Landlord and tenant – Costs – Administration charge – Lease of flat – Tribunal determining issues of liability and reasonableness in relation to county court claim by appellant landlord for unpaid sums under lease – County court proceedings then compromised by consent order providing for respondent tenant to pay appellant’s costs of the action – Landlord calculating costs only by reference to costs in county court – Whether respondent liable to pay further administration charge under terms of lease in respect of costs before tribunal – Whether such charge preclude by terms of consent order – Appeal dismissed
The respondent was the lessee of a flat in London SW19 under a 99-year lease dating from 1983. Clause 2.15 of the lease required the respondent to pay, as an administration charge, “all expenses including Solicitors costs and surveyors fees incurred by the Lessor incidental to the preparation and service of a notice under Section 146 of the Law of Property Act 1925 notwithstanding that forfeiture is avoided otherwise than by relief granted by the court.”
In September 2011, the appellant landlord brought a county court action against the respondent for unpaid sums due under the lease. The county court referred the matter to the leasehold valuation tribunal (LVT) to determine the respondent’s liability to pay those sums and their reasonableness. The LVT confirmed that the sums were payable in full. It declined to make any order in relation to costs, taking the view that the issue of costs was best determined by the county court. The proceedings then returned to the county court, where they were compromised by an agreement between the parties, embodied in a consent order which provided for the respondent to pay the sums claimed “together with the appellant’s costs of the action in the sum of £811”. The costs figure there set out had been calculated by the appellant as representing its costs of the part of the proceedings heard by the county court.
The appellant subsequently asked the respondent to pay an administration charge representing its costs of the proceedings in the LVT. The respondent refused to pay and the appellant brought a further county court action, in which the issue of the respondent’s liability to pay was referred to the first-tier tribunal (LVT), as successor to the LVT. Ruling in favour of the respondent, the first-tier tribunal (FTT) held that the August 2013 consent order had compromised the appellant’s entitlement to costs not only in respect of the proceedings before the county court but also in respect of the costs incurred while the proceedings were before the LVT. The appellant appealed.
Held: The appeal was dismissed.
The object of a clause such as clause 2.15 was to protect the landlord from the cost of pursuing the tenant for breaches of covenant, even in circumstances where the landlord did not have the benefit of a costs award from a court. Even when a court made an order for costs, it did not preclude further recovery by the landlord under the terms of the lease. Accordingly, had the county court made an order for costs after a contested hearing, the landlord would still have been able to recover further costs under clause 2.15 unless the court order expressly dealt with that entitlement. However, in the instant case, the court order did preclude any further recovery under clause 2.15 because it was a consent order that embodied a compromise disposing of all the costs in the action.
It made no difference that the costs figure given by the appellant only included expenses that related to the county court action where that might not have been obvious either to the respondent at the time or to a reasonable lay person in the same position as the respondent. The appellant’s stated costs figure purported to set out the appellant’s costs of the claim and made no mention of any other costs. Whether or not that statement technically gave rise to an estoppel, it was nonetheless a clear indication of what the parties must have had in mind in making the agreement which the consent order was intended to embody and was therefore evidence of the scope of that agreement. Both parties thought that they were bringing the proceedings as a whole to an end and that was clearly what anyone in the respondent’s position would have understood. The terms of the consent order referred to the appellant’s costs of “the action”: there was only one action, brought by the appellant to recover the unpaid sums under the lease, albeit that, because of the legislative structure, the action had to take a winding road from court to tribunal and back again. The plain meaning of the order was that it dealt with the respondent’s liability to the appellant for the costs of the action as a whole.
The appeal was determined on the written representations of the parties.
Sally Dobson, barrister
Click here to read the transcript of Sinclair Gardens Investments (Kensington) Ltd v Clemo
