Kedleston Close, Belper, Derbyshire, DE56 1TZ BIR/17UB/LIS/2020/0008

FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No BIR/17UB/LIS/2020/0008
Between
Heritage Court RTM Company LimitedApplicantFairhold Homes (No 14) LimitedRespondent
Before
Judge D BarlowMr R P CammidgeRTMF Services Limited for the ApplicantJB Leitch solicitors For the determination of the for the RespondentDate 27 January 2021Hearing 2021-01-08Property: Kedleston Close, Belper, Derbyshire, DE56 1TZType of application: reasonableness of and the liability to pay a service charge

DECISION

[1]Covid-19 pandemic: description of hearing This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was V:CVP . A face-to-face hearing was not held because it was not practicable, no one requested it and all issues could be determined in a remote hearing. The remote video hearing took place on 8 January 2021. The Respondent provided a combined digital bundle of 641 pages (the Combined Bundle) and a Supplemental Bundle of the Applicant’s additional authorities of 124 pages (the Supplemental Bundle). DECISION OF THE TRIBUNAL[2]The Tribunal does not have jurisdiction to determine this application and the proceedings are therefore struck out pursuant to Rule 9(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (“the Rules”).

REASONS

[1]The Applicant RTM seeks a determination pursuant to s.27A of the Landlord and Tenant Act 1985 (“the 1985 Act”) as to whether rent charged for the use of Flat 4 within the Property (“Flat 4”) as accommodation for a resident House Manager during the service charge years 2014 to 2020, is payable to the Respondent, under the terms of the long residential leases and if so whether the rent is reasonable.[2]The service charge items in issue, which all relate to rental payments for the use of Flat 4 by the House Manager, are:(i) Service charge y/e 27/08/2014: rent £7,736(ii) Service charge y/e 27/08/2015: rent £7,983(iii) Service charge y/e 27/08/2016: rent £8,167(iv) Service charge y/e 27/08/2017: rent £8,232(v) Service charge y/e 27/08/2018: rent £8,290(vi) Service charge y/e 27/08/2019: rent £8,414(vii) Service charge year to 27/08/2020: rent £8,540[3]The Respondent has applied for the application to be struck out under Rule 9(2)(a) on the grounds that the Tribunal does not have jurisdiction on an application under s27A of the 1985 Act, to determine what is a contractual issue between the Applicant RTM and the Respondent. The detailed grounds for the application are set out in the Respondent’s statement of case dated 9 November 2020.[4]The Applicant’s grounds for opposing the Respondents strike out application are set out in paragraph’s 6-10 of a skeleton argument filed by the Applicant’s representative on 7 January 2021.[5]The Tribunal determined that it would consider the strike out application as a preliminary matter on the morning of the hearing and then, depending on its decision, go on to consider the substantive application under s27A. Background[6]The Respondent is the registered proprietor of the freehold of the Property, which is a block of 50 flats known as Heritage Court. The flats are let on long leases granted in 2006 by the developer McCarthy and Stone (Developments) Ltd (“McCarthy”), prior to the Respondent acquiring the freehold on 13 September 2006. The leases of 49 of the flats contain age restrictions limiting occupation to persons aged 60 and over.[7]Flat 4 was retained by McCarthy through the grant of a head lease to a company called Littonace (No 9) Ltd and lease back to McCarthy, both dated 16th of June 2006. The underlease to McCarthy was granted for a term of 125 years from 1 February 2006 (less seven days) reserving an initial rent of £10,503 per annum subject to an upward only annual review based on 6% of the market value of the flat (subject to a minimum RPI increase). The Respondent is both freeholder of the head lease reversionary title and the registered leasehold proprietor of the underlease under title DY404540.[8]On 3 May 2011, the Applicant RTM acquired the right to manage Heritage Court pursuant to the provisions of Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) and from that date, took over all management functions of the “premises” pursuant to sections 96 and 97 of the 2002 Act.[9]Flat 4 appears to have been used as accommodation for a House Manager since the grant of the long residential leases in 2006 and rent for that accommodation was initially paid to the Respondent, by the long leaseholders, through the service charge. After the Applicant RTM acquired the right to manage in 2011, that use appears to have continued and rent for the use of Flat 4 was paid by the Applicant RTM to the Respondent until March 2017.[10]During 2010 to 2011 there was some correspondence between the leaseholders, the Applicant RTM and the Respondent concerning the level of rental for Flat 4. Gordon Glover, on behalf of the Applicant RTM, accepted by letter dated 10 June 2011, a proposed rental of £7,140.00 for the year 2011/2012. In March 2017 the Applicant RTM stopped paying rent to the Respondent for the use of Flat 4.