Avon Grounds Rents Limited v Kirstie Ward
[2023] UKUT 88 (LC)
Zaid Alothman Holdings Limited & Ors v Better Intelligent Management Limited & Anor
10 September 2024
[2024] UKUT 253 (LC)
Upper Tribunal
Landlords sued leaseholders for window repairs, but the court said the landlords shouldn't have because they knew they couldn't win against some of the leaseholders. The landlords had to pay some of the leaseholders' legal costs for the unnecessary lawsuit.
Key Facts
- •Appeal against the First-tier Tribunal's (FTT) refusal to award costs to leaseholders (appellants) in Phoenix Place, Liverpool.
- •Respondents: freeholder and managing agent of Phoenix Place.
- •FTT declared it lacked jurisdiction to hear respondents' application concerning window replacement.
- •Phoenix Place comprises 348 units: 74 self-contained studios and 274 ensuite bedrooms in clusters with shared facilities.
- •Respondents issued service charge invoices and notices for window repairs without prior section 146 notice (in most cases required before lease forfeiture).
- •Appellants argued respondents acted unreasonably by initiating proceedings knowing the FTT lacked jurisdiction over cluster units.
- •Respondents' applications to FTT lacked clarity on jurisdiction, initially claiming abundance of caution while later arguing lack of jurisdiction specifically for cluster units.
- •A second group of leaseholders disputed FTT jurisdiction over all units.
- •FTT ultimately decided it lacked jurisdiction over cluster units, but had jurisdiction over studios.
- •Appellants' costs application to the FTT was refused, leading to this appeal.
Legal Principles
Forfeiture of a lease: Landlords must generally serve a section 146 notice before forfeiture, except under certain conditions (section 168 of the Commonhold and Leasehold Reform Act 2002).
Law of Property Act 1925, section 146; Commonhold and Leasehold Reform Act 2002, section 168
Definition of "dwelling": A building or part of a building occupied or intended to be occupied as a separate dwelling (Landlord and Tenant Act 1985, section 38). Shared facilities negate separate dwelling status.
Landlord and Tenant Act 1985, section 38
FTT's costs jurisdiction: Primarily a no-costs jurisdiction, with exceptions including unreasonable conduct (Tribunals, Courts and Enforcement Act 2007, section 29; Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, rule 13(1)(b)).
Tribunals, Courts and Enforcement Act 2007, section 29; Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, rule 13(1)(b)
"Unreasonable conduct" for costs purposes: Vexatious, harassing conduct designed to avoid case resolution, not merely unsuccessful conduct. Objective standard of conduct applies (Ridehalgh v Horsefield; Willow Court Management Company v Alexander).
Ridehalgh v Horsefield [1994] EWCA Civ 40; Willow Court Management Company (1985) Ltd v Alexander [2016] UKUT 290 (LC)
Outcomes
FTT's decision refusing costs set aside.
FTT failed to understand the appellants' argument that respondents acted unreasonably by issuing proceedings against cluster units knowing the FTT lacked jurisdiction; it misfocused on studio unit jurisdiction.
Respondents ordered to pay 90% of costs incurred by appellants holding cluster units.
Respondents acted unreasonably by not seeking agreement on jurisdiction before initiating proceedings, despite knowing the FTT lacked jurisdiction, even if they did so out of caution. Failure to send a letter before action exacerbated the issue.
Similar Cases
Assethold Limited v Nelio Patricio Teixeira Franco
[2022] UKUT 285 (LC)
Kathryn Anne Lea & Ors v GP Ilfracombe Management Company Limited & Ors
[2023] UKUT 108 (LC)
Khalid Qayyum Rana & Anor v Maitland Court Limited
[2024] UKUT 122 (LC)
Michael Connell & Anor v Beal Developments Limited & Ors
[2024] UKUT 54 (LC)