Tenant Entitled to Costs and Interest Based on Lease Provisions

Tribunal Reference : LON/00BK/LSC/2020/0375

LON/00BK/LSC/2021/0023

Court Claim No : G84YX791

HMCTS Code : CVP Remote

Property : [ADDRESS] [POSTCODE]

Applicant Claimant: [redacted] : Mr [COUNSEL] of Counsel, instructed by [COMPANY]

Respondent: [redacted] : no attendance

Type of Application : Determination of costs and interest following a hearing on 7 June 2021

Tribunal Members : Tribunal Judge Dutton

Mrs A Flynn MA MRICS

In the County Court : Tribunal Judge Dutton

Mrs A Flynn MA MRICS as Assessor

Date of Hearing : 17 January 2022

Date of Decision : 18 January 2022

_______________________________________________ FIRST - TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) & IN THE COUNTY COURT AT CENTRAL LONDON SITTING AT 10 ALFRED PLACE, LONDON [POSTCODE]

DECISION ____________________________________ © CROWN COPYRIGHT 2022

COVID-19 PANDEMIC: DESCRIPTION OF HEARING

This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was CVP Video. A face-to-face hearing was not held because it was not practicable, and no-one requested same and further that issues could be determined in a remote hearing.

The documents that we will refer to were in a bundle of some 25 pages which have been noted by us during the course of the hearing. The order is as described at the end of these reasons.

DECISION

1. The tribunal determines that the costs payable by the respondent,

following a summary assessment is £30,553.80 for the reasons set

out below. Such sum is to be paid by 10 March 2022.

2. The tribunal determines that the interest payable is the sum of

£400.00 again payable by 10 March 2022 for the reasons set out

below

Background

1. On 9 July 2021, subsequently amended on 17 January 2022 we found

that the respondent was indebted to the applicants in the sum of

£8,266.45 (the Decision). The question of the costs associated with the

application and interest accruing on the sum found payable were

adjourned to a later date. Directions were included in the Decision and

provided for a paper determination. Subsequently a request for a

hearing was made and the matter originally listed for 25 November

2021. However, on 15 November 2021, solicitors acting for Mr [RESPONDENT]

sought an adjournment because of problems following an assault. He

indicated he would not be available until the new year.

2. The solicitors for the applicant consented to such an adjournment and

the matter was relisted for 17 January 2022. However, on 12 January

2022 the solicitors acting for Mr [RESPONDENT] said they were coming off the

record.

3. Subsequently, on 13 January 2022 Mr [RESPONDENT] sought a postponement of

the hearing, both it would seem because of his financial situation and

health issues. On 14 January 2022 he wrote again saying he had a fever

and cough, and was gathering medical evidence to support his

application to postpone. He told us that he would not be attending. On

the morning of the hearing he contacted the tribunal to confirm he

would not be attending but that he was seeking medical support and

new solicitors. 4. The applications for adjournment were opposed by the applicants and

in support we were provided with the case report in the matter of

Financial Conduct Authority v [COMPANY] and others [2020]

EWHC 26 (Ch) 2020 WL 00281683.

5. Mr [COUNSEL], counsel for the applicants, highlighted the elements

needed to be established by the respondent to support an application

for a postponement on the grounds of health as set out in the FCA

decision at paragraphs 54 onwards.

6. In this case we have no medical evidence to support the respondent’ s

request for postponement. Further the solicitors then acting for the

respondent had lodged a response to the applicant’s statement of case

setting out the respondent’s position on this application. We were told

that the solicitor having the conduct of the case would be absent for

some time from the end of January.

7. The problems from which it is said the respondent suffers have not

been raised before and very late in the day. Given that his solicitors

have already filed a response there was little that his attendance would

add as following consideration of the written submissions there would

need to be a summary assessment of the costs, which we undertook. In

the circumstances we declined to adjourn the matter.

Hearing

8. We were provided with a Statement concerning the applicant’s

entitlement to recover costs which also sought to explain an error on

the final judgment figure and set out the interest claimed. On the error

we were provided with a figure for inclusion in the Decision which

proved to be incorrect. The error is in the respondent’s favour and we

there agree to amend the Decision and the judgment to reflect the new

figure of £8,266.45.

9. On the question of interest, the applicant relies on clause 3.01.2 of the

lease under which the respondent holds his interest. This provides that

if a payment of rents or any part thereof are in arrears for fourteen days

then interest becomes payable at the rate of 2% above the Bank

Minimum Lending rate. This does depend on a demand for the rents

having been made, which clearly have been in this case.

10. The respondent’s solicitors sought to suggest that the demand had to be

for interest, but we cannot agree with that interpretation of the lease.

The interest flows from the respondent’s failure to settle the demand

and was pleaded in the Particulars of Claim.

11. The [NAME] have calculated the interest from 14 August

2018 to the 27 July 2021 in the sum of £416.98, with a daily rate of

£0.48.The calculation appears to have been dealt with by use of a

computer programme.