[11]One 16th of January 2019, following unpaid demands for the rent, JB Leach solicitors wrote to the Applicant RTM demanding payment of the arrears of rent from 1 March 2017 to 28 February 2019, totalling £17,121.56. The letter points out that the Heritage Court leases make provision for payment of service charge for accommodation of the House Manager, at paragraph 1.2.11 of the Fourth Schedule to the leases and that despite management functions having been acquired by the Applicant RTM, the rents remained payable to the Respondent. (Page 632 of the Combined Bundle).[12]On 1 February 2019, RTMF Services Ltd responded to the letter on behalf of the Applicant RTM. The letter is a denial that rent for the accommodation is payable by the Applicant RTM or overdue. The letter disputes the right of the Respondent under paragraph 1.2.11 of the Fourth Schedule to the leases, to charge a rent for the House Manager’s flat. It contends that the clause required the leaseholders to pay the costs incurred by way of expenditure in providing and maintaining the accommodation but did not specify a rent. The letter goes on to require the Respondent to(a) identify the accommodation referred to and provide details of the expenditure in providing and maintaining the accommodation; and(b) identify the clause or clauses in the lease that required the leaseholders to pay rent for the accommodation. (Page 631 of the Combined Bundle)[13]On 22 April 2020, an application with made to the Tribunal by the Applicant RTM under s27A of the 1985 Act, for determination of the Respondent’s entitlement to charge a rent for the House Manager’s flat and if so, the amount of rent which is reasonable. Mr Joiner of RTMF Services Ltd, representing the Applicant RTM, confirmed at the hearing that this application was filed as a consequence of the exchange of correspondence between the Respondent and the Applicant RTM in January/February 2019 referred to above.[14]Directions were made by the Regional Judge on 21 May 2020, confirming refusal by the Chamber President of the Applicant’s request for a transfer to the Upper Tribunal under Rule 25, but staying proceedings under Rule 6(3)(m) pending the handing down of the decision of the Upper Tribunal in the appeal of Fountain Retirement Housing Association Re: Flats at Batworth Park House, Crossbush, Arundel, West Sussex, BN18 9PG, under reference LRX/4/2020.[15]The stay was lifted in September 2020 and Directions issued by the Tribunal on 16 September 2020, for the parties to file statements and evidence. Material statutory provisions[16]The material statutory provisions are set out in Appendix I. Written submissions and evidence[17]Both parties filed written statements of case pursuant to the Directions. The Applicant’s statement of case dated 16th of October 2020, appears at pages 68 to 72 of the Combined Bundle. The Respondent’s statement of case dated 9 November 2020, which includes the strike out request at paragraphs 19 – 28, and exhibit’s two witness statements, appears at pages 73 to 218 of the Combined Bundle.[18]The Applicant RTM did not file a Reply to the Respondent’s statement (as permitted by paragraph 3 of the Directions). The Applicant’s representative Mr Joiner, did however file two bundles of additional authorities (pages 219 –344 of the Combined Bundle and pages 1-156 of the Supplemental Bundle) and on 7 January 2021, Mr Joiner also filed a skeleton argument addressing the substantive issues, including the strike out request.[19]The parties’ written submissions were considered by the Tribunal before and during the hearing. The Hearing[20]The Applicant RTM was represented at the hearing by Mr Joiner of RTMF Services Ltd. The Respondent was represented by Ms Crampin of counsel. Also attending were Ms K. Edwards, solicitor from JB Leach, the Respondent’s two witnesses, Mr M. Loughnane and Ms L. Smith from Estates and Management Ltd (the Respondent’s agents) and Ms E. Gough in-house counsel for Estates and Management Ltd.[21]The parties’ submissions at the hearing on the strike out application were very similar to their written submissions, but will be identified separately in this decision, where relevant. Respondent’s submissions[22]On behalf of the Respondent, Ms Crampin submitted that the Tribunal did not have jurisdiction to determine the application for reasons that are summarised as follows:(i) The sums being challenged are rent for the use of Flat 4, charged by the Respondent, who is both freeholder and the underlessee of Flat 4, to the RTM company. That is evident from the demands attached to the statement of case which all show that what is being demanded by the Respondent’s agent from the RTM company is rent for Flat 4.(ii) The rent was paid up until 2017 when the RTM company stopped paying rent.(iii) The rent is payable to the Respondent as owner of Flat 4, not as a ‘landlord’ within the meaning of s30 of the 1985 Act, because the Respondent does not have the right to charge or enforce payment of a service charge. That is the effect of s96 and s97 of the 2002 Act.