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Costs

Fixed costs

The fixed costs rule in relation to possession and demotion claims is now set out in CPR Part 45.1 and 45.4A..

Unless the court otherwise orders the amount to be allowed in respect of solicitors charges is fixed where:
  • the claim is for the recovery of land, including a possession claim under Part 55, whether or not the claim includes a claim for a sum of money and the defendant gives up possession, pays the amount claimed, if any, and the fixed commencement costs stated in the claim form;
  • 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
    • has neither delivered a defence, or counterclaim, nor otherwise denied liability; or
    • has delivered a defence which is limited to specifying his proposals for the payment of arrears of rent;
  • the claim is a demotion claim under Section III of Part 65 or a demotion claim is made in the same claim form in which a claim for possession is made under Part 55 and that demotion claim is successful.
Where the claimant obtains judgment the amount to be included in the judgment for the claimant's solicitor's charges is the total of the fixed commencement costs and the sum of �57.25. In addition the claimant is entitled to the court fee (45.2(3))


Possible exceptions

The circumstances in which the court might otherwise order (ie award costs greater than fixed costs) is not specified. Examples might include:
  • Where there has been one or more adjournments at the request of the defendant;
  • Where there is a complication in the case, or
  • Where the tenancy agreement makes specific provision as to costs.

Contractual entitlement

Where the tenancy agreement makes specific provision as to costs the landlord is "not to be deprived of his contractual rights to costs where he has claimed them unless there is a good reason to do so and that applies both to the making of a costs order in his favour and to the extent that costs are to be paid to him" even in a "straightforward possession action" (Church Commissioners for England v Ibrahim [1997] 1 EGLR 13, at 14H, per Roch LJ).

Where a landlord is relying upon a contractual term it will be for the tenant to show that the individual items were unreasonably incurred or unreasonable in amount (CPR 48.3; PD 48, section 50).

Any party which wishes to obtain greater costs than fixed costs should prepare a costs schedule.

Contractual entitlement not conclusive

Forcelux v Binnie
[2009] EWCA Civ 1077

Summary

A landlord’s contractual entitlement to legal costs pursuant to the terms of the lease is a relevant factor in determining who should pay the costs. However, it is just that, a relevant factor, and is not conclusive. The court can make a different order. In this case it did so where the landlord lost on appeal.

More detail

Where, as in this case, the tenant had been the substantial winner on an appeal brought by the landlord, the landlord should pay the majority of his costs. Before the district judge, the landlord had obtained an order for possession, subject to the tenant obtaining relief from forfeiture by paying arrears and costs. The purposes of the right of re-entry had therefore been met. However, the court was now considering an appeal by the landlord that had failed. Warren J at paras 12, 13, 15 and 16:
    "As I have said he [counsel for the landlord] accepts the jurisdiction of the court to make a different order notwithstanding the contractual position as he states it, but submits that the general principle is that the discretion should be exercised in line with the contract. He relies on Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] CH 171 (a mortgage case) and Church Commissioners for England v Ibrahim [1997] 1 EGLR 13 (a lease case) to demonstrate that principle. I do not dissent in any way from the proposition that the general principle is as he states. But the general principle is not a rule of law and it may well be that in a particular case, or even in a class of case, the court's discretion should be used to override the contractual right.

    For example, if a lessor loses a piece of litigation at first instance which it was reasonable for him to fight, it might be wrong to deprive him of a contractual right to costs. But if he goes on to appeal the decision against him and loses the appeal, then it is not obvious to me that the general rule should be that the discretion should be exercised in accordance with the contractual right; or if it is the general rule, then the court should be willing to depart from it quite readily."


Unfair contract terms

Query: Will the Unfair Contract Terms Regulations prevent a landlord from recovering more than fixed costs? It will no doubt depend upon the precise wording of the clause but the OFT considers the following wording to be suitable: "To pay, unless a court orders otherwise, the landlord's reasonable legal costs and expenses (including VAT) properly incurred in enforcing this agreement." (See Group 5 on p85 of the OFT document "Guidance on unfair terms in tenancy agreements" (oft 356).

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