Welcome News for Landlords on Recovering Costs of Proceedings

In Chaplair v Kumari [2015] the Court of Appeal has confirmed that unless there is a good reason to the contrary, a landlord that brings a claim on the small claims track can expect to recover its legal costs where the lease says it can.

The Problem

This is useful for cases of rent and service charge arrears where the sums owing are less than £10,000, meaning the claim will be allocated to the small claims track. Historically, a landlord would be reluctant to commit to such proceedings on the expectation that legal costs might outstrip the actual amounts recovered.
This is because parties are usually only entitled to recover prescribed fixed legal costs, which are prohibitively low; the rationale being that parties are encouraged to deal with small claims without professional legal advice.

Costs Clause in Lease

A well drafted lease will give a landlord the ability to recover its legal costs from a tenant, and we now know, thanks to Chaplair v Kumari, that the contractual right in the lease trumps the fixed costs rules on the small claims track.
Although like many legal rules, there are exceptions; a landlord that behaves unreasonably in proceedings can be at risk of the Court awarding only the low fixed costs prescribed, as despite this general rule set out in Chaplair v Kumari, costs are always at the discretion of the Court.