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Rent Repayment Order and legal costs

Leibel v Baird CHI/29UC/HMF/2020/0035 (4 May 2021) (FTT decision available here)

This was an application for a rent repayment order in respect of an unlicensed property. Unusually, it also featured a rule 13 costs application by the tenant.

Ms Leibel was one of five tenants in a property, on a tenancy agreement made with Mr Baird, the property owner. The property was not licensed and Ms L applied for an RRO in the sum of £5382. Mr B defended on the basis that the property did not need a licence.

Prior to the first hearing, Mr B had sent a copy of a tenancy agreement apparently naming and signed by four tenants. Ms L sought and was given permission to reply on additional witness statements from two of the other tenants, stating that there were 5 tenants, they had all signed together and Mr B had taken all the copies of the agreements away with him.

On the first day of the hearing, Mr B – in person –  insisted that there were only four tenants, and subjected Ms L to a lengthy cross examination making various unpleasant and unfounded accusations. At the end of the first day, the Tribunal directed Mr B to provide the Tribunal with the original of the tenancy agreement, and bank statements showing the rent payments. The Tribunal reminded Mr B he could get legal advice, in view of the accusations being made by the applicant about the veracity of the documents he had presented.

On the second day, about 3 weeks later, Mr B appeared represented by Des Taylor of ‘Landlord Defence’. Mr Taylor said he had sent a copy of the tenancy agreement and the bank statements. He hadn’t realised that the Tribunal wanted the original of the agreement, but in any event, Mr B had destroyed it, which he did routinely after scanning. However:

Mr Taylor stated the bank statements showed payments from 5 people. He stated that rent was paid by 5 people and his client is now aware he was running the property as an unlicensed house in multiple occupation.

The Judge queried with Mr Taylor whether his client was now accepting that he committed the offence alleged of running an HMO without a licence and that a rent repayment order should follow? Mr Taylor agreed this was the case. His client no longer relied upon the statement he had filed and was saying that this was a case of “no contest”. Mr Taylor was not tendering any evidence.

The Judge explained to Mr Taylor that Mr Sandham (for the applicant) was making serious allegations against his client in light of the documents presented to the Tribunal. The Judge explained it was anticipated that Mr Sandham would invite the Tribunal to make findings on these points. The Tribunal adjourned for Mr Taylor to take instructions from his client whether he wished to give any evidence.

Upon resumption of the hearing Mr Taylor stated his client withdraws all the evidence including all statements and documents filed save for the bank statements. He stated he was submitting his client agreed that a rent repayment order should be made for the sum claimed of £5382.

The Judge asked Mr Taylor to confirm that his client was admitting the criminal offence and that the Tribunal should make a rent repayment order in the sum of £5382 being the sum requested? Mr Taylor confirmed this was the case and Mr Baird was sitting alongside him and made no comment.

The Tribunal then turned to the rule 13 costs application, made on the basis that Mr B had acted unreasonably in defending or conducting the proceedings.

The applicant argued that Mr B had put forward a palpably false account, that there were 4 tenants, not 5, and he could have no honest belief in that case. Mr B had gone to great lengths at the first hearing day, including cross examination and attacks on the applicant. Mr B had forged a tenancy agreement, given false evidence and only on the second hearing date, withdrawing it all. Mr B was well aware of the licensing requirements, and owned many other properties. He had behaved abusively and vexatiously.

For Mr B, Mr Taylor argued that there was no proof that the agreement was forged because the fake document could not be shown against the original. He went on:

He suggested it makes no sense for Mr Baird to go to that trouble for the sums in dispute. He is a landlord with a rent roll of £20-25,000 per month. It is ludicrous to think he would create a forgery.

Mr Taylor submitted Mr Baird had attended various meetings held by Canterbury Council about licensing. He had made an application for one of his other properties, 9 Pretoria Road and the licence was granted about one year later.

Mr Baird does not have 50 properties but 15 of which he owns 10 and 5 are let for others. He has about 50 tenants. Mr Baird is aware of the laws in respect of houses in multiple occupation. He submitted the Council had taken no action.

