Landlord and tenant – Summary judgment – Costs – Claimant holding leases of flats in block owned by defendant landlord – Service charge payable including contribution to reserve fund – Claimant obtaining summary judgment in claim for order that defendant provide account of expenses and service charges for years 2003-2007 – Defendant appealing against order for summary judgment – Court holding that defendant had arguable defence in respect of 2003 – Defendant appealing against costs order – Whether judge erred in awarding costs in favour of claimant below – Whether defendant entitled to costs of appeal – Appeal allowed in part
The defendant owned the freehold of a block of 104 flats, 19 of which were let on long leases to the claimant. Under the terms of each lease, the claimant covenanted to pay a service charge, payable by quarterly interim payments on account, in respect of the defendant’s expenses incurred in providing certain services; the amount was to be calculated in accordance with a service charge schedule.
An issue arose over the payment of service charges and the claimant brought proceedings for an order for specific performance requiring the defendant to provide a certified account of the expenses and service charge for the years 2003 to 2007, plus damages for breach of that obligation. The court was asked to decide whether, on the proper construction of the lease, the defendant was obliged to provide full audited accounts or whether something less sophisticated, such as a list of all expenses, would suffice. In the county court, the judge gave summary judgment for the claimant.
On the defendant’s appeal, the High Court dismissed the defendant’s arguments on construction of the lease. However, the court held that the defendant had had an arguable defence in respect of 2003 but not in respect of the other years: [2013] EWHC 224 (Ch); [2013] PLSCS 53.
Following the judgment on the substantive appeal, the court had to deal with the defendant’s appeal from the costs order made by the judge below and decide the question of costs of the appeal. The defendant argued that the appropriate course was to make no order as to costs. The claimant sought to uphold the order below for costs in its favour to be summarily assessed. It also sought its costs of the appeal.
Held: The appeal was allowed in part.
(1) It was important, when considering the costs of an application, to consider whether it had been properly made. In the present case, the claimant had been perfectly justified in launching its summary judgment application when it did in the light of the correspondence as it stood at that time. The ordinary rule was that the successful party in an application of this sort should recover the costs of the application. In this case, in relation to 2004 to 2006, the claimant was the clear winner. It had succeeded, as the result of the judgment, in obtaining an order for summary judgment for 2004 to 2006, i.e., for the provision forthwith of the accounts required by the lease, albeit that those accounts might be in a form different in some respects from those which the judge had ordered. The central point was that the defendant had contended that the claimant was entitled to nothing and had failed; although the claimant had got something different from that which it eventually obtained, it was undoubtedly the successful party.
(2) So far as 2007 was concerned, the claimant had failed to obtain summary judgment because it claimed too soon but the additional cost of that claim had to be de minimis. It raised no discrete issue and by the time the summary judgment application had been made, there was no remaining argument that, assuming the claimant was to be successful in relation to the earlier years, it would not also be entitled to an account for 2007. The claimant’s failure to obtain summary judgment in relation to 2007 had to be reflected by a reduction in the costs (if any) which it would otherwise be entitled to recover.
(3) As to 2003, the claimant had failed to obtain summary judgment because of the possible uncertainty about what items should feature in the 2003 account. Although the defendant’s defence was weak, it had been sufficient to stave off summary judgment. In reality, consideration of 2003 added nothing to the costs of the summary judgment application. In the end, the argument was principally about construction, which would have had to be resolved even if 2003 had never featured at all. If the application had been only about 2004 to 2006, the claimant would have been wholly successful in obtaining summary judgment, albeit on the basis of a different construction of the lease from that which the court had held to be correct.
(4) A “no costs” approach would not be fair to the claimant. The difference between the positions of the claimant and the defendant was that to get any relief, the claimant had to bring its application and in including 2003 caused no additional cost to either party; in contrast, it was not necessary for the defendant defend 2004 to 2006 in order to obtain its relief in relation to 2003. The defendant’s success in relation to 2003 should be reflected in a percentage reduction in the costs to which the claimant would otherwise be entitled to recover which, in all the circumstances, was 10% which was within the permissible range designed to achieve justice between the parties. Accordingly, the defendant was to pay to the claimant 90% of its costs of the application and of the appeal, subject to a detailed assessment, if not agreed, on the standard basis.
Edwin Johnson QC (instructed by Mishcon de Reya) appeared for the claimant; Jonathan Seitler QC and William Moffett (instructed by Payne Hicks Beach) appeared for the defendant.
