6 August 2015Print This Post

Court of Appeal: Tenants on small claims track can be ordered to pay more than costs of issue

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Arden LJ: landlord “had a right to all its costs”

County courts can order tenants on the small claims track (SCT) to pay more than the costs of issuing the claim, the Court of Appeal has ruled.

Lady Justice Arden was ruling in a case involving a landlord who wanted to recover unpaid rent and service charges from a tenant in Barking, East London.

When the issues had been dealt with, both by the county court and Leasehold Valuation Tribunal (LVT), the landlord attempted to recover costs, relying on a term in the tenant’s lease.

Applying CPR 27.14, the district judge held that since the county court proceedings had been allocated to the small claims track (SCT), the court could award no more than £200, or the cost of issuing the proceedings.

On appeal, Judge Wulwik held that the restriction did not apply “because the costs were not payable under the CPR, but under the terms of the lease”.

Delivering judgment in Chaplair v Kumari [2015] EWCA Civ 798, Arden LJ said: “In my judgment, the judge applied the correct principle. He had to deal with the landlord’s contractual right to costs. It is not suggested that this right was other than to a full indemnity for costs properly incurred.”

Arden LJ went on: “Moreover in the present case the judge went on to exercise that discretion. He was entitled to take into account the costs before the LVT because they formed part of the costs covered by the contractual right.

“He was also entitled to take into account the costs occurred in pursuing the claim on the SCT. Because Chaplair had a right to all its costs, it was not restricted to the fixed costs which can be awarded under the CPR in a case on SCT.”

Lady Justice Arden dismissed Ms Kumari’s appeal. Agreeing, Lord Justice Patten said the court would enforce a contractual entitlement “subject to its equitable power to disallow unreasonable expenses”.

Lord Justice Christopher Clarke said he agreed with both judgments.

By Nick Hilborne

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