Tenant's Cost Claim Rejected by First-tier Tribunal

OUTCOME: Refused

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case reference : LON/00AP/LSC/2023/0371

Property : [ADDRESS] [POSTCODE] (also known as Flat A, [ADDRESS]) Applicant : [redacted] : In person Respondent : [redacted] : Ms [COUNSEL], counsel Type of application : Costs under rule 13 Tribunal members : [NAME] [NAME] : 10 [ADDRESS] [POSTCODE] Date of decision : 29 December 2024

DECISION

2 Decision

(1) The application by the respondent for an order for costs under rule 13 is REFUSED.

Reasons

Background

1. This is an application for the award of costs pursuant to rule 13 of the Tribunal Procedure (First-tier Tribunal)([NAME]) Rules 2013 (the Rules). The application is made on behalf of the respondent lessee in an application under section 27A of the Landlord and Tenant Act 1985. The Tribunal’s substantive decision in the section 27A proceedings was handed down on 24 September 2024. In this decision, to avoid confusion, we will refer to the applicant for costs as Ms [APPELLANT] and the respondent as Mr [APPELLANT]. This matter was dealt with on the papers.

2. Ms [COUNSEL], Counsel, set out the following grounds:

i. [Mr [COUNSEL]] was unreasonable for bringing this application as he knew or ought to have known that his demands were not service charges under the lease ii. [Mr [RESPONDENT]] unnecessarily increased the costs of the Respondent by bringing this matter to the tribunal when the matter was already in the County Court iii. [Ms [NAME]] will rely on [ADDRESS] Limited v Alexander [2016] UKUT 290 (LC) which held that ‘unreasonable’ behaviour includes conduct which is “vexatious “ and “designed to harass the other side”. iv. [[NAME]] seeks an Order from the tribunal judge acting in their capacity as a county court Judge as the matter has now been transferred back to the Clerkenwell and Shoreditch County Court (Claim No:259MC410)

Jurisdiction and the Relevant Law

3. Section 29 of the Tribunal Courts and Enforcement Act (TCEA) provides:

29 Costs or expenses

(1)The costs of and incidental to—

(a)all proceedings in the First-tier Tribunal, and

(b)all proceedings in the Upper Tribunal,

shall be in the discretion of the Tribunal in which the proceedings take place.

3

(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. The Tribunal therefore finds that it retains jurisdiction to consider the present application, which is limited to proceedings before it, notwithstanding that it ordered transfer of the case back to the County Court on 24 September 2024.

5. Rule 13 sets out the circumstances where the FTT ([NAME]) may make cost shifting orders. It provides that the FTT may make an order in respect of costs only in specified circumstances.

Accordingly, costs orders are made only where, by exception, the section specifically allows the Tribunal to do so. Even if one of the listed exceptions is established, the Tribunal has a residual discretion as to whether or not to make an award of costs.

6. [ADDRESS] Co v Alexander [2016] 290, the ambit of rule 13(1)(b) was considered in some detail. It determined that Tribunals should approach a rule 13 costs application in three stages: i. The Tribunal must determine that there has been “unreasonable conduct.” ii. If there has been unreasonable conduct, then the Tribunal must consider whether, in the light of that unreasonable conduct, it ought to exercise its discretion to make an order for costs. iii. If so, then it must consider what the terms of any costs order should be.

7. [ADDRESS] reliance was placed on [NAME] v [NAME] & Anr [1994] Ch 205 where the Court of Appeal considered the meaning of “unreasonable.” Both cases were considered and approved in [NAME] (and other leaseholders) v [COMPANY] [2024] EWCA Civ 1241. Lord Justice Coulson referred to the authorities as follows:

“6. In [NAME] v [NAME] & Anr [1994] Ch 205, the Court of Appeal was concerned with wasted costs orders. One of the requirements for such an order is that the conduct must be ‘unreasonable’. Sir [NAME] MR (as he then was) said at 232 E-G:

‘Unreasonable” also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But

4 conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but it is not unreasonable.’

