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16th September, 2016 by Jamie Kidd
Many property disputes are now resolved by the Property Chamber of the First-Tier Tribunal (‘the Property Chamber’). This is the court which replaced the Leasehold Valuation Tribunal (‘the LVT’). The remit of the Chamber is quite wide, but in particular it specialises in leasehold disputes. The LVT was largely a “no costs jurisdiction” - it was difficult for successful parties to obtain orders that unsuccessful parties should pay costs. The move from the LVT to the Property Chamber meant that a new set of procedural rules applied to those cases and, until recently, the position in relation to the recoverability of costs from unsuccessful parties was unclear.
The Property Chamber does have the power to award costs. It has this pursuant to Rule 13(1)(v) of the Tribunal Procedure (First-Tier Tribunal)(Property Chamber) which permits the Tribunal to order costs where a person has acted unreasonably in bringing, defending or conducting proceedings before them.
Clarity has been provided by a decision of the Upper Tribunal (which hears appeals from the Property Chamber). Guidance was issued following an appeal decision in relation to three cases which had been joined and all asked the same question: when might costs be ordered payable by the unsuccessful party?
The three cases considered by the Appeal Court featured the certain unreasonable behaviour said to justify the award of costs:
In all three cases the Appeal Court found that no orders for costs should be made against the parties said to have acted unreasonably.
The Tribunal said this in relation to the discretion under Rule 13:
The Appeal Court then went on to set out a process to be applied when every application is considered under Rule 13.
It was always difficult to recover orders for costs before the Leasehold Valuation Tribunal. It appears that it will not be much easier before the Property Chamber. The new jurisdiction appears to carry forward one of the key features of the LVT - that, in most cases, the jurisdiction is one where costs are not ordered payable.
It should be noted that this decision has no impact on the recoverability of costs incurred in proceedings before the Property Chamber where they are chargeable as service charge under the terms of the leases in question.
This decision will also apply to lesser known elements of the business before the Property Chambers, in particular its work in resolving agricultural land and drainage cases.