In his submission the lawyers are the biggest winners. They managed to take something simple and make the matter complicated. He suggested Mr Baird had not paid attention to the detail that another person beyond the 4 on the agreement were paying rent.

The Judge reminded Mr Taylor he had on behalf of his client already admitted the offence, which had been committed. Mr Taylor accepted the offence was committed but suggested it was not reasonable to incur costs of about £22,000 for a claim with a maximum value of £5832.

He suggested that a lower cost could have been incurred for the claim. In particular he challenged the solicitors hourly rate and the brief fees of counsel. He submitted that the lawyers by accusing the Respondent of forgery were using this as an excuse to recover their inflated costs. Mr Baird had been unrepresented. He felt if a cost must be awarded, then something like £1800 would be reasonable.

This, you might think, is not really the strongest example of a plea in mitigation. And so it proved not to be. The Tribunal made the RRO in the sum of £5832, and £300 application fee. The Tribunal then turned to the rule 13 costs.

The Tribunal finds that Mr Baird did deliberately obfuscate matters and in signing the statement of truth [148] on his defence dated 19th February 2021 he deliberately misled the Tribunal. We are satisfied he knew that at all times there were 5 tenants at 15 North Holmes Road. (…)

It was apparent from his cross examination of the witnesses that Mr Baird knew all. (…)

We find that all 5 tenants being the Applicant, Mr Basaran, Mr Al Shabani, Mr Lu and Mr Onuegbu did meet with Mr Baird at 15 North Homes Road at some date prior to the commencement of the tenancy and all 6 persons present signed and initialled a document. This was not the document produced by Mr Baird. Mr Baird has deliberately produced a document which, placing it in the most generous light for Mr Baird, is not the document signed at that meeting and which the tenants believed was the tenancy agreement they were entering into. The production of this document was a calculated decision by Mr Baird in an attempt to mislead the Tribunal.

It would now appear that there is nothing within Mr Baird’s statement which can be said to be true. (…)

Mr Taylor suggests that once represented Mr Baird realised he had been letting to 5 tenants and that he should effectively make a clean breast of matters and did so at this late stage. Again we find this statement to be disingenuous. Mr Taylor told us that Mr Baird had attended on a course run by Canterbury Council explaining the licensing requirements. Further Mr Baird holds a licence. Mr Taylor looks to suggest that despite admitting the offence Mr Baird had not agreed 5 tenants or understood there would be 5 tenants and simply just accepted the money. That this was an oversight by a busy man.

We do not find that credible. (…)

We find Mr Baird’s actions were deliberate. Mr Taylor suggests there is no motivation for him to behave in this fashion. It is not for us to speculate upon his motivation save to say we are satisfied he did set out to deceive the Applicant and the Tribunal. His response to the claim was confrontational and bullying, he did make scurrilous accusations about the Applicant which we are satisfied were made in an attempt to persuade her to withdraw her claim.

Mr Baird has treated the Tribunal with contempt. (…)

Mr Taylor was instructed to make submission which offered no apology and tried to paint Mr Baird still as the wronged party. A landlord who had made a mistake and was now being penalised. Mr Taylor looked to criticize the solicitor and counsel for the Applicant. He suggested they set out to paint his client in a poor light simply so they would be able to recover costs from him. He suggested the costs claimed were unreasonable. (…)

This Tribunal does not accept any part of that submission.

Mr Baird had failed to disclose the documents requested by the applicant when requested, and had not given any indication before the start of the second hearing that he was changing his case. He had brought the costs upon himself.

Taking all the matters referred to above we find that the conduct of the Respondent in conducting these proceedings was unreasonable. We agree with Mr Sandham that the lies and deceit practised by the Respondent is some of the most serious that this Tribunal has seen.

Costs awarded on the indemnity basis. Solicitor’s hourly rate and counsel’s fees were reasonable, given Mr B’s deceit. Costs of £21,512 ordered.

Comment

Rule 13 costs on RROs are an interesting development, and perhaps applications should be considered more often in cases where the landlord defends outright on what are found to be false grounds.

