Decision Nº LRX 83 2014. Upper Tribunal (Lands Chamber), 01-06-2015 , [2015] UKUT 0230 (LC)
| Jurisdiction | UK Non-devolved |
| Judge | His Honour Judge Stuart Bridge |
| Neutral Citation | [2015] UKUT 0230 (LC) |
| Date | 01 June 2015 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 83 2014 |
UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2015] UKUT 0230 (LC)
UTLC Case Number: LRX/83/2014
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – right to manage- costs- whether RTM company liable for costs of proceedings where application to tribunal withdrawn- ss.88-89 Commonhold and Leasehold Reform Act 2002- whether withdrawal of application effective to terminate proceedings where no dismissal- appeal allowed
IN THE MATTER OF AN APPEAL AGAINST A DECISION
OF THE FIRST TIER TRIBUNAL (PROPERTY CHAMBER) FOR THE LONDON REGION
BETWEEN:
POST BOX GROUND RENTS LIMITED
Appellant
and
THE POST BOX RTM COMPANY LTD
Respondent
Re: The Post Box,
Upper Marshall Street,
Birmingham
B1 1LA
Before: His Honour Judge Stuart Bridge
Sitting at: Royal Courts of Justice, Strand, London WC2B 2LL
on
30 April 2015
Justin Bates for the Appellant
Daniel Dovar for the Respondent
© CROWN COPYRIGHT 2015
The following cases are referred to in this decision:
Fencott Ltd v Lyttelton Court RTM Companies [2014] UKUT 27 (LC)
Gilchrist v Revenue & Customs Commissioners [2014] UKUT 169 (TCC), [2015] Ch 183
R (O Twelve Baytree Limited) v Leasehold Valuation Tribunal and Others [2014] EWHC 1229, [2015] 1 WLR 276
Silkstone v Tatnall [2012] 1 WLR 400
DECISION
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An RTM (right to manage) company initiates a claim to acquire the right to manage leasehold premises (pursuant to Part 2 of the Commonhold and Leasehold Reform Act 2002) and makes an application to a tribunal for a determination that it has such a right.
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If the RTM company withdraws its application before it is due to be heard, is it liable for the reasonable costs incurred by the freeholder in defending those proceedings?
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Section 88(3) of the 2002 Act restricts the company’s liability for costs to circumstances where its application has been dismissed. In this case, the Ft T held that:
(1) an application may terminate when it is withdrawn by the company with the freeholder’s consent; and
(2) in such circumstances, there having been no dismissal of the application, the company is not liable for the freeholder’s costs.
Introduction
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On 12 May 2012, the Post Box RTM Company Limited (the respondent) commenced a claim to acquire the right to manage (RTM) three blocks of flats in Upper Marshall Street, Birmingham referred to generically as the Post Box. Three separate claims were made each in respect of what was claimed by the respondent to be a self-contained building.
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The landlord, Post Box Ground Rents Limited (the appellant) replied by letter from their solicitors on 15 June 2012. That letter contained a counter-notice in response to one of the claims, and two further counter-notices were served separately. Although there is no need for me to detail them here, the letter set out the objections made by the appellant to the claims being made.
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On 25 June 2012, the respondent made an application to the Leasehold Valuation Tribunal under section 84(3) of the 2002 Act for a determination that it was entitled to acquire the right to manage the premises.
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The respondent’s application was listed for hearing on 19 November 2012. Following service of the landlord’s expert report and a witness statement, the respondent wrote on 12 November 2012 to the Tribunal as follows:
‘Dear Sirs
‘Property: Flats 1-57; 58-107 and 108-258, the Post Box, Upper Marshall Street, Birmingham B1 1LA
‘Please note that we wish to formally withdraw our application reference BIR/OOCN/LRM/2012/0005.
‘This is due to the fact that the [appellant] has substantially departed from its Statement of Case in relation to two of the blocks on the estate, its original case being that Blocks B and C did not qualify under the 2002 Act because they touched the underground car park. Only last week we received the [appellant’s] expert evidence which states that blocks B and C are one single structure.
‘We respectfully request that the hearing at the Tribunal on the 19th November 2012 be vacated.’
