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Important Case in Relation to Costs for breach of covenant in a lease

By February 23, 2023June 26th, 2024No Comments

Important Case in Relation to Costs for breach of covenant in a lease

In 2021 case of Dipcot Holdings Ltd v Euro General Retail Limited the High Court in the person of Ms Justice Bronagh O’Hanlon awarded costs to the landlord against the defendant tenant. In awarding costs, she made an order that costs be recovered on a ‘legal practitioner and client’ basis rather than on the normal party and party basis.

The matter went before the Legal Costs Adjudicator as the parties could not agree the amount of the costs. The Legal Costs Adjudicator awarded the Plaintiff landlord 97% of the total amount of costs claimed in the bill of costs. The basis of the Legal Cost Adjudicator’s decision was that this was not a straightforward debt collection matter, but that it involved a breach of a lease agreement which was ongoing which brought about issues to be determined in relation to on going interest and VAT. The Costs Adjudicator noted that the tenant having entered in an appearance then ignored the proceedings until the eve of the hearing when the matter was settled.

What was of particular importance was the decision of the High Court to award costs in the first place on a legal practitioner and client basis by virtue of the wording of the lease which provided that the tenant was to ‘pay to the landlord all reasonable costs, charges and expenses (including legal costs and surveyors fees) which may be properly incurred by the landlord all the costs which arise or result to the landlord or are incurred in enforcing any of the covenants on the part of the tenant herein’. Therefore, in circumstances where such a clause is included in a lease, it is possible that a tenant who is in breach of the covenant to pay the rent, may end up having to pay substantial costs to the landlord in the form of legal practitioner and client costs.

For further information on this or any other litigation matter, do not hesitate to contact Brendan Dillon or Conor Cleary on 012960666.