High Court Departs From Normal Rule On Costs: Legal Practitioner And Client Costs Awarded On Foot Of A Contractual Clause

• Published date: 21 December 2021
• Subject Matter: Real Estate and Construction, Landlord & Tenant - Leases
• Law Firm: William Fry
• Author: Mr Richard Breen and Gail Nohilly

In a recent ex tempore judgment in a landlord and tenant dispute (Dipcot Holdings Ltd v Euro General Unreported, ex tempore, High Court, O'Hanlon J., 28 June 2021) the High Court (Court) made an order for costs but departed from the normal measure of those costs. The default position is that a successful party's costs are awarded on a 'party and party' basis.

In this case, in which William Fry and James Nerney BL acted for the plaintiff landlord (Landlord), the Court awarded costs to the Landlord against the defendant tenant (Tenant) in summary summons proceedings to recover rent arrears, to be measured on a 'legal practitioner and client' basis (formerly 'solicitor and client' basis).

Background

The Landlord and Tenant entered into a lease in respect of commercial premises in September 2012 for a term of 15 years (Lease). By a subsequent deed of variation, the parties agreed to a reduced rate of rent payable for six months between 1 April 2020 and 1 September 2020. The instalment days were also varied to monthly in advance, subject to the proviso that in the event of non-payment of rent, the instalment days would automatically revert to the quarterly dates as provided for in the Lease.

The Tenant continued to pay the reduced rate of rent into October 2020, beyond the agreed timeframe. Despite demands, the Tenant neglected to pay the arrears and again continued to pay the reduced rate of rent into November 2020.

The Landlord issued summary summons proceedings and sought judgment in respect of the arrears of the rent. The proceedings were resolved on consent on 26 June 2021, the day before the hearing. The only issue before the Court was costs, with the Tenant arguing that costs should be awarded to the Landlord on a party and party basis. The Landlord applied for its costs, to be adjudicated in default of agreement, on a legal practitioner and client basis under Ord.99 r.10(3) of the Rules of the Superior Courts (RSC).

O'Hanlon J. in the High Court, relying on the written submissions of James Nerney BL, Counsel for the Landlord, granted the Landlord's application. The Tenant was ordered to pay the Landlord's costs on a legal practitioner and client basis, to be adjudicated in default of agreement between the parties.

Traditional Approach of the Courts to Awarding Costs

In general, where an order for costs is made in favour of a party to proceedings, the court will direct that costs be adjudicated in default of agreement. The default position is that...