Entitlement of the Court to make a costs order following dismissal of claim

Winchester Park Ltd v Sehayek [2016]

The background

The respondent tenant occupied a flat under a long lease. The lease contained a covenant on the part of the appellant landlord to use its reasonable endeavours to provide a number of services, which included the provision of a lift. The covenant was subject to payment by the tenant of the ‘service rent’.

Following a dispute over payment of the service charges, the landlord cut off the lift servicing the tenant’s floor of the building and commenced proceedings to recover unpaid service charges through the county court.

The county court referred the issue concerning the reasonableness of the service charges to the First-tier Tribunal, which found that several demands made by the landlord were invalid.

During the county court proceedings, the tenant paid £12,770 to the landlord in respect of service charges for 2014. The tenant applied for an injunction requiring the landlord to reinstate the lift service; both parties agreed to this reinstatement and the application was adjourned.

The injunction application was later restored at the tenant’s request and the court invited to dismiss the application on the basis that the lift service was reinstated. The court did dismiss the application but made a costs order in favour of the tenant in the sum of £10,845.

Following the FTT’s judgment, it was held by the court that no further sums were owed by the tenant to the landlord. The landlord appealed against the order for costs, arguing that the dismissal of the application brought the proceedings to a close.

The law

A claim should be discontinued by service of a Notice of Discontinuance under CPR 38; a request by the tenant to dismiss the application could not be considered as a discontinuance of the claim.

The court referenced Nelson’s Yard Management Co v Eziefula [2013], indicating that the current case’s circumstances were substantially different to those of discontinuance of the claim. The court could consider appropriate costs, in particular whether the facts of the case, including the FTT’s decision, were clear enough to allow it to conclude and make an order.

The decision

The landlord’s appeal was dismissed and the court was entitled to make the costs order. There had been no discontinuance of the case, only a dismissal of the application by consent after the lift service had been restored.

JB Leitch’s Phil Parkinson comments:

“The Winchester Park case reinforces the court’s ability to make an order as to costs even where the parties have agreed by consent to request the court to dismiss an application following satisfaction of the subject matter of the claim. Dismissal of an application does not bring a case to a close and, until that point, a court may make a costs order as it sees fit. Landlords should be aware that they may face a costs order on appeal despite a claim no longer being active.”