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Fixed costs in possession claims (2004) [i]

Most advocates are familiar with certain types of fixed costs - for example the Fast Track advocacy fees of £350, £500 and £750 set out in CPR 46.2.  Many are also aware of the fixed costs on the entry of summary judgment provided for by CPR 45.4.  However the fixed costs which apply on making a possession order, where one of the grounds for possession is arrears of rent, are harder to find.  CCR Order 38 rule 18* provides

Appendix B shall have effect for the purpose of showing the total amount which, in the several cases to which Appendix B applies, shall be allowed to the solicitor for the claimant as fixed costs without assessment (whether by the summary or detailed procedure), unless the court otherwise directs.

Appendix B (to be found at cc38.B.2 in The White Book), after the heading Fixed Costs on Judgments states

Where judgment is given in a fixed date action for - …. (ii) possession of land where one of the grounds for possession is arrears of rent (whether or not the order for possession is suspended on terms) and the defendant has neither delivered a defence, admission or counterclaim nor otherwise denied liability…

exceeding £25 but not exceeding £600 -             £38.50

exceeding £600 but not exceeding £3,000 -        £57.25

exceeding £3,000 -                                                  £70.75

These sums are in addition to the issue fee and solicitors' costs on the claim form for the issue of the claim.  (The costs on issue are set out in the first part of Appendix B and vary from £35 to £82, depending on the value of the claim and whether or not service is by the solicitor or the court.)

There is nothing new about fixed costs in possession claims.  The 1974 Green Book shows that the 1936 County Court Rules, as amended, provided for fixed costs when making a suspended possession order based upon rent arrears.  Then the fixed costs were £1 (if the arrears were less than £20), £2 (for arrears between £20 and £100) or £4 (if the arrears exceeded £100).  A similar provision was re-enacted from the outset in the 1981 County Court Rules, but the levels of rent arrears triggering the different bands of fixed costs were increased to the current levels of £25 to £600, £600 to £3,000 and over £3,000.  By 1985 the amounts of fixed costs were respectively £20,  £31 or £38. Fixed costs were extended to cover other possession orders in 2002.

The fixed costs are mandatory, unless the court otherwise directs.  This raises the question "When should the court otherwise direct?" One reliable barrister informed me recently that he succeeded in "busting" fixed costs in 50% of private sector possession claims in other courts.   Yet the mere fact that the fixed costs are low and will almost inevitably leave a landlord out of pocket, if a legally qualified advocate attends a possession hearing, is not enough.  That is something that must have been known by the rule makers when extending the scope of fixed costs in 2002. There has to be a positive reason for the court to direct that fixed costs do not apply.

It is impossible to be prescriptive about the circumstances which might justify directing that fixed costs do not apply, but it seems to me that there are three obvious examples:-

(i)                  an adjournment has been sought by the defendant tenant, or an adjournment has been granted to give the defendant an opportunity to pay arrears or to sort out a housing benefit claim.  The fixed costs apply however many hearings take place, but it would often be unjust not to direct otherwise in such circumstances;

(ii)                there is something unusual about the case which justifies more work by the solicitor or advocate than would normally be the case - for example a high value claim involving a particularly valuable property or a particularly high rent.  The last case where I allowed more than fixed costs at West London County Court involved a private sector tenant with arrears of over £25,000.  The experienced barrister who appeared successfully argued that as any adjournment would cost the landlord over £1,000 a week, it was reasonable and proportionate for her to be instructed and for me to allow more than the fixed costs;

(iii)               where the tenancy agreement expressly provides for indemnity costs.  CPR 48.3 provides that where the court assesses (whether by the summary or detailed procedure) costs which are payable by the paying party to the receiving party under the terms of the contract, the costs payable under those terms are … to be presumed to be costs which have been reasonably incurred and are reasonable in amount and the court will assess them accordingly.  That provision does not by itself oust the fixed costs regime, but PD48 para 50.3(2) provides that where there is a contractual right to the costs, the discretion should ordinarily be exercised so as to reflect that contractual right. This reflects Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171; [1992] 3 WLR 723; [1992] 4 All ER 588, CA where the Court of Appeal set out the following principles:-

(i) an order for the payment of costs of proceedings by one party to another party is always a discretionary order;

(ii) where there is a contractual right to costs, the discretion should normally be exercised to reflect that contractual right; and

(iii) a party contractually entitled to costs is not to be deprived of the right to costs merely because of an order for payment of costs made without reference to the contractual provisions.

The position is analogous to mortgage possession claims where mortgagees are entitled to add costs to security as a result of their contractual entitlement in the mortgage deed.  Indeed, in Church Commissioners for England v Ibrahim [1997] 1 EGLR 13, CA, the Court of Appeal held that the principles set out in Gomba Holdings are not confined to mortgage cases. Although the award of costs is always a discretionary order, a party is not to be deprived of a contractual right to costs unless there is a good reason to do so. The mere fact that it was a straightforward possession action was not a good reason. Similarly, the bargaining strength of the landlord did not justify departing from the contractual basis for taxation. The Church Commissioners were entitled to an order for costs to be taxed on an indemnity basis.

Many judges accordingly take the view that a provision for indemnity costs in a tenancy agreement may, depending on the circumstances, be a reason "to direct otherwise", although others leave claimant landlords to their contractual remedies.  

*N.B.  Since this article was written the provisions relating to fixed costs in possession claims have been moved to CPR 45(2)(c), (d), (e) and (f).

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[i] Published in the ADJ Bulletin in the Spring 2004.