(iv) This is an application under section 27A of the 1985 Act and s27 is the source of the Tribunal’s jurisdiction. Section 27 sets out a list of matters that a Tribunal can determine in relation to whether a service charge is payable. A service charge for the purposes of any determination under section 27A is defined in section 18 (1) of the 1985 Act as an amount payable “by a tenant of the dwelling as part of or in addition to the rent”. The RTM company is not a tenant and the straightforward submission is that this cannot therefore be a service charge. The Respondent was responsible for management of the Property but that was taken away on the acquisition of rights to manage by the RTM company in 2011.(v) Before 2011 the Respondent would have charged rent for Flat 4 through the service charge. However, since 2011 it charges rent to the RTM company, which it is entitled to do because the acquisition of rights to manage by the RTM company, does not prevent the Respondent from either receiving or charging a rent for the use of the Flat 4. The rent charged to the RTM company for the use of Flat 4 is not a service charge within the meaning of the 1985 Act. Any issue concerning the level of the rent is a contractual, or estoppel, or trespass issue between the Respondent and the RTM company.(vi) If the Applicant wants to raise issues concerning the service charge, the other parties should be leaseholders of the flats, since it is they who pay the service charge to the Applicant. The Respondent is not an appropriate Respondent to a s27A application, since it neither charges nor pays a service charge. Any determination of whether the Applicant can recover the rent it has paid to the Respondent from the leaseholders, through the service charge, would not affect its liability to pay the Respondent that rent.(vii) The Applicant’s liability to pay rent to the Respondent does not arise through any relationship between them of landlord and tenant. It arises from an implied agreement to pay rent for the use of Flat 4, based on its actual payment of rent from 2011 to March 2017. Its refusal since to either pay rent, or vacate the flat gives rise to an estoppel by convention, in respect of any argument that the RTM company is not liable for the rent. Alternatively, the Applicant RTM is liable to the Respondent for damages in trespass. These are not issues as to service charges and the application should be struck out. Applicant’s submissions[23]Mr Joiner made a number of submissions in his skeleton argument filed on 7 January 2021, which he expanded on at the hearing. They are summarised as follows:(i) The Applicant RTM is entitled to make an application under s27A of the 1985 Act as the party obligated to demand and collect service charges. The Tribunal therefore has jurisdiction to hear the application.(ii) The Tribunal’s jurisdiction extends to determining the proper construction of leases where necessary or incidental to issues of liability or quantum of the service charges. (Southend-on-Sea BC v Skiggs [2006] 2 E.G.L.R. 87 (LT)).(iii) It follows therefore that the Tribunal’s jurisdiction extends to determining the scope of a service charge demanded under a lease and any item that does not meet the statutory definition of service charge is ‘not reasonably incurred’.(iv) This application was prompted by the Respondents letter dated 16 January 2019, quoting paragraph 1.2.11 of the Fourth Schedule of the Flat Lease and stating that “the leases at Heritage Court provide for the payment of a service charge in connection with…accommodation for the House Manager(s) together with rent(s) in respect thereof…”, and threatening winding up proceedings if the demand was not paid. This application is therefore rightly before the Tribunal and it is disingenuous for the Respondent to allege otherwise.[24]The Tribunal explained to Mr Joiner that there was a difficulty with his application in that first, it seeks a determination of sums paid by the RTM company to the Respondent for use of Flat 4 and secondly, the leaseholders, who are paying the service charge, which includes the disputed sums, are not parties.[25]Mr Joiner submitted that s27A of the 1985 Act didn’t require the leaseholders to make the application or state that the leaseholders were the only parties that could make an application. If the landlord of a lease was uncertain as to whether or not charges are appropriate as a service charge and wanted that to be determined before charging it to the tenant, then in his submission, the landlord could make an application under s27 of the 1985 Act.[26]The Tribunal explained that it did not dispute the right of an RTM to make an application under s27 of the 1985 Act, but the Tribunal was unlikely to make a determination affecting the liability of the leaseholders to pay service charges, or the amount of the charges, if they were not parties to the proceedings. The leaseholders were not parties and had not been served with notice of the proceedings, which would have provided them with an opportunity to make submissions, if they wished.