26 January 2018
Tony Allman-Secretary to the Tribunal Procedure Committee
1st Floor Piccadilly Exchange
2 Piccadilly Plaza Manchester
TPC Consultation- on possible changes to the Property Chamber Rules and the Lands Chamber Rules concerning costs in leasehold cases and residential property cases
This response to your consultation is on behalf of The Federation of Private Residents’ Associations, which as far as we know, is the only national body that represents the voice of leaseholders in England and Wales.
We have over 500 member associations representing tens of thousands of individual leaseholders.
We have drafted this response on the basis of our regular daily contact with our members who inform us of the problems they encounter in the leasehold sector and we have analysed those contacts so that we understand and can convey to you the problems faced from a leaseholders’ perspective.
This organisation is represented on the National User Group for the Tribunal Service.
We have a committee of over 30 volunteers and this response has been drafted using their expertise in addition.
1) Is it appropriate to amend the Property Chamber Rules to include a cap on the award of rule 13(1)(b) costs in residential property cases other than applications under the Mobile Homes Act 1983 or the Caravan Sites and Control of Development Act 1960 (which are the subject of question 3 below)? If so, why? If not, why not? Please provide your reasons.
2) If so, in what amount should the cap be? Please provide your reasons.
3) Is it appropriate to amend the Property Chamber Rules to include a cap on the award of rule 13(1)(b) costs in applications under the Mobile Homes Act 1983 or the Caravan Sites and Control of Development Act 1960? If so, why? If not, why not? Please provide your reasons.
4) If so, in what amount should the cap be? Please provide your reasons.
5) Is it appropriate to amend the Property Chamber Rules to include a cap on the award of rule 13(1)(b) costs in leasehold cases? If so, why? If not, why not? Please provide your reasons.
6) If so, in what amount should the cap be? Please provide your reasons.
We do think it is appropriate for there to be a cap in these cases. While the potential for costs awards can affect all parties, in these cases there is most frequently (although not always) an imbalance in the ability for the respective parties to absorb the costs of going to the tribunal. The threat of unlimited costs (albeit that these costs are not frequently ordered) is more likely to prevent an individual or group of individuals, whose own personal funds are at risk bringing a tribunal claim to protect their rights, than a company.
We would consider both landlords and leaseholders can be affected by the other party acting unreasonably, however, we are of the view that it is most often individual leaseholders that find it the most difficult to take the risk of going to the tribunal.
The combined effect of the risk of unlimited costs awards and the additional effect this has on individuals, results in further imbalance in an area whether the law is already perceived to be on the side of the landlord. A cap would give greater clarity to all parties and if it is set at the right level, also dissuade parties from acting in an unreasonable manner in the proceedings.
The level of the cap is therefore very important to create the correct balance between preventing people from making the claim and to dissuade those who are involved in proceedings, acting unreasonably.
In practice, the parties would normally take into account the costs of going to the tribunal when determining whether it is worth pursuing a claim. In enfranchisement and lease extension cases, this would normally be based on the difference in valuation figures between the parties and whether the likely improvement in value is worth the risk of the costs incurred in going to the Tribunal. If there were a cap, it would remove some uncertainty for the parties. We would however note that we are not aware of there being a large number of successful costs claims having been made, although in practice the threat of seeking costs for unreasonable behaviour are seen frequently.
We are of the view that a reasonably significant cost, that would go a fair way to compensating a party for unreasonable behaviour but one which would not be too unreasonably high would be £5,000. This would give the Tribunal discretion to award relatively substantial costs to act as a deterrent but clearly the Tribunal could also award smaller amounts where that was appropriate.
In practice, we understand that the costs of one party being represented at a tribunal by a solicitor and/or junior barrister and valuers can vary significantly but are likely to be in the many thousands of pounds. The award of costs would not be to cover this cost, but the additional cost that may have been incurred due to unreasonable behaviour.
We would add, however, that the lack of clarity as to what is considered unreasonable behaviour in proceedings adds to the need for there to be a cap. If the parties could satisfy themselves that certain behaviour would not be considered unreasonable, there would be a reduced concern about there being a risk of being required to pay the other parties’ costs.
7) If a cap (or caps) is/are appropriate, is it/are they best achieved by drafting in the manner illustrated above?
8) If not, why not? Do you have any other drafting suggestions?
As stated above, we think there should be greater clarity on what is meant by unreasonable behaviour. However, if that is not to be addressed, then yes we think the drafting suggestions at paragraph 47 would be appropriate although they should provide a mechanism for increasing the costs over time as any cap fixed would not remain at the correct level without the ability to increase it. We would suggest that it should potentially be linked to inflation and re-calculated every 5 years.
9) Do you have any other suggestions as regards how rule 13(1)(b) costs in these cases should be dealt with in the Property Chamber Rules?
10) If you consider it appropriate to amend the Property Chamber Rules in the respects you have identified in your answers to the questions above, is it also appropriate to amend the Upper Tribunal (Lands Chamber) Rules likewise? If so, why? If not, why not? Please provide your reasons.
No, we are of the view that if the matter is appealed to the Upper Tribunal that there should be no cap on the award of costs, if a party has acted unreasonably. If the matter has reached this stage then it should be for this higher court to have the discretion to make any award for costs for unreasonable behaviour, that it deems fit.
11) Do you have any further comment?
We would welcome the opportunity to answer any other questions and help communicate the final decisions to leaseholders.
We look forward to hearing further from you.
FPRA Voluntary Chairman