Federation of Private Residents’ Associations Newsletter Costs in a No Costs Environment continued from page three
Federation of Private Residents’ Associations Newsletter now has powers to award costs in an unlimited amount where parties’ representatives cause costs to be wasted, and against parties themselves in cases of unreasonable behaviour.
Wasted costs determinations are new to the FTT. Representatives will be kept on their toes knowing that a costs determination can be made and ultimately enforced against them personally if their conduct of the proceedings warrants it.
The second scenario has echoes of the LVT rules, although to my mind the gateway has widened a little compared to the LVT rules. The LVT rules require that the LVT must be satisfied that the party against whom an order is sought has acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably. In Halliard Property Company Limited v Belmont Hall and Elm Court RTM Company Limited (LRX 130/2007) the Upper Tribunal held that, in the context of LVT proceedings, the unreasonable behaviour must be akin to those rather colourful epithets for an order for costs to be made. Logic dictates that if they have disappeared in the new rules, that
limitation has also evaporated. The FTT exercised its new power in Virani v Chelsea Harbour Ltd (LON/00AN/ LSC/ 2013/0467). Mr Virani, the owner of a property portfolio, made an application to the LVT. He failed to comply with the FTT’s directions and, a week before the final hearing, sought an adjournment on the grounds of ill-health. The FTT refused. Mr Virani sent his surveyor to the hearing to repeat the request for an adjournment. The FTT refused again. On Mr Virani’s behalf, the surveyor then applied orally to withdraw the application. Consent was given, but Mr Virani was ordered to pay the landlord’s costs of that hearing under rule 13 of the FTT procedure rules.
Reimbursement of fees
The third scenario is a direct reflection of the position in the LVT, so there has been no change with the advent of the FTT.
What does this mean for LVT & FTT proceedings?
If the costs cannot be recovered because the lease does not provide for recovery, that is the start and finish of the matter unless an award of costs can be justified under Schedule 12 of the 2002 Act (in the LVT) or rule 13 of the new FTT rules (in the FTT).
If the lease provides for recovery of legal costs as part of the service charge, a section 20C order can prevent the landlord
Issue No. 110 Autumn 2014
putting the costs of the proceedings through the service charge. It is worth remembering that the LVT and FTT have the power to make a partial section 20C order – for example that the landlord can recover 50 per cent of the costs of the proceedings through the service charge. If the costs are recoverable as a variable administration charge, the LVT and FTT have the power to consider their reasonableness. As a rule of thumb, a variable administration charge is normally a charge recoverable directly from the lessee who is party to the proceedings and is not shared amongst all lessees. A point to note: legal costs cannot be a service charge and an administration charge at the same time, although they can be claimed/resisted in the alternative. There are however undoubtedly occasions when the costs fall within both definitions. It is then that careful consideration should be given to the way forward.
If costs cannot be recovered under the lease – and I have yet to see a lease which allows the lessee to recover legal costs – the FTT procedure rules empower the FTT to make an order for costs where a party has behaved unreasonably.
A no costs environment? I am not at all sure that I agree.
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