[27]Mr Joiner submitted that the issue was not one of quantum the issue was essentially as to liability. This was, he said, “not an issue in which the leaseholders themselves are qualified to speak even if they were here as parties listening in - they are not in a position to make those decisions, it is a decision that has to be made by the RTM company in deciding whether or not it is appropriate to make that charge” and that, in Mr Joiner’s submission, came well within s27A. Mr Joiner feared that the Tribunal were putting limitations on s27A that were not there, that nowhere in s27A did it say that an application couldn’t be made if the tenant wasn’t present. The issue, Mr Joiner submitted, is whether the RTM standing in the shoes of the landlord is entitled to make these charges to the leaseholders. The party that has to make that decision is the RTM company and that is why the RTM company has made the application.[28]Mr Joiner went on to explain that the sequence of events started with the letter from JB Leach to the RTM company referred to above. It was not sent to the leaseholders but to the RTM company - saying you’ve got to pay these sums and charge them back to the leaseholders. It goes on to say in the letter, effectively, that there is an obligation under the service charge. The lease they say, provides for the payment of the service charge in connection with and providing the use of the accommodation and they are therefore demanding the payment. So, what Mr Joiner asked, are the options of the RTM company? The issue Mr Joiner submitted, is whether or not it is a service charge. So, any argument put to the Tribunal that it’s not a service charge and therefore out of the Tribunal’s jurisdiction is, Mr Joiner submitted, a bit circular because jurisdiction depends on whether or not it is a service charge.[29]Mr Joiner submitted that the Southend-on-Sea case extended the jurisdiction of the Tribunal to construction of the lease terms where relevant to determining the reasonableness issue and contended that was what the Tribunal should do and there was no authority to say that the leaseholders needed to be present for the hearing of such an application. Deliberation and Decision[30]The Tribunal adjourned to consider the parties submissions and determine the strike out application.[31]The Tribunal considered the overriding objective set out in Rule 3, to deal with cases fairly and justly and determined that it could not proceed with an application under s27A, that effectively seeks to determine the liability of leaseholders to pay service charges, where the leaseholders have not been joined to the proceedings. Some of the leaseholders may be aware of the proceedings in their capacity as shareholders of the Applicant RTM. Some leaseholders (possibly all) may have no wish to make individual submissions or participate in the proceedings, but as leaseholders liable to pay the service charges, they have that right and are the proper first respondents to this application.[32]As the application seeks a determination that affects the proprietary rights of the Respondent, it is right that the Respondent should also be a party to the proceedings. However, having determined that the Tribunal could not make a determination of the leaseholders’ liability to pay service charges because they were not parties, it was left with an application that seeks a determination of the Respondent’s contractual right to demand payment from the Applicant RTM for the use of Flat 4 by the House Manager. That application is not within the jurisdiction of this Tribunal on an application under s27A of the 1985 Act, for the following reasons:(i) The service charge referred to in s27A of the 1985 Act is defined in s18(1) of the 1985 Act, as an “amount payable by a tenant”. The Applicant RTM is not a tenant and sums paid by it for the provision of accommodation for a House Manager cannot therefore be service charges within section 18(1) of the 1985 Act. They may be “relevant costs” under s18(2) and s19 of the 1985 Act, that the Applicant RTM can include in the annual service costs, but the sums paid (and/or payable) to the Respondent are not service charges.(ii) The Respondent does not have the right to charge or enforce payment of service charge because all management functions under the lease are now functions of the Applicant RTM, and have been since the RTM acquired the right to manage in 2011.(iii) To the extent that the payments are “relevant costs” under s18 or s19 of the 1985 Act, incurred or to be incurred by a ‘landlord’ in connection with the provision of the services, then paragraph 4 of Schedule 7 of the 2002 Act provides that, in ss18-30 of the 1985 Act, references to the ‘landlord’, are to the RTM company.(iv) Whether on a proper construction of the lease, the ‘landlord’ is entitled to include payment of rent for the House Managers accommodation within the service charge, is and has since 3 May 2011, been an issue between the leaseholders and the RTM company. That is the effect of s96 and 97 of the 2002 Act.