Sinclair Gardens Investments v Clemo [2015]

Consent order prevents full recovery of costs

The Background

The landlord, Sinclair, took its tenant to County Court in respect of unpaid insurance rent and associated administration charges. The case was referred to the Leasehold Valuation Tribunal, where it was held that whilst the tenant was liable for the unpaid charges, the landlord could not be awarded costs. The LVT stated that, under s.20C of the Landlord and Tenant Act 1985, it had no jurisdiction as proceedings were issued in the County Court.

The case was referred back to County Court, where the parties agreed a Consent Order to the effect that the tenant paid a sum to include ‘the [landlord’s] costs of the action in the sum of…’.

A further administration fee was charged to the tenant by the landlord, equivalent to the landlord’s costs in the LVT proceedings. The tenant refused to pay this additional charge, and the landlord issued further proceedings in the County Court; these were referred to the First-Tier Tribunal, which rejected the claim on the basis that the Consent Order dealt with costs for the first action. The FTT stated that:

• where cases are referred to the FTT from the County Court, the FTT does not have jurisdiction to deal with costs and these must be dealt with by the County Court;
• the County Court had already dealt with the issue of costs by way of the Consent Order;
• the way that the landlord described the charges (as ‘administration charges’) did not make these fall within the jurisdiction of the FTT; and
• parties should ensure that, where proceedings are returned to the County Court to deal with costs, those costs should be awarded by the Court.

The Law

The landlord appealed to the Upper Tribunal, which cited and confirmed the decision in Chaplair Limited v Kumari [2015]. Where a County Court makes an order as to costs but the costs are limited as a result of the case being listed in the small claims court, the Court may order as per the landlord’s contractual rights under the lease and call on any indemnity provision to increase the award made to a landlord.

The Upper Tribunal had to decide whether the Consent Order compromised the landlord’s position in respect of its further claim. The UT stated that, where a lease contains a provision which allows a landlord to recover administration charges such as those incurred as a result of preparation and service fo a s.146 Notice, the provision is intended to protect the landlord and indemnify it against the cost of pursuing a tenant for breach of covenant.

The Decision

The Upper Tribunal held that the Consent Order did preclude the landlord from seeking costs in the further proceedings. The Consent Order represented a compromise which settled all costs in the case; both the FT and the UT held that the Order clearly dealt with the tenant’s liability in respect of the whole action and comprised the landlord’s costs in both the County Court and the LVT.

JB Leitch comments:

“The crucial factor in this case was the return of the proceedings to the County Court from the Tribunal; there are no separate County Court and Tribunal proceedings but instead the whole case, including the additional claim, was treated as one action. The parties were therefore bound by their Consent Order in respect of the whole claim and it was to the landlord’s detriment that it did not consider its full costs when preparing and agreeing to the Order.”