12. We then turned to the question of costs. Mr [NAME] relied on clause

3.16 of the lease. This said as follows:

To keep the Landlords fully and effectively indemnified from and

against all actions proceedings claims demands liabilities costs

charges and expenses howsoever arising which may be brought by

any person against them or be incurred by them in consequence of

any of the following matters or things

(a) The use of the Premises

(b) Any breach by the Tenant of any covenant or stipulation

contained.

13. In addition, the applicant was entitled to recover the costs as a service

charge by reason of the Third Schedule Part II to the lease at paragraph

D(10). This relates to any sums paid or incurred by the Landlords or

the [NAME] in respect of “All such acts matters and things as

may be in the Landlords’ or [NAME]’ discretion be necessary

or advisable for the proper maintenance security or administration of

the Building or for good estate management or for the performance

of their obligation and exercise of their rights under this Underlease

including the payment of all fees and expenses reasonably required in

connection with the management of the Building to any [NAME] or

other Agents Surveyors Accountants Solicitors or other professional

advisors”

14. This it was said enabled the costs of these proceedings to be recovered

as a service charge as well as under clause 3.16.

15. Prior to the hearing we had referred the case of [COMPANY] v

Boakeye [2021] EWCA Civ 1725 to the parties. [NAME] sought to

differentiate this case from Kensquare in that there was specific

mention of solicitors in clause D(10) in the Third Schedule Part II of the

lease, which was lacking in the lease held by Mrs [NAME] (see para 54

of the judgment in that case).

16. On the question of the quantum of costs we were provided with two

costs schedules in form N260. One in the sum, of £29,253.80 for the

costs of the proceedings both before the Court and this Tribunal and

the other ion the sum of £11,484.60 for dealing with this costs

application. A total of £40,738.40 in respect of a debt of not much

over £8,000.

17. Mr [NAME] argued that costs should be awarded on a full indemnity

basis and that proportionality played no part, this being a contractual

debt. He did agree that reasonableness did play a part in our

assessment. There was no application under rule 13 of the Tribunal

Procedure (First-tier Tribunal)([NAME]) Rules 2013 (the

Rules) although it was suggested by the respondent that the applicant

sought costs under this provision. We were reminded that this case had

been running for some time. Indeed, the letter before action is dated 18

December 2019.

18. On the level of costs, we heard briefly from Mrs [NAME] of instructing

solicitors [COMPANY]. She had been involved with the case

from the outset. We did query the amount of time spent on

attendances with the client and were told that there had been

communication with both the landlord, [APPELLANT]

and the [NAME], but she did not think this had caused

duplication. We also queried the costs incurred in communicating with

the respondent, which were in excess of 6.5 hours and on others, which

we told was Counsel and the Court or tribunal.

19. Another area we sought clarification upon was the time spent under the

schedule, in particular the preparation of briefs, both for the CMC and

the hearing, which appeared to be three hours in each case, which we

thought excessive. It was explained that the CMC brief contained the

information relating to the case and taken time to prepare. In addition,

the time spent in relation to attendances at the hearing and the CMC

were queried.

20. In so far as the legal fees for the costs claim are concerned again, we

queried the time spent with the client and on the respondent. We were

told that’s time had been spent investigating an anomaly in the

judgment figure and calculating the interest. We also asked why

Counsel’s fees for the cost hearing where higher than the brief fee for

the full hearing. In all cases we noted the responses given.

21. In addition to the above there was a claim of £402 for the fees of HML,

which appeared to be an arrears management fee and costs of

instructing solicitors, which it is said are either payable by reason of

clause 3.16, or as a variable administration charge under schedule 11 of

the 2002 Act.

22. The respondent had filed a response to the applicants claim for

entitlement to costs. This was dated 13 September 2021. We have

already referred to the respondent’s argument on interest. The

response then turned to the terms of the lease. Reference is made to

clause3.14 which enables the Landlord to recover costs associated with

forfeiture proceedings, although this was not in fact the main plank of

the applicant’s submission. As a matter of comment, we are somewhat

doubtful that the claim could proceed under this head as neither the

letter before action, nor the particulars of claim mention forfeiture, but

it was not pursued before us. What is noted is that the response does

not address the provisions of clause 3.16 but appears to conflate them

with clause 4.01. What the response does say is that “the majority of

the contractual terms the applicant relies on to seek costs are not

relevant as explained above”.

23. Reference is made to rule 13 of the Rules but there is no application

under that provision. The submission then goes on to explain why the

respondent challenged the service charge costs.

Findings

24. We accept that in deciding contractual costs the question of

proportionality is not relevant. However, reasonableness is. We accept

Mr [NAME] argument that the costs of these proceedings, both

before the Court and this tribunal are recoverable under the

provisions of clause 3.16 and the Third Schedule Part II paragraph

D(10), both of which we have set out above. Clause 3.16 is relevant

as clearly the respondent has been in breach of his covenant to pay the

rents as provided for in clause 3.01.1 of the lease. Paragraph D(10)

specifically refer to solicitors costs, which in our finding would include

Counsel’s fees.

