General Rules on First-Tier Tribunal (Property Chamber) Costs

First-Tier Tribunal (Property Chamber) Costs can arise in relation to disputes between landlord/tenant, changes to the Land Register and agricultural drainage disputes.  Where there is a dispute brought before the Tribunal, each party usually bears their own legal costs and expenses unless other legal provisions apply. In summary, these provisions include:

1. If there is a written contract allowing one of the parties to claim costs from the other party (usually landlord and tenants/management companies disputes). The contract will usually be in the form of a lease, and the landlord is usually the party who can recover or claim the costs from the tenant.
2. If an Act of Parliament specially allows for costs to be recovered from  the opposing party.
3. When the legal representatives of a party have acted unreasonably by increasing the costs incurred by the other party, also known as a wasted order for costs.
4. When a party has acted unreasonably in bringing, defending or conducting the case before the Tribunal.

An example of the discretion utilised by the Tribunal is exemplified in Willow Court Management Company (1985) Limited v Alexander [2016] UKUT 0290 (LC)

Written Contract

The first provision of the four is usually the most confusing. This is because many tenants do not realise the contract into which they are entering. Most tenants do not realise that by simply signing a lease that they may also take on this commitment to pay the landlord’s costs if any disputes arise in the future.

There are three main categories where this provision applies:

1. If the lease specifically states that the landlord can claim legal costs as service charges.
2. If the lease states that the tenant must pay legal costs in the event that there is a breach of the lease in the future.
3. If the lease states that the tenant must pay the landlord’s legal costs for granting an agreement, for example, agreeing to sublet.

In all three instances, it falls for the Tribunal to decide if the costs are reasonable and payable by the tenant.  If the tenant has given informed consent i.e. there is clear evidence that this clause was explained to them, this is likely to significantly benefit the landlord in recovering their costs.

Act of Parliament

There are numerous Acts of Parliament which allow for one party to pay the other’s costs, again this is usually the tenant paying the landlord’s costs.

Examples of this include the Leasehold Reform Act 1967 and the Leasehold Reform, House and Urban Development Act 1993. These Acts apply to situations where the tenant wants to extend a leasehold or they are buying the freehold of a house. They will have to pay the landlords fees for bringing this action, including expenses.

Another example is the Commonhold and Leasehold Reform Act 2002, where the tenant brings an action to take over the management of a building. The tenants here are then ordered to pay the landlord’s costs.

Wasted Costs

This is when a party acts unreasonably and in their conduct, increases the other party’s costs. These costs awards are usually made against the legal representatives themselves for their unreasonable conduct.

Unreasonable Behaviour

Under Rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, a Tribunal can decide whether a party has behaved unreasonably. To make this order, the Tribunal must be satisfied that the party’s conduct was unreasonable in bringing the action in the first instance e.g. the claim lacked merits in its entirety.

How Can ARC Costs Assist?

First Tier Tribunal (Property Chamber) Rules provide for recovery of costs in all disputes so long as one of the aforementioned criteria is met, and these are not limited to just landlord/tenant disputes.  If the matter is to be appealed to the Upper Tribunal (Lands Chamber), different costs rules can apply.

As specialist Costs Draftsman and Costs Lawyers we can advise on the prospect of recovering your legal fees, and assist in recovering any costs which have been ordered to be paid. We can assist both the receiving party and the paying party through the preparation of Bills of Costs and negotiations or in preparing Points of Dispute (Precedent G). If you have any queries or require assistance in a costs matter, please contact us on 01204 397302, or contact us via email at info@arccosts.co.uk. 

Our Costs Lawyers are authorised and regulated by the Costs Lawyer Standards Board. 

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