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On the same day the Tribunal wrote to the appellant’s solicitors, enclosing a copy of the above letter. The Tribunal asked the appellant to return the reply form enclosed “confirming whether or not you agree to this application being withdrawn.” In turn, the appellants responded by their solicitors on 15 November 2012, stating:
‘Thank you for your letter of 12 November 2012.
‘We do not believe that our client’s consent is required; principally because the [respondent’s] Claim Notice will be deemed withdrawn by virtue of section 87(1)(b) of the Commonhold and Leasehold Reform Act 2002.
‘However, in the event that our consent is required, please accept this letter as formal consent on behalf of the [appellant] to the withdrawal of the application, on the grounds that we have obtained all the relief we could have possibly achieved had the hearing gone ahead.’
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The letter enclosed the consent duly signed by the appellant’s solicitor.
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On 20 November 2012, the Tribunal wrote to the appellant to inform them that the case had now been withdrawn.
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The issue of costs then arose. Attempts to come to agreement were unsuccessful, and so on 3 May 2013 the appellant made application to the Leasehold Valuation Tribunal in standard form for costs pursuant to section 88(4) of the 2002 Act. Directions were given by the Tribunal and in compliance with those directions the appellant supplied a Statement of Costs. This statement, authenticated by a statement of truth, indicating that the costs being claimed totalled £28,117.95. The solicitor’s fees amounted to £10,812; counsel’s fees £4,106.40; and surveyor’s fees £12,795.30 (each of those figures being inclusive of VAT).
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Following a hearing on 15 October 2013, the Ft T gave its decision on 20 December 2013. The Tribunal considered section 88 of the 2002 Act. It determined that the respondent was liable for the appellant’s costs for the period between the date of the claim notice (12 May 2012) and the date of the application to the Tribunal (25 June 2012). It considered the representations of the parties in determining the reasonable amount of such costs at £2,883 (inclusive of VAT). However, the Ft T determined that the respondent was not liable for any costs after that date as a result of section 88(3) of the 2002 Act. The respondent’s claim had been withdrawn with the appellant’s consent, and accordingly the respondent was not liable for costs incurred by the appellant as a party to the proceedings which commenced on 25 June 2012.
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The appellant sought permission to appeal this decision, and on 16 June 2014 the Ft T granted permission to appeal. Reference was made to two decisions, one of the Upper Tribunal and one of the High Court, neither of which were available to the Ft T but which have featured prominently in counsel’s submissions before me.
Issues
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The principal issue in this appeal is whether the Ft T was wrong in law in determining that the respondent company was not liable for costs incurred by the appellant in the course of the proceedings before the Tribunal, and in refusing, as a result, to assess the amount of costs payable by the respondent for the period after 25 June 2013.
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Resolution of this issue requires this Tribunal to interpret section 88 of the 2002 Act. It will be seen that a further issue then arises from the stipulation, contained in section 88(3), that the RTM company is only liable for the costs of proceedings if its application is dismissed. Where the company withdraws its application, does that terminate the application without more, or does the application remain extant unless and until the tribunal itself dismisses it? In other words, is dismissal the only means of terminating an unsuccessful application to the tribunal? I shall deal with these issues in turn.
Interpreting section 88
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Section 88 provides:
(1) A RTM company is liable for reasonable costs incurred by a person who is—
(a) landlord under a lease of the whole or any part of any premises,
(b) party to such a lease otherwise than as landlord or tenant, or
(c) a manager appointed under Part 2 of the [Landlord and Tenant Act 1987] to act in relation to the premises, or any premises containing or contained in the premises,
in consequence of a claim notice given by the company in relation to the premises.
(2) Any costs incurred by such a person in respect of professional services rendered to him by another are to be regarded as reasonable only if and to the extent that costs in respect of such services might reasonably be expected to have been incurred by him if the circumstances had been such that he was personally liable for all such costs.
(3) A RTM company is liable for any costs which such a person incurs as party to any proceedings under this Chapter before the appropriate tribunal only if the tribunal dismisses an application by the company for a determination that it is entitled to acquire the right to manage the premises.
(4) Any question arising in relation to the amount of any costs payable by a RTM company shall, in default of agreement, be determined by the appropriate...
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