Incidence of costs to be highly restricted, rules Upper Tribunal (Lands Chamber) in Willow Court Management Co (1985) Limited case

23rd June 2016

The Upper Tribunal (Lands Chamber) has recently handed down its guidance decision on when costs may be awarded against a party for “unreasonable” conduct under Rule 13(1)b. Three joined costs cases were considered and the costs awards in each case were reversed, sending a strong message that the incidence of costs is to be highly restricted.

Tom Carpenter-Leitch of Tanfield represented the lead Respondent.

This decision will be essential reading for all appearing in the First Tier Tribunal. It highlights the need in the future for the Tribunal itself, through its case management powers, to more actively encourage preparedness and cooperation and discourage obstruction, pettiness and gamesmanship.

The Upper Tribunal gave guidance on the threshold of “unreasonable” conduct that must be shown and also on the procedure to be followed.

The threshold is a high one and will only be reached in truly exceptional or the clearest of cases – in the informal environment of the Tribunal the required standard of conduct should not be set at an unrealistic level and should not discourage access to the Tribunal. The test is case specific and fact sensitive but comes down to whether a reasonable person, in the position of the party, would have conducted themselves in the manner complained of – alternatively, is there a reasonable explanation for the conduct complained of?

The procedure to be followed is a three stage assessment:

  1. The First Tier Tribunal must first assess (as a value judgement and not as the exercise of discretion) whether the conduct complained of is sufficient to meet the objective standard of conduct threshold;
  2. Secondly the Tribunal must consider whether, in the exercise of its discretion, and taking account of all relevant factors, it is appropriate to make a costs award;
  3. Thirdly the Tribunal must, as a further exercise of discretion, consider the form and quantum of the costs award.

Tom Carpenter-Leitch of Tanfield, who represented the lead Respondent, said: “Clients and practitioners will welcome the clarity of this decision and the guidance given. Inevitably, however, the effect of the decision will be to severely restrict the availability of costs awards and thus likely be to the detriment of landlords and management companies who tend to be represented and thus suffer the greater costs burden.”



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