Landlord and tenant – Costs – First-tier Tribunal – Jurisdiction – Appellant manager being appointed under section 24 of Landlord and Tenant Act 1987 – Appellant applying to First-tier Tribunal to enforce respondent landlord’s obligations – Question arising as to identification of “proceedings” for purpose of deciding whether landlord acted unreasonably in defending or conducting proceedings – Tribunal deciding lacked jurisdiction to order respondent to pay appellant’s costs in applying to vary management order – Appellant appealing – Whether tribunal having separate costs jurisdiction under section 24 – Appeal allowed
The respondent was the freehold owner of 8 Portland Place, Brighton, East Sussex. The building was divided into five flats held upon long leases at low rents by lessees, but one of the flats was retained by the respondent. Various problems arose in the management of the building and the other lessees applied to the FTT for the appointment of a manager under section 24 of the Landlord and Tenant Act 1987. In May 2016, the tribunal appointed the appellant as manager and directed the respondent to co-operate with the appellant, hand over to him all uncommitted service charges and provide an income and expenditure account for the reserve fund.
In August 2017, the appellant considered that the respondent was in breach of those obligations and applied to the First-tier Tribunal (FTT) for further directions under section 24(4) of the 1987 Act. The tribunal gave directions and the appellant complied in part. There was no order in respect of the costs of the application. The FTT took the view that the conduct alleged against the respondent was not conduct in “bringing, defending or conducting proceedings” as required by rule 13(1)(b) of the Tribunal Procedure (Fist-tier Tribunal) (Property Chamber) Rules 2013. Therefore, rule 13, which gave the tribunal jurisdiction to order a respondent to pay costs where it was guilty of unreasonable conduct, was inapplicable. Nor did section 24 of the 1987 Act confer the necessary jurisdiction because, although it provided for the appointment of a manager by the FTT, there was no express reference to costs.
The appellant appealed against the FTT’s decision that it lacked jurisdiction. The matter was dealt with by written representations. The appellant contended that the application in August 2017 was an administrative step in the context of the management order. Therefore, when considering the appellant’s conduct for the purposes of rule 13, it was necessary to consider the conduct in relation to the proceedings which included and flowed from the making of the management order.
Held: The appeal was allowed.
(1) The appellant sought an order for costs of and incidental to the application made in August 2017 whereby the appellant sought a variation of the management order made by the FTT. Section 29 of the Tribunals, Courts and Enforcement Act 2007 provided that those costs were in the discretion of the FTT, subject to the 2013 Rules. Rule 13(1)(b) provided that the FTT might make an order in respect of costs only “if a person has acted unreasonably in bringing, defending or conducting proceedings in ….. a leasehold case”. A “leasehold case” to which that power applied was any case in respect of which the FTT had jurisdiction under any of the enactments specified in section 176A(2) of the Commonhold and Leasehold Reform Act 2002. The enactments there specified included the Landlord and Tenant Act 1987.
(2) The application in August 2017 was made for the purpose of enforcing a previous order of the FTT. The management order itself recognised that the appellant might need to apply to the FTT in accordance with section 24(4) for further directions including directions seeking to deal with any failure by any party to comply with any obligation imposed by the management order. That was what the appellant was doing when he made the application.
(3) For the purpose of testing the question whether jurisdiction to award costs against the respondent existed, it was appropriate to assume (without deciding) that the FTT could properly conclude that some or all of her conduct in relation to the obligations imposed upon her by the making of the management order in 2016 was unreasonable. If a tribunal made an order and the party against whom it was made unreasonably failed or refused to comply, then the act of omission by failing to comply could properly be described as an act done in defending or conducting proceedings. Accordingly, the conduct of the respondent after the making of the management order, being conduct directed towards complying or failing to comply with the management order, could properly be described as conduct in “defending or conducting proceedings” in a leasehold case.
(4) Section 29 of the 2007 Act provided that the costs of and incidental to all proceedings in the FTT were in the discretion of the tribunal in which the proceedings took place. Section 29(3) provided that that general provision was to have effect subject to rule 13 of the 2013 Rules. It would require clear words if some other statutory provision was to be found to give the FTT a wholly self-standing and separate jurisdiction in relation to the costs of and incidental to proceedings in the FTT. Section 24(4) and (5) of the 1987 Act were not apt to confer any jurisdiction regarding costs of proceedings in the FTT. S24(4)(a) allowed an order made under section 24 to make provision with respect “such matters relating to the exercise by the manager of his functions under the order” as the FTT thought fit. That was not directed towards dealing with costs of proceedings in the FTT. Section 24(4)(b) permitted an order under section 24 to make provision with respect “such incidental or ancillary matters as the tribunal thinks fit”. Those were matters incidental or ancillary to the exercise by the manager of his functions under the order rather than being capable of embracing costs of and incidental to proceedings in the FTT. There was no self-standing and separate jurisdiction arising under section 24(4) to award costs of and incidental to proceedings before the FTT. The management order itself does not give to the FTT a separate power to award the manager costs of and incidental to proceedings in the FTT.
(5) The FTT erred in examining whether the conduct of the respondent was conduct in “defending or conducting” the proceedings started by the application of August 2017. The appropriate question was whether such conduct was conduct in “defending or conducting” the proceedings in which the appellant was appointed manager by the order of FTT made in May 2016. The August 2017 application was a step within that continuing set of proceedings. Accordingly, there existed jurisdiction for the FTT to make a costs order against the respondent if the FTT concluded the respondent had acted unreasonably in defending or conducting the proceedings in which the appellant was appointed manager which were continuing and of which the August 2017 formed part.
Eileen O’Grady, barrister