(v) The leaseholders can of course challenge the charges for the House Managers flat, they can bring proceedings under s27A against the RTM company (and it would be correct for the landlord and owner of Flat 4 to be joined, as the application seeks to affect its proprietary interests). However, the leaseholders are not parties to these proceedings, the Tribunal cannot therefore make any determination under s27A of the 1985 Act which would affect them - and it has no jurisdiction to determine what remains, which is a contractual dispute between the RTM company and the Respondent.(vi) Under Rule 9(2)(a), where a tribunal does not have jurisdiction in relation to the proceedings, it must strike out the proceedings.[33]The hearing was reconvened to confirm to the parties the Tribunal’s determination that the application would have to be struck out. The chair gave brief reasons for the decision and explained that the detailed decision would explain what evidence and issues the Tribunal had taken into account in arriving at their decision. Further Directions and costs[34]Ms Crampin indicated that the Respondent wished to apply for an order for costs under Rule (13)(1)(b) against the Applicant for acting unreasonably in the bringing of proceedings, having earlier submitted that it was incumbent on a person bringing an application, especially one that is represented, to ensure that it is within the jurisdiction of the Tribunal before embarking on it.[35]The Tribunal therefore makes the further Directions set out in Appendix II NAME: Judge D Barlow DATE: 27 January 2021 APPENDIX I Material statutory provisions Landlord and Tenant Act 1985 (as amended) Section 18(1) In the following provisions of this Act "service charge" means an amount payable by a tenant of a dwelling as part of or in addition to the rent - (a) which is payable, directly or indirectly, for services, repairs, maintenance, Improvements or insurance or the landlord's costs of management, and (b) the whole or part of which varies or may vary according to the relevant costs.(2) The relevant costs are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable.(3) For this purpose - (a) "costs" includes overheads, and (b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period. Section 19 (1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period - (a) only to the extent that they are reasonably incurred, and (b) where they are incurred on the provisions of services or the carrying out of works, only if the services or works are of a reasonable standard; and the amount payable shall be limited accordingly. (2) Where a service charge is payable before the relevant costs are incurred, no greater amount than is reasonable is so payable, and after the relevant costs have been incurred any necessary adjustment shall be made by repayment, reduction or subsequent charges or otherwise. Section 27A (1) An application may be made to the appropriate tribunal for a determination whether a service charge is payable and, if it is, as to - (a) the person by whom it is payable, (b) the person to whom it is payable, (c) the amount which is payable, (d) the date at or by which it is payable, and (e) the manner in which it is payable. (1) Subsection (1) applies whether or not any payment has been made. (3) An application may also be made to the appropriate tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to - (a) the person by whom it would be payable, (b) the person to whom it would be payable, (c) the amount which would be payable, (d) the date at or by which it would be payable, and (e) the manner in which it would be payable.(4) No application under subsection (1) or (3) may be made in respect of a matter which - (a) has been agreed or admitted by the tenant, (b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party, (c) has been the subject of determination by a court, or (d) has been the subject of determination by an arbitral tribunal pursuant to a post dispute arbitration agreement.(5) But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment. s30. Meaning of “flat”, “landlord” and “tenant”. In the provisions of this Act relating to service charges— ... “landlord” includes any person who has a right to enforce payment of a service charge; Commonhold and Leasehold Reform Act 2002 s96 Management functions under leases (1) This section and section 97 apply in relation to management functions relating to the whole or any part of the premises. (2) Management functions which a person who is landlord under a lease of the whole or any part of the premises has under the lease are instead functions of the RTM company. (3) And where a person is party to a lease of the whole or any part of the premises otherwise than as landlord or tenant, management functions of his under the lease are also instead functions of the RTM company. (4) Accordingly, any provisions of the lease making provision about the relationship of— (a)a person who is landlord under the lease, and (b)a person who is party to the lease otherwise than as landlord or tenant,in relation to such functions do not have effect. (5) “Management functions” are functions with respect to services, repairs, maintenance, improvements, insurance and management.