Kathryn Anne Lea & Ors v GP Ilfracombe Management Company Limited
[2024] EWCA Civ 1241
Kathryn Anne Lea & Ors v GP Ilfracombe Management Company Limited & Ors
30 May 2023
[2023] UKUT 108 (LC)
Upper Tribunal
Leaseholders sued a management company over unfair service charges and lost. They then tried to get the management company to pay their legal costs, but a judge said the management company, while making mistakes, wasn't unreasonable enough to have to pay.
Key Facts
- •Appeal against a First-Tier Tribunal (Property Chamber) decision on costs following a service charge dispute at Ilfracombe Holiday Park.
- •195 leaseholders appealed the FTT's refusal to award costs against the management company, its representative (Mr. Gubbay), and its agent (Epworth SW Ltd).
- •The FTT had previously ruled that none of the demanded service charges were payable due to apportionment issues and unreasonableness of the charges.
- •The leaseholders sought approximately £164,000 in costs under rule 13(1)(b) for unreasonable conduct.
- •The management company (GPIMCL) did not participate in the costs proceedings; Epworth SW Ltd was dissolved.
- •The case involved complex background circumstances including lease restructuring, company changes, and potential fraud allegations against other parties.
Legal Principles
Costs may be awarded under rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 if a person has acted unreasonably in bringing, defending, or conducting proceedings.
Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, rule 13(1)(b)
Unreasonable conduct includes vexatious conduct designed to harass, not merely an unsuccessful outcome. A reasonable person test is applied.
Willow Court Management Company (1985) Limited v Alexander [2016] UKUT 290 (LC)
The decision-making process behind a service charge demand must be reasonable, as well as the charge itself.
London Borough of Hounslow v Waaler [2017] EWCA Civ 45 and Assethold Limited v Adam ad other leaseholders of Corben Mews [2022] UKUT 282 (LC)
Outcomes
The appeal was dismissed.
The Upper Tribunal found that the FTT applied the correct test for unreasonable conduct and reached a conclusion open to it on the evidence. The FTT considered the substance of the leaseholders' allegations, not just procedural issues.
The FTT's decision to not award costs against the respondents was upheld.
The Upper Tribunal found the FTT's reasoning that bringing the service charge application, even if ultimately unsuccessful, wasn't inherently unreasonable, given the complexities of the leases and potential for dispute, to be valid.