Eileen O’Grady, barrister
Landlord and tenant – Summary judgment – Costs – Claimant holding leases of flats in block owned by defendant landlord – Service charge payable including contribution to reserve fund – Claimant obtaining summary judgment in claim for order that defendant provide account of expenses and service charges for years 2003-2007 – Defendant appealing against order for summary judgment – Court holding that defendant had arguable defence in respect of 2003 – Defendant appealing against costs order – Whether judge erred in awarding costs in favour of claimant below – Whether defendant entitled to costs of appeal – Appeal allowed in partThe defendant owned the freehold of a block of 104 flats, 19 of which were let on long leases to the claimant. Under the terms of each lease, the claimant covenanted to pay a service charge, payable by quarterly interim payments on account, in respect of the defendant’s expenses incurred in providing certain services; the amount was to be calculated in accordance with a service charge schedule.An issue arose over the payment of service charges and the claimant brought proceedings for an order for specific performance requiring the defendant to provide a certified account of the expenses and service charge for the years 2003 to 2007, plus damages for breach of that obligation. The court was asked to decide whether, on the proper construction of the lease, the defendant was obliged to provide full audited accounts or whether something less sophisticated, such as a list of all expenses, would suffice. In the county court, the judge gave summary judgment for the claimant.On the defendant’s appeal, the High Court dismissed the defendant’s arguments on construction of the lease. However, the court held that the defendant had had an arguable defence in respect of 2003 but not in respect of the other years: [2013] EWHC 224 (Ch); [2013] PLSCS 53.Following the judgment on the substantive appeal, the court had to deal with the defendant’s appeal from the costs order made by the judge below and decide the question of costs of the appeal. The defendant argued that the appropriate course was to make no order as to costs. The claimant sought to uphold the order below for costs in its favour to be summarily assessed. It also sought its costs of the appeal. Held: The appeal was allowed in part. (1) It was important, when considering the costs of an application, to consider whether it had been properly made. In the present case, the claimant had been perfectly justified in launching its summary judgment application when it did in the light of the correspondence as it stood at that time. The ordinary rule was that the successful party in an application of this sort should recover the costs of the application. In this case, in relation to 2004 to 2006, the claimant was the clear winner. It had succeeded, as the result of the judgment, in obtaining an order for summary judgment for 2004 to 2006, i.e., for the provision forthwith of the accounts required by the lease, albeit that those accounts might be in a form different in some respects from those which the judge had ordered. The central point was that the defendant had contended that the claimant was entitled to nothing and had failed; although the claimant had got something different from that which it eventually obtained, it was undoubtedly the successful party.(2) So far as 2007 was concerned, the claimant had failed to obtain summary judgment because it claimed too soon but the additional cost of that claim had to be de minimis. It raised no discrete issue and by the time the summary judgment application had been made, there was no remaining argument that, assuming the claimant was to be successful in relation to the earlier years, it would not also be entitled to an account for 2007. The claimant’s failure to obtain summary judgment in relation to 2007 had to be reflected by a reduction in the costs (if any) which it would otherwise be entitled to recover.(3) As to 2003, the claimant had failed to obtain summary judgment because of the possible uncertainty about what items should feature in the 2003 account. Although the defendant’s defence was weak, it had been sufficient to stave off summary judgment. In reality, consideration of 2003 added nothing to the costs of the summary judgment application. In the end, the argument was principally about construction, which would have had to be resolved even if 2003 had never featured at all. If the application had been only about 2004 to 2006, the claimant would have been wholly successful in obtaining summary judgment, albeit on the basis of a different construction of the lease from that which the court had held to be correct. (4) A “no costs” approach would not be fair to the claimant. The difference between the positions of the claimant and the defendant was that to get any relief, the claimant had to bring its application and in including 2003 caused no additional cost to either party; in contrast, it was not necessary for the defendant defend 2004 to 2006 in order to obtain its relief in relation to 2003. The defendant’s success in relation to 2003 should be reflected in a percentage reduction in the costs to which the claimant would otherwise be entitled to recover which, in all the circumstances, was 10% which was within the permissible range designed to achieve justice between the parties. Accordingly, the defendant was to pay to the claimant 90% of its costs of the application and of the appeal, subject to a detailed assessment, if not agreed, on the standard basis.Edwin Johnson QC (instructed by Mishcon de Reya) appeared for the claimant; Jonathan Seitler QC and William Moffett (instructed by Payne Hicks Beach) appeared for the defendant. Eileen O’Grady, barrister
