Costs on the Small Claims Track
A landlord may need to make a money claim against a tenant for either a specified amount e.g. for unpaid rent, or a claim for damages for breach of covenant, where there has been damage done to the property that needs assessing, as to amount, by the court – where possession of the property is not in dispute.
The sums involved may be relatively contained, usually significantly, less than £10,000, but not necessarily small amounts of money.
Such claims get allocated to the small claims track. Where recovery of the cost of legal advice and representation is ruled out, from a party that has lost a case, unless he has been unreasonable. Turning up to court and not being believed is not for the purposes of these costs rules necessarily to have been unreasonable.
Poorly prepared cases can fail for technical legal reasons, plain errors of law, and paradoxically this may be unreasonable, and costs may get awarded against the Landlord that sues, who makes such an error. The writer has seen this occur.
What can landlords do?
Landlords should insert into their tenancy agreements a clause that provides:
That the Tenant shall pay all of the costs of the Landlord reasonably incurred, including for the instruction of an advocate, in recovering unpaid rent and/or other contractual charges provided for by the tenancy agreement or in respect of the costs of bringing a claim for the assessment of damages in respect of breach of the agreement by the tenant. The said costs are to be proportionate as well as reasonable.
Such a clause is a significant factor that a court should take into account. The court will look at the costs claimed with very anxious scrutiny according to the editors of one of the leading practitioner texts dealing with civil procedure, when costs are claimed outside of the ambit of the “no costs” rule.
Costs should always be both reasonable and proportionate. To spend more in legal expenses than one is claiming may be disproportionate, even if the costs are themselves reasonable, in terms of the legal work that had to be done, and such disproportionate costs may be disallowable. To spend more than an easy simple case could justify is a clearly both unreasonable and disproportionate, and the excessive costs are likely to be disallowed.
However, I had a case where a tenant who was a medical professional abandoned a property in London and went to Newcastle, and managed to get the proceedings transferred North. Despite the small claim
Landlords should build in the protection of a clause such as I have suggested. It may allow a landlord to feel able to get legal advice and avoid making significant procedural errors, or misunderstanding legal principles or the basis upon which one proves a case, and also recover at least part of the cost of this. Certainly if a landlord is unsure of the law or procedure, he or she needs to get to the right answer before issuing proceedings.s track rules the charging clause for legal costs in the assured short hold tenancy allowed her former landlord to recover the costs of going up to Newcastle with the lawyer he had instructed at the outset. The tenant’s defence was based on an erroneous understanding of the principles of landlord and tenant law. This was expensive mistake on the part of the tenant but costs she had to meet were reasonable and proportionate on the facts of the case. My client was ordered to have his costs, on the basis of the “legal expenses” clause in the AST.
The wording very anxious scrutiny about the assessment of costs used in the white Book invites landlords to prudence, in any event, on the amount of the legal fees that they incur– however, landlords should not discountenance doing so a priori if they have the benefit of such a clause.
Before making a cliam, Landlords should be mindful of the need to follow the Pre- action Protocol for rent arrears, and/or for the need to send a letter of claim that complies with the practice direction – on pre-action conduct that the Civil procedure rules require.
Paul Dipré Barrister