Right, I am back from a two week holiday (it was lovely thank you) so onwards…
Crescent Trustees Limited v Behjat. Tribunal Ref: LON/00BJ/LSC/2021/0168, County Court Claim No F69YX307
I had my attention drawn to this First Tier Tribunal/County Court double hatted decision for reasons that will eventually become clear. But it is a very interesting decision on contractual costs in proceedings split between the County Court and the First Tier Tribunal, and it also features Richard Davidoff of ABC Estates (or probably his client) coming a quite expensive cropper. (For those not familiar with Davidoff, let us just say that he and ABC Estates have not got a good reputation – more reading and more.)
The underlying proceedings were a small claim in the County Court by Crescent (via Davidoff as agent) for unpaid service charges against Mr Behjat as leaseholder. It was, apparently, transferred to the FTT for determination of payability and reasonableness of the service charges. It appears that there was then a Tribunal decision, and simultaneous County Court order made by the Tribunal judge sitting as a county court judge.
A demand for the costs of this case was – it appears – then made as an administration charge (bizarrely, for the small claims issue fee of £350, ‘fixed costs’ of £840, plus another £250 for Davidoff and as a contractual costs claim. The original claim was for £7,566.22. The costs claim was for £30,550, made up of solicitors costs and counsel’s fees of £17,650 and fees of £12,900 for Mr Davidoff’s time and that of a ‘service charge accountant’.
Mr Davidoff disinstructed the solicitors before the costs hearing, representing the client himself, and tried to justify his failure to make arguments in submissions as being a litigant in person. The Tribunal/Court was not exactly impressed.
This is not the first, (or even the second) hearing in which I have heard Mr Davidoff make this submission. As observed in the hearing, Mr Davidoff is not unfamiliar in or with the Tribunal, and frequently conducts litigation before us without legal assistance on his own account or as the appointed representative of a party. We would not accept that he is as inexperienced as he purports, though of course we are mindful he is not a lawyer. We are satisfied that he is aware that he has to set out his whole argument when directed to do so.
The documents supplied by Davidoff to support the claim were woefully inadequate. The schedules of costs prepared for county court hearings did not add up to the sum claimed for solicitors costs and disbursements and contained duplications, so the figure was actually some £4000 less. Counsel’s fees were incorrectly invoiced with VAT. There were no documents to support Davidoff/ABC Estates demand for their costs save for invoices.
The contractual claim rested on a s.146 lease clause, which it appears was in a common form –
“To pay all costs charges and expenses (including legal costs and fees payable to the Lessor’s and/or Superior Lessor’s surveyor) incurred by the Lessor and/or Superior Lessor in or in contemplation of any proceedings under section 146 and 147 of the Law of Property Act 1925 in respect of the Premises notwithstanding that forfeiture is avoided otherwise than by relief granted by the Court …”
The decision follows London Borough of Tower Hamlets v Khan (2022) EWCA Civ 831 (our note). In order to be in contemplation of a s.146 notice (if none was actually served), there has to be evidence as to the landlord’s intention to forfeit. Here there was none, safe fro early letters from the solicitor to the effect that the landlord might consider possession proceedings if arrears weren’t paid. This was not sufficient.
There was therefore no basis for a contractual claim under the lease. There was no evidence of the landlord’s intention, no evidence that Mr Davidoff could make the decision on his own, and Mr Davidoff’s own evidence suggested this was a stock passage in letters to allow costs recovery.
in the second part of the decision in Khan, the Court of Appeal resolved the tension between Avon Ground Rents Ltd v Child (2018) UKUT 204 (LC) and John Romans Park Homes Ltd v Hancock, 17 October 2019 (His Honour Judge Martin Rodger KC), unreported. It held that costs in the Tribunal after a County Court case is transferred were not County Court costs in the exercise of section 51, but costs to be considered under section 27 of the Tribunals, Courts and Enforcement Act 2007 as implemented in the Tribunal Procedure (First Tier Tribunal) (Property Chamber) Rules 2013 (‘the Rules’). This points to the fact that there are different considerations regarding contractual costs in the Tribunal.
The Tribunal’s powers to award costs are those of Rule 13 – so only where a party in a leasehold case has acted unreasonably, where there was no contractual claim. A case transferred to the Tribunal from the County Court is a ‘leasehold case’ for the purposes of Rule 13. So, there was no recovery of costs in the Tribunal in any event.
This meant that the County Court costs and the Tribunal costs were “in effect, siloed”.
There was no evidence at all that the Tribunal proceedings had been conducted unreasonably by the leaseholder, so whatever inchoate Rule 13 application Mr Davidoff might have been trying to make was dismissed in any event.
With the Judge now sitting as a County Court judge, the county court costs did not have a basis in a contractual claim, as per above.
So there was no basis for Davidoff/ABC Estates costs, but further
84. Firstly, the Claimant appointed solicitors in this case. ABC’s purported costs are simply not litigation costs properly so-characterised. He has not, up until two days after the hearing on 5 December 2022, conducted the litigation. What he did was stand in the shoes of his client as a witness in the case, being the individual (or the director of the company, at least) to whom the day-to-day management of the development was delegated by the Claimant. If the Claimant had engaged in this litigation themselves, they too would have been entitled to only such witness costs as the small claims track would permit, or such costs as the contractual clause supports. Mr Davidoff (and ABC) should not be in a better position than the person in whose shoes he stands, and the Defendant should not have additional costs visited on him because of this arrangement. There is no evidence provided in the bundle, nor was it asserted in oral evidence or with his submissions, to support his assertion that he has contracted for such ‘fee’ or ‘costs’ (in circumstances in which he asserts whatever ‘services’ he has provided are not part of his management contract (which contract is, as already observed, also absent from evidence).
