Where part of proceedings has been transferred from the county court to the First-tier Tribunal, the county court has no jurisdiction to make any orders for costs in respect of the FTT proceedings.
In Davies v Benwell Road RTM Co Ltd [2023] UKUT 197 (LC), the respondent right-to-manage company issued proceedings against the appellant leaseholder in the county court in 2021 for unpaid service charges and administration charges. The claim was defended by the appellant on a number of grounds, including that he was not liable to pay service charges demanded by the respondent in 2014, in the sum of £616.60, because he was owed a credit for that sum, which the respondent’s managing agent had agreed. The appellant also argued that the respondent was statue barred from recovering the £616.60 under the Limitation Act 1980. In relation to the administration charges demanded by the respondent for the 2014 FTT proceedings, the appellant argued that he was also not liable to pay the administration charges claimed.
The matter was transferred from the county court to the FTT. It was directed that the tribunal judge hearing the matter would determine all issues arising from the claim using the “double hatting procedure”. The FTT determined that the appellant was not entitled to an alleged credit nor was there any evidence that he had been promised the same by the managing agent. This was upheld by the Upper Tribunal.
The UT, however, determined that the FTT had erred in failing to consider the issue of limitation. Under the terms of the appellant’s lease, service charges were reserved as rent. Under the 1980 Act, the relevant limitation period applicable to a claim for rent arrears was six years. The respondent was therefore out of time for issuing the claim for the unpaid service charges. The UT rejected the respondent’s argument that it was entitled to appropriate payments received from the appellant to his earlier debts. The UT found that the respondent knew they had been tendered by the appellant on the basis of the claimed credit.
The administration charges assessed by the FTT related to two separate costs. The first was the costs of proceedings before the FTT in 2014. The second concerned the costs of the current proceedings. In respect of the 2014 FTT costs, the UT found that the appellant, under the provisions of his lease, was only obliged to pay administration charges for costs incurred in respect of the recovery of arrears of rent and service charges. The 2014 proceedings were not in respect of those matters.
In relation to the current set of proceedings, the UT determined that the FTT only had jurisdiction to determine the sum which the appellant was liable to pay as a variable administration charge under the contractual terms of his lease. That sum would only become due when demanded by the respondent.
The UT rejected the respondent’s contention that the decision on costs was taken by the judge in his capacity as a county court judge under the “double hatting” procedure. The Court of Appeal had previously decided that where part of proceedings had been transferred to the FTT from the county court, the county court had no jurisdiction to make any orders for costs in respect of the FTT proceedings.
Elizabeth Dwomoh is a barrister at Lamb Chambers
