The impact of Rule 13 at the First-tier Tribunal

Rule 13 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (“Rule 13”) is starting to bite in the FTT.

The impact of Rule 13 has been handily summarised in Amanda Gourlay’s blog www.lawandlease.co.uk/2014/04/15/mr-z-virani-and-chelsea-harbour-limited-lon00anlsc20130467/ regarding the recent decision in Virani v Chelsea Harbour Limited LON/00AN/LSC/2013/0467.

Rule 13 permits the Tribunal to make an order for costs if a person has acted unreasonably in bringing, defending or conducting proceedings. The rule was introduced along with the introduction of the FTT and lifted the previously capped costs ceiling of £500 that the LVT was previously allowed to award.

Amanda Gourlay’s article highlights a common problem for landlords and managing agents alike, who often incur significant legal costs in preparing thoroughly for a Tribunal hearing only to find the litigant in person tenant withdrawing their case at short notice.

In Virani, the tenant had attempted to adjourn the hearing in the days leading up to the hearing. The Tribunal refused the adjournment requests and the tenant finally withdrew his case on the day of the hearing. The landlord made an application for costs under Rule 13 and the Tribunal awarded sums for its Solicitors costs together with a portion of its Counsel’s brief fee. The costs award was based on the tenant being deemed to have left it to the very last minute to withdraw his case, increasing costs, when the paperwork the tenant had received from the landlord gave the tenant the opportunity to consider withdrawing his case at an earlier stage. This sends out a very clear message that the FTT will not tolerate indecisive behaviour from litigants in person.

Interestingly, the article plays devil’s advocate over the portion of the disallowed Counsel’s brief fee. The article muses that placing the balance of the disallowed Counsel’s fee through the service charge may well find the landlord in a weakened position when dealing with arguments that the disallowed portion has been (or rather not been) reasonably incurred under Section 19 of the Landlord and Tenant Act 1985. The alternative solution put forward is to rely on the contractual entitlement to put the costs through the service charge without making a rule 13 application.

If the alternative solution is used, tenants, through no fault of their own, may be left paying a landlord’s cost for pursuing another defaulting tenant at their development. It will therefore be imperative to risk assess a decision to pursue an application for costs under rule 13 prior to committing to the application. Conducting such risk assessment will entail scrutiny of the relevant lease together with anticipating what potential arguments could be encountered in the future.