The claimant, a residents' management company, brought proceedings against the defendant to recover arrears of service charges. The claim was allocated to the small claims track. The defendant subsequently paid the service charges claimed, but the matter proceeded to a final hearing on the questions of interest and costs. At the final hearing the defendant did not dispute his liability to pay interest and to indemnify the claimant in respect of pre-action legal costs. However, a dispute arose as to whether the defendant could be ordered to pay the claimant's costs of the proceedings. The defendant relied upon the fact that the case had been allocated to the small claims track. The claimant relied upon a contractual right to costs conferred by the defendant's lease.
At first instance the claimant succeeded in recovering its costs. On appeal, however, HHJ Moloney QC held that the costs restrictions applicable on the small claims track apply even where the party seeking to recover its costs has (in the absence of those restrictions) a contractual right to do so. His Honour also held that Shaw v Nine Regions Ltd  EWHC 3553 (QB) had been decided per incuriam.