Mr B’s conduct in this case certainly exacerbated matters, though. If he had had representation or advice before the first hearing, and had folded at that point, things might have been different. We don’t know when Mr Taylor was taken on as a representative by Mr B, but if it was not at the last minute, it is surprising that it was thought that turning up to the second day without any prior mention to the applicant or Tribunal of the change of case was a good idea. It would, at the least, infuriate the Tribunal and incur additional costs in preparation by the applicant.

 

 

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

5 Comments

  1. Ben Reeve-Lewis

    Des Taylor has been hacking around RROs for some time, arguing that they are a moral crime against landlords. The website for his service, ‘Landlord Defence’ has this strapline on the landlng page “Helping Landlords and Agents Avoid Council Fines and Penalties”. Compare that selling point with the tribunal’s statement above “The lies and deceit practised by the Respondent is some of the most serious that this Tribunal has seen.”, said respondent personally represented by Des Taylor of Landlord Defence.

    Nice business model there

    Reply
  2. getrentbackblog

    This coincides with a number of cases we have where we are looking to obtain costs. In fact we had a RRO hearing last Friday which was adjourned due to R’s lack of preparation and the Tribunal invited us to apply for costs…not had that before. In a parallel hearing the same day, also adjourned, R had stuck their head in the sand until 2 days before the hearing when they emerged with a solicitor and a bundle. Our Applicants had given up a day’s work to attend the hearing, not to mention Flat Justice’s wasted time, so we will apply for costs there too.

    On the flip side, also last Friday, we received a decision on a £46,000+ costs claim we successfully defended our clients against: costs claim rejected à la Willow Court (https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKUT/LC/2016/290.html). It was rather hard for R to argue A acted unreasonably when Tribunal had already given permission to appeal the decision.

    It should be re-emphasised here that claims against Applicants… and against Respondents ….can only work at the property Tribunals where a party has acted unreasonably in bringing or defending an action. This is very unlikely for Applicants, in our experience. But as landlords thrash around to find a defence for the often indefensible and turn to the likes of Mr Taylor we will likely see more successful claims against Respondents.

    Worth remembering, also, that a party’s legal representative is also not immune to a cost claim for unreasonable behaviour under ‘wasted costs’ section of rule 13: landlord reps take note.
    Benji H-M, Flat Justice Community Interest Company

    PS this is an extract from our guide, freely available above, on the subject of costs for RROs. We will soon be adding to this section to cover A claims for costs against Rs:

    “COSTS

    If your Respondent has engaged a solicitor, it is quite common for Applicants to receive threats of a legal costs claim unless they withdraw their application, etc. However, you should not be unduly concerned about this. The Tribunal virtually never makes such a costs award against Litigants in Person (LiP), i.e. DIY Applicants. The hurdle for a successful costs application at the FtT against an RRO Applicant is very, very high, especially if they are representing themselves without legal advice.

    Naturally the idea that you might be subject to a counterclaim for costs is concerning for Applicants which is why we go into some detail here to explain the situation at the FtT and the reasons why you should not be worried.

    The rules on costs claims are at Rule 13 in the
    The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013
    13(1)(a) “wasted costs” only concerns the behaviour of a representative not an Applicant themself
    13(1)(b), specifically (ii), is the rule of concern for this discussion
    13(1)(c) is the rule under which you can (and should) apply for your application and hearing fees to be awarded”

    The First-tier Tribunal has completely different rules to other courts of law in England. This stems from the FtT’s origins in the Land Valuation Tribunal (LVT) as well as its overriding objectives to provide an accessible route to justice for Applicants who are often ‘Litigants-in-Person’ (LiPs): so DIY Applicants without representation. In its earlier incarnation, a LVT could order party ’X’ to pay costs of part ‘Y’ when X had acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with proceedings. Similarly, the FtT can only award costs against a party if it has acted “unreasonably” in bringing, defending or conducting proceedings. As so often, it hinges on the definition of what is “acting unreasonably”.

