The costs jurisdiction of the FTT which is now contained in Rule 13 of the Tribunal (Procedure First-tier Tribunal) (Property Chamber) Rules 2013 has now been in force since 1st July 2013 (although the FTT’s power to award costs is derived from section 29 of the Tribunals, Courts and Enforcement Act 2007).
For some time practitioners where unsure how the Tribunal were going to make use of these powers and how “unreasonable” a party to a dispute has to be before the Tribunal would be prepared to exercise their discretion to award costs.
Rule 13 provides, essentially, for two circumstances in which costs can be awarded.
Firstly, a wasted costs order could be made under Rule 13(1) (a) – this is concerned with the conduct of a legal or other representative rather than a party to the proceedings, and beyond the scope of this note.
Secondly, costs may be awarded under Rule 13(1) (b) where a party has “acted unreasonably in bringing, defending or conducting proceedings…”.
The Upper Tribunal has recently given some guidance as to when a costs order may be appropriate in the combined appeals of Willowcourt Management Company (1985) Ltd v. Ratna Alexandra, Shelley Sinclair v. 231 Sussex Gardens RTM Ltd, and Raymond Henry Stone v. 54 Hogarth Road, London SW5 Management Ltd (2016) UKUT 0290 (LC).
The UT heard appeals from all three cases together as the appeals all related to costs award made by the FTT from which the appeals emanate.
The UT referred to the fact that the FTT, when making any decision, is required to seek to give effect to the overriding objective which is set out in Rule 3. It commented that “unreasonable conduct includes conduct which is vexatious, and is 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 UT was very clear that costs were exclusively within the decision making power of the Tribunal. Even if unreasonable conduct was apparent, the Tribunal still had to exercise its discretion in awarding costs. Even where the Tribunal decide to exercise its discretion, it remains within that discretion as to what the terms of any costs award should be.
The UT were also clear that the withdrawal of an application or concession of a party’s position, even at the last minute would not usually amount to unreasonable conduct. Whilst the UT gave clear reasoning for this stance (that a party should not be deterred from conceding a point later in proceedings with the threat of a costs order looming), this stance is unfortunate for those parties who face an opponent who deliberately holds out on a point which has no chance of success, simply to put the other party to substantial costs, only to concede at the last minute. This happens all too often in enfranchisement and right to manage cases.
Many welcome the general costs neutral position of the Tribunal but perhaps some thought should be given to those faced with an opponent who deliberately take no action to resolve a case and conceded a bad point or withdraw at the last minute.
This is not legal advice; it is intended to provide information of general interest about current legal issues.