Claimant firms might think more carefully before pursuing speculative claims, according to a property lawyer who helped a landlord win costs following a failed rent repayment order case.

Six tenants were ordered to pay £3,240 in costs after a property tribunal ruled that a settlement demand backed by Justice for Tenants was made to intimidate the landlord. The tenants had claimed a £60,000 Rent Repayment Order, making the landlord an offer without prejudice save as to costs to settle the matter at 85% of the 12 months’ rent. However, there had been no pre-claim correspondence and no attempt prior to making the application to narrow the issues, the tribunal heard, while the property had been licensed for the entire period.

Harrison Engler, barrister at Field Court Chambers (pictured), says although the judgment is not binding on other tribunals, it might be a helpful example to be deployed in cases with weak or exaggerated RRO claims.

Critical

“The tribunal in this case was critical of the tenants bringing an inflated claim and trying to force a settlement on the basis of the inflated claim, but in other cases the logic could apply the other way around,” he tells LandlordZONE. “Landlords who refuse to concede parts of their case which have no merit are less likely to recover any costs, even if the tenants’ claim is exaggerated. It is always worth considering settlement, but that requires detailed consideration of the legal risks first.”

If landlords receive an RRO claim that they believe is unfounded, Engler suggests seeking proper advice as soon as possible. “RRO applications can be quite legally complex, and the nature of the statutory scheme is that landlords can be liable even for completely inadvertent errors,” he adds.

“Given the recent extension of the maximum RRO available from 12 months to 24 months, the risks of a significant RRO justify taking advice at an early stage. This judgment is not binding in other FTT cases, but where there is a genuinely unfounded or inflated claim (for example, one where there is a valid claim but the claim that is brought is far more extensive and has unfounded elements), this judgment is a helpful indication that it may be possible to seek a costs order to recover the cost of that advice from the other side.”

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