A Guide To Costs In Possession Proceedings

In this article I shall examine the rules surrounding costs in Landlord and Tenant possession claims stemming from Assured Shorthold Tenancies and give a guide for Landlords in respect of the two most common forms of possession proceedings. The process of recovering one’s property from a tenant can be a stressful, time consuming and expensive process, made equally frustrating for a Landlord if he is not adequately compensated for the costs incurred in bringing the matter to Court. I shall concentrate on the two most common possession proceedings, those brought for rent arrears (Grounds 8,10,11 of Schedule 2 the Housing Act 1988) and those brought after expiry of a s.21 notice.

Amount of Fixed Costs

The proper starting point is an examination of the fixed costs regime as it applies to these Landlord and Tenant proceedings. The fixed costs regime was brought in to limit the amount recoverable by Landlords after successful possession proceedings to ensure that litigation was conducted at a proportionate cost. CPR 45 provides for the recovery of the following fixed costs in undefended claims, unless the Court orders otherwise.

• Court Fee (currently £325 for claims issued using the Possession Claims Online (PCOL) system and £355 for County Court possession claims).

• Fixed costs on Commencement (CPR 45.5) as per the below:

1. Where the claim form is served by the Court or any method other than personal service by the Claimant – £69.50
2. Where the claim form is served personally by the Claimant and there is only one Defendant – £77.00
3. Where the claim form is served personally by the Claimant and there is more than one Defendant, for each additional Defendant personally served at separate addresses the Claimant may claim an additional £15 per Defendant.

• Fixed costs on Judgment (CPR 45.6)

1. The sum of £57.25.

Note that this last sum for costs, payable under CPR 45.6, is payable on entry of judgment, which will normally be for rent arrears. As such, this sum is not recoverable when using the accelerated possession procedure, which does not provide for the recovery of rent arrears.

As can be seen from the above, the amount of fixed costs that can be claimed in possession proceedings will vary depending on the way in which the claim is issued, the method of service of the claim form and whether or not judgement is sought in respect of rent arrears.

Departures From Fixed Costs

CPR 45.1(1) makes it clear that the Court still retains its usual costs discretion despite the fixed costs regime. The most usual circumstance in which the court will order otherwise is where there is a contractual right to costs. The vast majority of AST’s will contain a provision that the tenant pays the landlord’s costs of court action in seeking possession.

The primacy of such contractual terms over fixed costs has been long established through the cases of Gomba Holdings (UK) Ltd v Minories Finance Ltd (No.2) [1993] Ch. 171 and Church Commissioners v Ibrahim [1997] EGLR 13. In short, these decisions make clear that notwithstanding the fixed costs regime, even for undefended claims, the Court should give effect to the contractual term between the parties. Where there is such a contractual term in the tenancy agreement the Court should assess costs from a prepared schedule.

Helpfully, the case of Chaplair Limited v Kumari [2015] EWCA Civ 798 confirms this position in relation to the Small Claims track, which also makes use of fixed costs. Some contested possession proceedings will be allocated to the Small Claims track and Courts had been unwilling to depart from the fixed costs rules that apply. Chaplair v Kumari reiterates the rule of primacy of contract in respect of costs for matters allocated to this track.
Another reason why the Court might “order otherwise” could be unreasonable conduct on behalf of the Defendant. A consistent and/or deliberate failure to follow Court orders or obtaining last minute adjournments without first requesting the other side’s consent might both be examples of conduct which would allow the Court to penalise the Defendant in respect of costs. This might come by way of ordering payment of the Claimant’s wasted costs in respect of any adjourned hearings or assessing costs per a schedule in situations where fixed costs would normally apply.

Undefended claims

CPR 45.1(2)(d) and 45.1(2)(e) make clear that the fixed costs set out above are the appropriate order for undefended claims:

45.1
(1) This Section sets out the amounts which, unless the court orders otherwise, are to be allowed in respect of legal representatives’ charges.

(2) This Section applies where….

(d) the claim is for the recovery of land, including a possession claim under Part 55, where one of the grounds for possession is arrears of rent, for which the court gave a fixed date for the hearing when it issued the claim and judgment is given for the possession of land (whether or not the order for possession is suspended on terms) and the defendant –

(i) has neither delivered a defence, or counterclaim, nor otherwise denied liability; or
(ii) has delivered a defence which is limited to specifying his proposals for the payment of arrears of rent;

(e) the claim is a possession claim under Section II of Part 55 (accelerated possession claims of land let on an assured shorthold tenancy) and a possession order is made where the defendant has neither delivered a defence, or counterclaim, nor otherwise denied liability.

It is important to note here that the rules refer to a defence “delivered”, not filed and served. A landlord who has issued his claim and has not received a defence by the time of the Court hearing may expect that the hearing will proceed undefended, and possession will be a formality, assuming that all the procedural steps have been correctly undertaken. However, it is very common for a tenant to attend the hearing and offer a defence at that time. This is permitted by CPR 55.7(3), and it is for this reason that reference is made to “deliver[ing] a defence”.

As such, if any element of the claim for possession is contested at the hearing, the matter should fall out of the fixed costs regime and the Court should assess the Claimant’s costs. This could apply if, for example, a Defendant argues that he had not received the relevant notice seeking possession. While such a defence is normally easily overcome by producing to the Court a certificate of service for the said notice, this is still an attempt to defend the claim. As such, a schedule of costs should always be provided to the Court at a possession hearing so that summary assessment can take place in such circumstances.

To explain further what is said in CPR 45.1(1)(d)(ii), a defence which is limited to specifying “proposals for payment of arears of rent” would be applicable where grounds 10 or 11 are relied on. As these are discretionary grounds the Court has the power to make a suspended possession order and the proposals referred to are the rate at which arrears are to be paid under the terms of the suspension of the possession order. Where ground 8 is made out (2 months arrears at the date of service of the s.8 notice and 2 months arrears at the time of the hearing) a mandatory possession order will be made where such proposals will not be considered and therefore 45.1(1)(d)(ii) is not relevant.

Conclusion

To summarise, the fixed costs regime in possession hearings should only come in to play where a claim is undefended and there is a lack of a contractual term allowing a Landlord to recover legal costs. Some Claimants in these proceedings are often induced into settlement at the door of the Court as the spectre of a defended claim may convince them that to continue in litigation may be cost prohibitive, not to mention an incredibly long process. However, if time is not an issue, such settlement should not be agreed to based purely on legal expense. It can be seen that only in the most straightforward and uncontested matters should a Landlord be limited to recouping fixed costs.

Members of Chambers are able to advise on all aspects of residential possession claims, please do not hesitate to contact clerks@becket-chambers.co.uk.