Costs on Relief Against Forfeiture

Although a case involving a commercial lease, Pineport Limited v Grangeglen Limited [2016] EWHC 2170 (Ch) offers useful general guidance about costs in relief against forfeiture cases and, in particular, when it may be right for a court in exercising its discretion as to costs not to award a landlord costs on an indemnity basis in accordance with Patel v K&J Restaurants Ltd [2010] EWCA Civ 1211 (see esp paras 100-104).
Senior Master Marsh summarised the chief provisions of CPR 44.2 thus:
i) Under CPR 44.2(1) the court has a broad discretion to decide whether costs are payable by one party to the other.
ii) Under CPR 44.2(2) the general rule is set out that the successful party is entitled to an award of costs but it is no more than a general rule and may, or may not, be appropriate depending on the particular circumstances of the case.
iii) CPR 44.2(4) provides three matters to which the court must have regard, namely the conduct of all the parties, the extent to which the party has been successful, and any admissible offers.
iv) CPR 44.2(5) provides guidance about what conduct includes.
v) CPR 44.2(6) provides a non-exclusive menu of orders which the court may make.

Before observing at 8:
…To my mind it is clear that there is no principle of law which constrains the court necessarily to grant the defendant landlord its costs of the claim. To take an extreme example, in the event of a lease being forfeited for non-payment of rent, but before the tenant’s application for relief is issued, the tenant offers to pay all the landlord’s reasonable costs and expenses, as well as the arrears, and the landlord declines to accept that offer, it might well be the case that the court would exercise its discretion as to costs and require the landlord to pay all the tenant’s costs of the claim. All the more so where the forfeiture is by peaceable re-entry, the claimant does not dispute that the forfeiture was lawful and the terms of relief make provision for the landlord’s costs and expenses of the forfeiture (including reasonable legal costs associated with the forfeiture).

He went on to identify two factors of particular relevance to costs in relief from forfeiture cases:
(1) whether the tenant had provided the landlord with such information as the landlord may reasonably require in order to consider the application, and
(2) whether the landlord had behaved reasonably in relation to the application.

The second criteria was “of particular significance” where the tenant had made an offer, although the landlord was not under “an obligation … to ‘make the running’ on seeking to resolve the tenant’s application for relief … [it] need only act reasonably and respond to the application as it is put forward.

The circumstances of the case were somewhat unusual (for the judgment on the substantive application, see Pineport Limited v Grangeglen Limited [2016] EWHC 1318 (Ch)) and neither the landlord nor the tenant could be described as having covered themselves in glory in the course of the proceedings; the tenant had made a very late application for relief but had, in the end, made an offer to pay the landlord more than the landlord was ultimately ordered to be paid as a condition of relief. The landlord had, among other things, been very slow to respond to the offer (particularly having regard to the proximity of the trial) and had effectively stood by and allowed events leading to the contested trial of the claim for relief to unfold. The result was a split costs order made by reference to a date after the date of the offer but before the date of trial, with each side’s costs being assessed on the standard basis.

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