    This term is analysed in detail in a case at the Upper Tribunal (Lands Chamber) (UT) which dealt with three costs appeals together, a case known as Willow Court (after the first-named appellant). In summary, this case found:
    13(1)(a) does not apply to LiPs, i.e. unrepresented parties
    For 13(1)b “acting unreasonably” did not include:
    any behaviour that could be put down to a party’s lack of knowledge of the law or legal proceedings
    losing the case; i.e. just losing a case is not a reason to award costs against the losing party
    At §24, Willow Court defines “Unreasonable” conduct “includes conduct which is vexatious, and designed to harass the other side rather than advance the resolution of the case.” The judgment offers further refinements:
    at §25: that considerable allowance be made for ‘lay’ Applicants without legal qualification and that truly unreasonable conduct is relatively rare in such cases
    at §26: the FtT should not seek to cast behaviour as ‘unreasonable’ but consider its overriding objective of seeking the truth in a cooperative spirit enshrined in rule 3(4) of its rules and actively use its case management powers to this end.
    §31-34 consider unrepresented parties and reiterate that, although they should not be given “carte blanche” to behave in any way they want, due allowance had to be given for lack of knowledge and training in law and procedures

    The net result is that, unless you deliberately go out of your way to be unreasonable and vexatious in the proceedings, a costs claim against you will fail.

    As an example, here is a case where a Respondent failed in their costs claim against an Applicant’s representative. This gives a good idea of how high the hurdle is set for such claims. At §28 of this Decision, Judge Nicol states:

    “Even if it could have been said that either or both of the Applicants and Justice for Tenants had behaved unreasonably, the Tribunal would have been minded to disallow the whole of the costs claimed.”

    Thereby reinforcing the point made in Willow Court, at §27, that the FtT ‘may’ make an award: evidence of any unreasonable behaviour does not automatically result in a costs award.

    Legal costs for any professional help you pay for, from a solicitor for example, will not be reimbursed if you win and you will not be asked to pay the other side’s legal costs if you don’t succeed. The tribunal rules are available here: http://www.legislation.gov.uk/uksi/2013/1169/contents/made

    §13 deals with the exceptional cases where costs may be ordered to be paid to the other side.
    (1) The Tribunal may make an order in respect of costs only—
    (a) under section 29(4) of the 2007 Act (wasted costs) and the costs incurred in applying for such costs;
    (b) if a person has acted unreasonably in bringing, defending or conducting proceedings

    The definitive situation regarding costs at the First-tier Tribunal Property Chamber (Residential Property) (FtT) is to be found in this case decision (Willow Court) at the Upper Tribunal:
    https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKUT/LC/2016/290.html

    Rule 13 (1)(2) on the other hand does allow recovery of fees. You should always apply for your application and hearing fees to be awarded: in your application and all further submissions. It’s also good to remind the Tribunal at the hearing.

    Reply
  3. archie maddan

    Clearly an appropriate costs decision, although one does wonder why the applicant solicitors didn’t make an earlier application for disclosure of the bank account statements once it became clear that the landlord’s defence was going to be that there were only four occupants/tenants; it might have saved the applicant the thoroughly unpleasant sounding “cross-examination”. The landlord is lucky that the tribunal didn’t refer the case for investigation for attempt to pervert the course of justice, I know judges who would have considered it.

    Reply
  4. Ben Reeve-Lewis

    @Getrentback. Sadly threats of unreasonable costs orders are thrown at us all the time, even when its a standard ‘Failure to licence’ claim where the respondent is bang to rights.. We know they are daft and always have to explain Willow to the claimants, who all too often wobble about progressing for fear of ending up in debt. The letters from the landlord’s representatives merely state their right to make such a claim rather than insisting that they will get costs awarded but renter’s dont always see through the careful wording. It’s a cheap, aggressive practice aimed solely at intimidating claimants into dropping their case and it should be stopped.

    Reply
  5. getrentbackblog

    @ Ben. Agree: landlord reps resort to this bullying all too easily. For As that are not represented it is very threatening. Would help if First-tier Tribunal Property Chamber (Residential Property) (FtT) would issue a guidance to As on such costs claims with their application acceptance

    Reply

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