25. The respondent makes no challenge to the quantum of the costs,

concentrating instead on the applicant’s entitlement. There is little in

the way of response to the entitlement of the applicant under clause

3.16. The points raised in respect of Rule 13 costs is not relevant. The

reasons behind the challenge were addressed in our decision and taken

into account at that time.

26. We have rejected the respondent’s argument on the question of

interest (see para 10). The sum claimed is, for reasons not wholly

clear to 27 July 2021. Mr [NAME] asked us to run interest forward to

the date of the costs hearing and to provide for ongoing interest until

payment. It seems to us that this is a recipe for more litigation. We have

a discretion on interest. The applicant seeks interest at 2%, when it

could, under the terms of the lease, be slightly higher as reference is 2%

above the Bank Minimum Lending Rate. The difference would be

minimal. We consider an appropriate sum would be £400, to reflect

the interest to date of our judgment in July 2021, with no further

accrual.

27. On the question of costs, we do not consider the hourly rate used by the

applicant’s solicitors to be unreasonable, nor the standard of fee earner,

although the involvement of Ms [NAME] was perhaps unnecessary given

the competence of Mrs [NAME].

28. We propose to take a broad-brush approach to the assessment of the

costs. We do think that the times spent both on attendances on the

applicant, including the need to liaise with two parties, the Landlord

and the [NAME] agent, and on the respondent are high. In addition,

the costs on such items such as the attendance at the CMC and the

preparation of the brief for same are too high. No attendance by

solicitors at the CMC would be required with Counsel present and three

hours, including two hours of Ms [COUNSEL] time to brief counsel for a

CMC, when much of the paperwork was still to be produced is

excessive. It is usual for costs of attendance on the Court or tribunal to

be absorbed in the hourly rate.

29. Further the costs in relation to the claim for costs seems unreasonably

high. It is nearly 40% of the costs of running the whole case. Again, the

attendance on the client seems excessive, over 9 hours and two

members of staff at the hearing which lasted only some 2 hours is also

excessive. Counsel’s fee for the costs hearing is £500 more than the

brief fee for the full hearing. The fee for calculating the interest seems

high as it looks as though this was dealt with by way of computer

programme.

30. Taking these matters into account we consider that it is reasonable to

reduce the overall fee claim by 25%. This reduces the total sum claimed

from £40,738.40 to £30,553.80, which we consider is a reasonable

amount given the complexity of the claims and the sums in dispute.

This includes any fee that may be payable to the [NAME] in

respect of their claims.

31. Accordingly, we find that the costs payable by the respondent are

assessed at £30,553.80, such sum to be paid by 10 March 2022.

Judge Dutton

18 January 2022

ANNEX - RIGHTS OF APPEAL

Appealing against the tribunal’s decisions

1. A written application for permission must be made to the First-tier Tribunal at the Regional tribunal office which has been dealing with the case.

2. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

3. If the application is not made within the 28-day time limit, such application 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 application for permission to appeal to proceed despite not being within the time limit.

4. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers

5. Any application to stay the effect of the decision must be made at the same time as the application for permission to appeal.

Appealing against the County Court decision

1. A written application for permission must be made to the court at the Regional tribunal office which has been dealing with the case.

2. The date that the judgment is sent to the parties is the hand-down date.

3. From the date when the judgment is sent to the parties (the hand-down date), the consideration of any application for permission to appeal is hereby adjourned for 28 days.

4. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

5. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers.

6. If an application is made for permission to appeal and that application is refused, and a party wants to pursue an appeal, then the time to do so will be extended and that party must file an Appellant’s Notice at the appropriate County Court (not Tribunal) office within 14 days after the date the refusal of permission decision is sent to the parties.

7. Any application to stay the effect of the order must be made at the same time as the application for permission to appeal.

Appealing against the decisions of the tribunal and the County Court

In this case, both the above routes should be followed.

General Form of Judgment or Order In the County Court at

Central London

sitting at 10 [ADDRESS] [POSTCODE]

Claim Number G84YX791

Date 18 January 2022

[APPELLANT]

Claimant [RESPONDENT]

Defendant Ref

BEFORE Tribunal Judge Dutton, sitting as a Judge of the County Court (District Judge), with Mrs A Flynn MA MRICS as assessor

UPON the claim having been transferred to the First-tier Tribunal for administration on 24 November 2020 by order of Deputy District Judge Redpath Stevens sitting at the County Court at Central London

AND UPON hearing Mr [APPELLANT] for the Claimant the Defendant not attending

AND UPON this order putting into effect the decisions of the First-tier Tribunal made on 18 January 2022

IT IS ORDERED THAT:

1. The Defendant shall pay to the Claimant by 10 March 2022 the sum of £30,553.80 being the sum found due and payable in respect of costs.

2. The Defendant shall pay to the Claimant by 10 March 2022 the sum of £400 being the sum found payable in respect of interest.

3. The reasons for the making of this Order are set out in the combined decision of the court and the First-tier Tribunal ([NAME]) dated 18 January 2022 under case reference LON/00BK/LSC/2020/0375 and LON/00BK/LSC/2021/0023.

Dated: 18 January 2022