Patel v Camden LBC – Protection Against Adverse Costs Orders
The council had been unsuccessful in its application for a liability order against Mr Patel. A district judge subsequently dismissed Mr Patel’s application for costs against the council, and the decision in relation to costs was appealed by way of case stated.
Mr Patel’s argument was that, as with most matters before the court, “costs follow the event”. In other words if you are successful in your claim or in defeating a claim you ought to be entitled to payment of your legal costs.
However the council sought to rely on the principles set out in Bradford MBC v Booth . Namely that the council has a statutory obligation to collect rates and that its work would be impeded if costs were imposed. Further that it had acted honestly and reasonably in bringing and pursuing the complaint.
The court agreed and held that the council was a public authority charged with recovering rates on behalf of the community and was entitled to protection in accordance with the principles in Booth. There was a need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if a decision was successfully challenged.
In this particular case the court also accepted that the council had been unable to enforce the rates against the purported tenants, Mr Patel as freeholder of the property had turned a blind eye to the way the businesses were being run from the property and had failed to assist the authority in pursuing other parties and in providing all the information relevant to his defence until the date the complaint was heard. When the council inspectors visited the premises, they encountered three men who they described as evasive. The companies purporting to have tenancies appeared to be shams which led the local authority to believe that Mr Patel was running a business at the premises using various intermediaries.
It is not clear from the case why the original liability order proceedings against the landlord failed, given the suspicion of the increasing problem of sham tenancies. However this case is comforting news for authorities in the continued challenge to such practices in that they can be relatively safe in the knowledge that such matters can be pursued, provided the principles in Booth are met, without fear of being hit with substantial legal costs bills from a successful defendant.