to show that Law Represent had acted unreasonably, as required by Section 29(5) Tribunals, Courts and Enforcement Act 2007.

17. Ms [NAME] provides an explanation, in her statement of case, for why [COMPANY] acted as it did in joining [RESPONDENT] as a respondent, referred to at paragraph 7 above.

18. In its Directions the Tribunal gave [COMPANY] solicitors the opportunity of responding to the applicants’ case, which [NAME[NAME] did not take, as evidenced by the e mail from it of 5 March 2024.

19. The Tribunal accepts Ms [NAME] explanation, and accordingly finds that the applicants’ legal representative did not act unreasonably, so that the costs incurred by [NAME] are not ‘wasted costs’ within the meaning of section 29(5) Tribunals, Courts and Enforcement Act 2007. Costs under Rule 13(1)(b)

20. On the basis of the submissions before it from [NAME] the Tribunal finds that [COMPANY] is not seeking costs against the applicants, but against their legal representative. It therefore makes no order for costs against the applicants under Rule 13(1)(b).

21. If [COMPANY] had sought costs against the applicants under Rule 13(1)(b) it would have had to show that the applicants had acted unreasonably.

22. The three stages that the Tribunal needs to go through when considering whether a costs order should be made under Rule 13 (1) (b) are set out in Willow at Paragraphs 27 and 28; which are set out below. ‘27. When considering the rule 13(1)(b) power attention should first focus on the permissive and conditional language in which it is framed: “the Tribunal may make an order in respect of costs only … if a person has acted unreasonably….” We make two obvious points: first, that

8 unreasonable conduct is an essential pre-condition of the power to order costs under the rule; secondly, once the existence of the power has been established its exercise is a matter for the discretion of the tribunal. With these points in mind we suggest that a systematic or sequential approach to applications made under the rule should be adopted.

28 At the first stage the question is whether a person has acted unreasonably. A decision that the conduct of a party has been unreasonable does not involve an exercise of discretion but rather the [NAME] of an objective standard of conduct to the facts of the case. If there is no reasonable explanation for the conduct complained of, the behaviour will properly be adjudged to be unreasonable, and the threshold for the [NAME] of an order will have been crossed. A discretionary power is then engaged and the decision maker moves to a second stage of the inquiry. At that second stage it is essential for the tribunal to consider whether, in the light of the unreasonable conduct it has found to have been demonstrated, it ought to make an order for costs or not; it is only if it decides that it should make an order that a third stage is reached when the question is what the terms of that order should be.’

23. The Tribunal do not find that the applicants had acted unreasonably. The applicants instructed a legal representative on whose legal advice they relied and the Tribunal does not find, for the reasons given above, the behaviour of [COMPANY] to have been unreasonable.

24. In light of the Tribunal’s finding in relation to the first stage set out in Willow the Tribunal do not need to consider the second and third stages set out in Willow. 25. The tribunal therefore makes no order for costs under Rule 13(1)(b).

Name: Judge Pittaway Date: 17 June 2024

9

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).