by Paul Newman
28 August 2018
The Tribunal Procedure Committee has decided not to cap costs for unreasonable behaviour in leasehold and residential property cases following consultation and is instead adopting a proposal by the Property Litigation Association (PLA) to publish a guidance note.
“This note aims to clearly explain Rule 13(1)(b), governing unreasonable behaviour, in the context of the Willow Court Management Company (1985) Limited v Alexander  case.
The Tribunal Procedure Committee (TPC) had been concerned that the unreasonable costs provisions were restricting access to justice by deterring applicants from continuing with genuine grievance claims, particularly those with limited financial means or lacking representation (more often leaseholders/tenants).
While the PLA’s Law Reform Committee acknowledged that the threat of costs might discourage some unrepresented parties from making applications, they were concerned that a cap particularly at the low figures mentioned in the consultation) might simply lead to more unreasonable behaviour by litigants.
Natalie Johnston of the PLA’s Law Reform Committee called the proposed rule change “a sledgehammer to crack a nut”, stating that the number of times the unreasonable costs order had been applied was ‘tiny’. She said it would be more effective to have a document that provided clear guidelines on what constitutes unreasonable behaviour.
In its submission to the TPC, the PLA argued: “In cases of aggressive landlords seeking to bully tenants, the threat of an adverse costs order against the landlord can be a restraining measure. A cap could mean that rule 13 costs become no more than a price for poor behaviour, stripping the Tribunal of its power to make an award that represents the true effect of the conduct. If the cap is too low, it lacks impact; if too high, it does not achieve the stated result of reassuring potential applicants.
“A better way to deal with threats of applications for costs is to improve the information available to litigants. Such information should be made available from a source that they will trust, namely guidance approved by the Tribunal, and in a form easily understood by nonlawyers. This will ensure that litigants have balanced information with which to make a decision and should confine unreasonable costs under rule 13 to cases of clear and serious misconduct.”