There is no general rule in First-tier Tribunal (FTT) proceedings that the unsuccessful party pays the successful party’s costs. However, Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 allows the FTT to make an order for costs if a person has acted unreasonably in bringing, defending or conducting proceedings. A recent case serves as a warning to tenants to ensure their landlord and the FTT are kept informed of the progress of any proceedings they bring.

The tenants of a flat gave their landlord notice of their right to acquire a new lease under Section 42 of the Leasehold Reform, Housing and Urban Development Act 1993. The landlord accepted that the tenants had the right to a new lease, and the tenants applied to the FTT to determine the premium payable.

Eight days before the hearing was due to take place, the FTT wrote to the parties requesting an update. The tenants’ representatives wrote to the landlord’s representatives confirming that notice of a collective enfranchisement claim under Section 13 of the Act had been served and the application to acquire a new lease would be withdrawn. The tenants subsequently notified the FTT of the withdrawal of the claim. The landlord applied to the FTT seeking payment of its legal costs under Rule 13 of the Rules.

The FTT took account of the decision of the Upper Tribunal (UT) in Willow Court Management Company (1985) Ltd v Alexander, which set out the criteria for awards of costs under Rule 13. The UT had concluded that the test of reasonableness could be expressed by asking whether a reasonable person would have conducted themselves in the manner complained of, or whether there was a reasonable explanation for their conduct.

The landlord had made a number of attempts to get the tenants to comply with the FTT’s directions, which they had failed to do. If they had communicated at an earlier date that they intended to serve a collective enfranchisement notice rather than pursue the application for a new lease, the landlord would not have had to prepare for a case that might or might not proceed.

In the FTT’s view, the tenants’ failure to pursue their own case and follow directions was undoubtedly unreasonable conduct. It was only right that they should pay the landlord’s costs, which the FTT found were reasonable. The tenants were ordered to pay the landlord £10,297, including VAT.