The PBA and PLA comprise 370 barristers and 1,100 solicitors, respectively, specializing in property litigation. Members’ areas of expertise cover the full gamut of commercial, residential and agricultural property law. This is a joint response by the two organizations.
The Associations are largely in agreement with Committee’s proposals. The Associations agree with the committee’s recommendations in paragraphs 71 – 76 and, subject to the following observations, the adoption of Option 1 of the amendment to rule 10. Those observations are limited to two issues:
- one-way costs-shifting; and
- tobin costs.
1. It is not considered that the justification for one-way cost-shifting in appeals from the First-tier Tribunal has been made out. The simple adoption of the costs rules of the first instance tribunal is more equitable and less problematic, for myriad reasons.
- It provides continuity and a degree of certainty.
- Costs-shifting on the basis of disparity of resources will lead to the tribunal having to resolve costly disputes as to the parties’ relative resources.
- A tenant is likely to be considered to have fewer resources than a corporate landlord. It is inequitable that a landlord should be liable for a tenant’s costs of an appeal, even if the landlord is successful.
- Many LVT cases involve a tenant having breached his obligations to pay service charges, in respect of which the landlord has a contractual right to his costs against the tenant. Costs-shifting would interfere with that right. It is not for the tribunal to rewrite contractual bargains via the backdoor.
- Under many leases the landlord has the right to recover costs of proceedings through the service charge. One-way costs-shifting could result in all tenants of a building paying for single tenant’s unmeritorious appeal. It is not an answer to resort to prohibiting the landlord from recovering those costs by s. 20C of the Landlord and Tenant Act 1985: to do so, in such circumstances, would not be “just and equitable”.
- A service charge determination adverse to a landlord, which is subject to appeal, is invariably going to be of more “interest” to the landlord. Although the landlord is not obliged to apply the first instance determination to tenants who were not party to proceedings, if he does not, further challenges are likely to be made on the same point incurring further costs. Again, the landlord should not be liable for a tenant’s costs of an appeal, even if the landlord is successful.
- If one-way costs-shifting is considered desirable in genuine test cases, the rules should expressly provide for the same.
- Currently, the discretion is so broad as to give rise to a plethora of satellite litigation on costs-shifting.
- The Warren Report identifies that, in respect of public authorities, one-way costs-shifting involves “diverting resources (already under pressure) from the main business of the chambers. It does not, in the view of the majority, represent a proportionate response to a problem the scale of which has not been identified, even if it exists at all” . This applies equally to non-public bodies.
- Although the report does recommend an exception for the Land Chamber, justification for that exception is not given, beyond the President seeking the same , and no problem has been identified which is sought to be cured.
- Such changes would be unjust without wider consultation do landlord and tenant organisations.
2. It is suggested that the proposed review might also provide a platform for enabling the assessment of pre-reference Tobin costs (currently assessed, if not agreed, during the substantive compensation reference) alongside assessment of the in-reference costs themselves (currently assessed, if not agreed, following determination of the reference). The unsatisfactory nature of the current arrangement was noted by the Court of Appeal in Tobin itself  1 WLR 354 at 371:
“It can be said, of course, and it was said, that it is unsatisfactory that the legal costs of compiling the claim, and the legal costs incurred in prosecuting a reference, if there should be a reference, should be assessed, to use a mutual phrase, by different persons; the first set of legal expenses by the tribunal in investigating the claim, and the second set by the registrar of the tribunal or a taxing master. I have some sympathy for this view, but I do not see how it could prevail, short of some statutory modification of the Lands Tribunal Act, 1949, providing that legal costs incurred in compiling a claim should be subject to taxation whether or not the claim was followed by a reference.”
3. It might perhaps be questioned whether that logic is entirely apposite, because the reason why a claim is not “followed by” a reference is that the claimant and the acquiring authority have reached agreement on compensation, including the amount of pre-reference costs. Where agreement is not reached on the pre-reference costs, the remedy is for one of the parties to make a reference. It follows that the difficulty only arises in cases where a reference has been made.
4. It might therefore be worthwhile to consider whether the rules should provide: as a default, that pre-reference costs will be assessed along with any assessment of the in-reference costs after the conclusion of the substantive reference, so far as not agreed; but by consent of the parties or by order on timely application by either party, that the conventional method should be adopted (for example, if it is envisaged that some particular difficulty will otherwise arise in determining whether a sealed offer has been “beaten”).
5. The principal foreseeable disadvantage of this suggestion is the difficulty which it would potentially introduce at the end of some references of judging whether or not a sealed offer (or its equivalent) has been beaten. This might produce two responses:
avoid the complication, by retaining the existing practice intact; or encourage those making sealed offers to stipulate for an amount apart from pre-reference costs, such costs to be assessed if not agreed.