Debt Recovery#10834

We acted for the Claimants who were the Landlords of a luxury residential apartment in London.

Their Tenant (a company) fell into rent arrears in excess of £6,000 and there was significant disrepair. Furthermore, the Tenant allowed the apartment to be occupied by multiple households (in breach of licencing laws) and made unauthorised adaptations to the apartment.

After regaining possession by way of Surrender our clients were required to carry out repairs in excess of £3,000 and lost rental income for the period that the apartment could not be let owing to the repairs.

The claim was issued and was allocated to the Small Claims Track meaning costs recovery was fixed to £890 unless it could be shown that the Tenant had behaved unreasonably.

The Tenant filed a holding defence which had no prospect of success. The Tenant also failed to comply with Court Orders for the filing of evidence and witness statements 14 days before the hearing. We intended to seek an order to strike out the defence on the day of the hearing.

One week prior to the hearing the Tenant sought to settle the claim but would not pay the costs incurred by the Landlord nor the claim for disrepair.

On the day of the hearing the Tenant admitted the full claim but the Tenant would only agree to pay fixed costs of £890.

Submissions were made as to whether the Tenant’s behaviour amounted to unreasonable behaviour on the basis that they:

1. Filed a holding defence which had no prospect of success;
2. Failed to comply with the Court Order for filing statements and evidence; and
3. Settled the claim at the last possible moment putting the Claimant to maximum costs.

The Judge agreed with the Claimants and ordered the Tenant to pay £2,500 as opposed to £890 which would have been payable under the fixed costs rules.