85. Further, early on in the proceedings I had to stop Mr Davidoff from trying to make submissions on case law while giving witness evidence, neatly demonstrating his misunderstanding of his role and that of the Claimant’s legal representatives.
86. Secondly, on the information provided, it is impossible to ascertain when and what specific work was carried out to justify sums almost as high as those charged by the Solicitor in the two N260s combined, in this modest small claim.
87. Thirdly, in the circumstances of the paucity of evidence as recounted in the decision of 23 December 2022, I find Mr Davidoff’s account of the time and research put into this case wholly incredible. As will be seen from paragraph 41 of that decision, we found that Mr Davidoff was unable to help us on many aspects of the case, which is not reflective of someone spending the hours claimed poring over the documents. It is evident from the document bundle itself that he was not the individual managing Mr Behjat’s account at the material time. That was a that Mr Stuart Burchell, also naming himself the managing agent in the employ of ABC, having prepared the witness statement for the 7 August 2020 hearing. In the Decision of 23 December 2022 we already observed that Mr Davidoff may not have been the appropriate witness if he did not have personal knowledge of the events, and so charging to read another person’s first-hand knowledge to put himself in position of primary witness is not, I find, reasonable. Moreover, his witness statement simply fails to deal with what is in his knowledge and what information has come to his attention through a case file or the designated managing agent’s notes, to support any such ‘reading in’.
88. Fourthly, if I am to go by the date on the ‘invoices’, all of the sums incurred were incurred after the transfer order. The Tribunal has made a finding that there has been no unreasonable conduct to engage its costs jurisdiction. I cannot bring the decision into my jurisdiction as a County Court Judge as the costs are siloed (Khan).
On the solicitor’s costs, exercising the County Court’s discretion as to costs in small claims under CPR 46.2, there was no reason to depart from the CPR 27.14 fixed costs regime, as the defendant’s conduct did not justify such a departure.
There was no basis for the additional £840 costs claimed on the claim form. The only costs allowed were the issue fee, commencement costs, and trial fee, totalling £910.
The decision on contractual costs seems entirely right. No evidence of contemplation of a s.146 notice and forfeiture. The point on the ‘siloing’ of County Court and Tribunal periods and costs jurisdictions is interesting and potentially very useful, if contractual costs are not at play.
Now, while I have set out the criticisms of Mr Davidoff’s approach to evidence, argument and submissions, it is only fair to say that the representatives of the defendant/leaseholder also apparently left a lot to be desired. In the previous proceedings, it is noted that they had a “basic want of understanding on the difference in recoverability of ‘on account’ and ‘actual’ service charges”. And then the representative in this hearing, a Mr Eastman gets this introduction
On the other extreme, on behalf of the Defendant Mr Eastman (who insists on calling himself an attorney, though as the panel observed previously, Mr Eastman is a CILEX authorised advocate, and he does not conduct this litigation, which is the job of his instructing solicitors) filed 13 pages of Respondent’s Costs Submissions, which was prolix and unfocussed on the issues. For example, in it Mr Eastman took issue for the first time with whether the Claimant in fact has any legal or beneficial interest in the property. Plainly, it was far too late to do so, and frankly such a submission demonstrated again Mr Eastman’s basic lack of familiarity with the area of leasehold law. To this was attached to a document entitled “Attorney’s (Litigator and Advocate) Certificate for Book of Authorities”. The document is a further six pages, presented in something akin to a scott schedule, in which the second column pastes in the legal provision relied on, and the final column is used for ‘comments’ that are, in reality, further submissions. The authorities identified in column two were then provided in a ‘Respondent’s Book of Authorities’, running to a further 129 pages.
Mr Eastman, ‘attorney’ (why do that?), was instructed by SCS Law, which appears to be a part of LPC Law – the ‘advocate’ providers. If this is LPC Law’s venture into actually running cases, rather than being the fig-leaf instructing solicitors for ‘advocates’ with no other right of audience, it seems that they might actually need to bone up on relevant law and practice.
But Mr Eastman’s involvement did, rather gloriously, bring about the reason I was directed to this decision. Here is paragraph 13
Amongst those authorities were included 2 articles from Nearly Legal, which Mr Eastman names as “persuasive academic authority” in his Certificate. With no disrespect to Mr Peaker, to whose blog I confess to being a subscriber, and who I strongly suspect would agree with me in this assessment, Nearly Legal blog posts are not academic authority. They are the thoughts and case analysis of a housing practitioner (unquestionably an experienced one), with no peer review or QA process. Moreover, those provided by Mr Eastman had no place in an ‘authorities’ bundle in which the Respondent was supposed to be making its submissions on costs recoverability – they were articles in which Nearly Legal blogged about cases in which the Tribunal was found to have got double-hatting wrong, but were not relied on for any point of principle, save perhaps for a ‘warning’ not to get it wrong. I’m sure the Tribunals in question had no intention of getting it wrong, and neither do we.
If Deputy Regional/District Judge Carr does read this, I can confirm that I entirely agree with that assessment. NL posts are not academic authority at all. Although there is peer review to the extent that if we get something wrong, people are rude about it in the comments. But QA depends entirely on our remaining shreds of self respect.