Kathryn Anne Lea & Ors v GP Ilfracombe Management Company Limited & Ors
[2023] UKUT 108 (LC)
Kathryn Anne Lea & Ors v GP Ilfracombe Management Company Limited
22 October 2024
[2024] EWCA Civ 1241
Court of Appeal
Leaseholders successfully fought a huge, unsupported service charge claim. Even though they won, the lower courts wouldn't make the management company pay their legal fees. The Court of Appeal said the management company acted unreasonably by bringing a bad claim, and so they *must* pay the leaseholders' legal fees.
Key Facts
- •Appeal against the First-tier Tribunal (Property Chamber) and Upper Tribunal (Lands Chamber) decisions refusing costs to leaseholders who successfully defended a £2.4 million service charge claim.
- •The claim was brought by GP Ilfracombe Management Company Limited (GPIMC).
- •The Tribunal found the service charge claim was unreasonable and invalid.
- •Leaseholders sought costs against GPIMC, but the Tribunal refused.
- •The central issue was the test for 'unreasonable conduct' in costs applications under the Tribunals, Courts and Enforcement Act 2007 and the Tribunal Procedure Rules.
Legal Principles
The test for 'unreasonable conduct' in costs applications is whether a reasonable person would have acted in the same way, or if there is a reasonable explanation for the conduct.
Ridehalgh v Horsefield & Anr [1994] Ch 205; Willow Court Management Co (1985) Limited v Alexander [2016] UK UT 290 (LC); Dammerman v Lanyon Bowdler LLP [2017] EWCA Civ 269
Unreasonable conduct doesn't necessarily equate to vexatious or harassing behaviour.
Willow Court Management Co (1985) Limited v Alexander [2016] UK UT 290 (LC)
The court will only interfere with a costs determination if the tribunal failed to consider relevant matters, considered irrelevant matters, or reached a decision no reasonable tribunal could have reached.
SCT Finance Ltd v Bolton [2003] 3 All E.R. 434; Hislop v Perde [2018] EWCA Civ 1726; Thakkar v Mican [2024] EWCA Civ 552
The decision of the First-tier Tribunal is the primary focus on appeal, not that of the Upper Tribunal.
HMRC v Procter & Gamble UK [2009] EWCA Civ 407
Outcomes
The Court of Appeal allowed the appeal.
The Court found GPIMC's conduct in bringing and pursuing the service charge claim was unreasonable. The claim was unsupported by evidence and the company's representative admitted he didn't believe the claim was justified. The Court determined that no reasonable person would have acted in this manner.
GPIMC was ordered to pay the appellants’ costs of the FtT proceedings.
The Court of Appeal exercised its discretion and ordered costs in favour of the appellants, finding that remitting the matter back to the FTT would be a denial of justice.