Costs Orders in the Property Tribunal – Don’t Be Unreasonable

13th May 2021 Commercial Litigation

Generally, the First-tier Tribunal (Property Chamber) is a cost neutral venue. However, the Tribunal may make an order for costs under rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 in certain circumstances.

Applications for costs under rule 13 are rare in the Tribunal, as it is well-known that the threshold for a successful application is very high. The Tribunal may make an order for costs where “a person has acted unreasonably in bringing, defending or conducting proceedings in – (…) (ii) a residential property case (…)”. More commonly used is the provision allowing parties to seek a reimbursement from the other side for the Tribunal fees paid.

In the recent decision of Leibel v Baird CHI/29UC/HMF/2020/0035 (4 May 2021) costs were ordered against the landlord in a claim for Rent Repayment Order. The Tribunal found that the landlord “did deliberately obfuscate matters and in signing the statement of truth [148] on his defence dated 19th February 2021 he deliberately misled the Tribunal.” The Tribunal found that the landlord’s conduct in the Tribunal had been deliberate and that the landlord had “treated the Tribunal with contempt”.

The landlord had gone to great lengths to mislead the Tribunal in putting forward evidence that there were 4 rather than 5 tenants at the property, producing a forged tenancy agreement and even subjecting (personally) one of the tenants to a lengthy cross-examination making various frivolous and unpleasant accusations. Subsequently, the landlord appeared on the second day of the hearing with legal representation, admitted the offence and withdrew all evidence produced previously including all statements and documents (apart from the bank statements showing receipt of payment from 5 tenants).

When making its decision the Tribunal remarked that “Taking all the matters referred to above we find that the conduct of the Respondent in conducting these proceedings was unreasonable. We agree with Mr Sandham that the lies and deceit practiced by the Respondent is some of the most serious that this Tribunal has seen.”

It is clear that the hurdle for successfully obtaining a costs order is very high, however, an application under rule 13 is probably worth making where, for example, a landlord defends an indefensible RRO application on false grounds. Clearly, signing a statement of truth without a reasonable belief in the truth of the document to which it refers is never a good idea and it may, unsurprisingly, result in a costs order against the party making the false statement, even in the Tribunal.

However, the bar remains high in accordance with Willow Court Management Company (1985) Ltd v Alexander [2016] UKUT 290 (LC) (21 June 2016) where the Upper Tribunal stated that: “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.”

“Unreasonable” behaviour will need to be something more than bare ineptitude by a litigant in person. The conduct must be vexatious and aiming to harass the other side. Simply losing a case is not a good enough reason to find that a party’s conduct has been unreasonable and that rule 13 should be triggered. In any event, even where unreasonableness has been objectively established and the power to order costs has been triggered, the Tribunal has discretion as to whether to order costs against the unreasonable party.

Our David Smith has been successful in obtaining a costs order in the Tribunal against a local authority in respect of an improvement notice where the local authority pursued the notice, which they knew was defective.

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Neli Borisova is a Solicitor located in Londonin our Commercial Litigation department

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