7. [ADDRESS] Co (1985) Limited v Alexander [2016] UK UT 290 (LC); [2016] L.&T.R.34, the UT dealt with the same issue as that which arises on this appeal, namely the applicable test for unreasonable conduct in bringing, defending or conducting proceedings. One of the issues was whether or not the guidance in [NAME] was applicable. The UT decided that it was, saying at [23]-[26]:

‘23. There was a divergence of view amongst counsel on the relevance to these appeals of the guidance given by the Court of Appeal in [NAME] on what amounts to unreasonable behaviour. It was pointed out that in rule 13(1)(b) the words “acted unreasonably” are not constrained by association with “improper” or “negligent” conduct and it was submitted that unreasonableness should not be interpreted as encompassing only behaviour which is also capable of being described as vexatious, abusive or frivolous. We were urged, in particular by Mr [NAME], to adopt a wider interpretation in the context of rule 13(1)(b) and to treat as unreasonable, for example, the conduct of a party who fails to prepare adequately for a hearing, fails to adduce proper evidence in support of their case, fails to state their case clearly or seeks a wholly unrealistic or unachievable outcome. Such behaviour, Mr [NAME] submitted, is likely to be encountered in a significant minority of cases before the FTT and the exercise of the jurisdiction to award costs under the rule should be regarded as a primary method of controlling and reducing it. It was wrong, he submitted, to approach the jurisdiction to award costs for unreasonable behaviour on the basis that such order should be exceptional.

24. We do not accept these submissions. 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. We see no reason to depart from the guidance given in [NAME] at 232E, despite the slightly different context. “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

5 have conducted themselves in the manner complained of? Or Sir [NAME] “acid test”: is there a reasonable explanation for the conduct complained of?

25. It is not possible to prejudge certain types of behaviour as reasonable or unreasonable out of context, but we think it unlikely that unreasonable conduct will be encountered with the regularity suggested by Mr [NAME] and improbable that (without more) the examples he gave would justify the making of an order under rule 13(1)(b). For a professional advocate to be unprepared may be unreasonable (or worse) but for a lay person to be unfamiliar with the substantive law or with tribunal procedure, to fail properly to appreciate the strengths or weaknesses of their own or their opponent’s case, to lack skill in presentation, or to perform poorly in the tribunal room, should not be treated as unreasonable. (Emphasis added by FTT)

[…]”

8. [ADDRESS] of Appeal approved and followed those decisions. Several other points of principle are made in the Lea case. Firstly, that neither [NAME] nor [ADDRESS] decide that unreasonable conduct must involve vexatious conduct or harassment. Secondly, that deciding whether or not there has been unreasonable conduct, and if so, whether an adverse order for costs should be made, is a fact-specific exercise. Although sufficient guidance in respect of rule 13(1)(b) had been set out in [NAME] and [ADDRESS], a good practical rule is for the Tribunal to ask: would a reasonable person acting reasonably have acted in this way? Is there a reasonable explanation for the conduct in issue?

Findings

9. This case turned on complex legal concepts of joint ownership. Mr [NAME] was not legally represented. The Tribunal is unable to accept the submission that the claim was brought unreasonably or that Mr [NAME] knew or ought to have known the Tribunal’s findings in advance. The Tribunal also refers to Paragraph 25 of [ADDRESS] set out above.

10. The Tribunal does not accept that Mr [NAME] motivation in bringing the claim was to harass Ms [NAME]. The claim was brought to recover his expenditure on the property.

11. The matter was transferred to the Tribunal by order of Deputy District Judge Jamieson in the County Court at Clerkenwell & Shoreditch on 13 April 2023. It was not transferred by Mr [NAME].

12. For these reasons the Tribunal does not find any unreasonable conduct by Mr [NAME] in relation to the Tribunal proceedings. It is therefore unnecessary for the Tribunal to

6 consider the second and third stages in [ADDRESS]. The application is therefore refused.

Name: Mr [NAME]: 29 December 2024

Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) 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 application for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. 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. The application 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 making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).