(6) But this section does not apply in relation to— (a)functions with respect to a matter concerning only a part of the premises consisting of a flat or other unit not held under a lease by a qualifying tenant, or (b)functions relating to re-entry or forfeiture.(7) An order amending subsection (5) or (6) may be made by the appropriate national authority. s97 Management functions: supplementary (1) Any obligation owed by the RTM company by virtue of section 96 to a tenant under a lease of the whole or any part of the premises is also owed to each person who is landlord under the lease. (2)A person who is— (a)landlord under a lease of the whole or any part of the premises, (b)party to such a lease otherwise than as landlord or tenant, or (c)a manager appointed under Part 2 of the 1987 Act to act in relation to the premises, or any premises containing or contained in the premises,is not entitled to do anything which the RTM company is required or empowered to do under the lease by virtue of section 96, except in accordance with an agreement made by him and the RTM company. (3) But subsection (2) does not prevent any person from insuring the whole or any part of the premises at his own expense. (4) So far as any function of a tenant under a lease of the whole or any part of the premises— (a)relates to the exercise of any function under the lease which is a function of the RTM company by virtue of section 96, and (b)is exercisable in relation to a person who is landlord under the lease or party to the lease otherwise than as landlord or tenant, it is instead exercisable in relation to the RTM company. (5) But subsection (4) does not require or permit the payment to the RTM company of so much of any service charges payable by a tenant under a lease of the whole or any part of the premises as is required to meet costs incurred before the right to manage was acquired by the RTM company in connection with matters for which the service charges are payable. Schedule 7 Right to Manage: Statutory Provisions … Service charges 4(1) Sections 18 to 30 of the 1985 Act (service charges) have effect with the modifications provided by this paragraph. (2)References to the landlord are to the RTM company. APPENDIX II Rule 13(2) costs application DIRECTIONS (1) The Tribunal considers that this application may be determined by summary assessment, pursuant to rule 13(7)(a). (2) The application is to be determined without a hearing, unless either party makes a written request (copied to the other party) to be heard before the paper determination. Respondents case (3) The Respondent shall not later than 25 February 2021 send to the Tribunal and to the Applicant’s representative, a statement of case setting out: (a) The reasons why it is said that the Applicant has acted unreasonably in bringing or conducting proceedings and why this behaviour is sufficient to invoke the rule, dealing with the issues identified in the Upper Tribunal decision in Willow Court Management Company (1985) Ltd v Mrs Ratna Alexander [2016] UKUT (LC), with particular reference to the three stages that the Tribunal will need to go through, before making an order under rule 13; (b) Any further legal submissions; (c) Full details of the costs being sought, including:• A schedule of the work undertaken;• The time spent;• The grade of fee earner and his/her hourly rate;• A copy of the terms of engagement with Respondent;• Supporting invoices for solicitor’s fees and disbursements;• Counsel’s fee notes with counsel’s year of call, details of the work undertaken and time spent by counsel, with his/her hourly rate. Applicant’s case (4) The Applicant shall not later than 26 March 2021 send to the Tribunal and to the Respondent’s representative a statement in response setting out: (a) The reasons for opposing the application, with any legal submissions; (b) Any challenge to the amount of the costs being claimed, with full reasons for such challenge and any alternative costs; (c) Details of any relevant documentation relied on with copies attached. Reply (5) The Respondent may provide a short statement in Reply no later than 9 April 2021. Documents for hearing (6) The Respondent shall be responsible for preparing the bundle of documents (in a file, with index and page numbers) and shall at least 2 weeks before the hearing date send one copy to the other party and send three [two if paper track] copies to the Tribunal. (7) The bundle shall contain copies of: (a) The tribunal’s determination in the substantive case to which this application relates; (b) These directions and any subsequent directions; (c) The Respondent’s statement with all supporting documents; (d) The Applicant’s statement with all supporting documents. Determination/hearing arrangements(8) The Tribunal will determine the matter on the basis of the written representations received in accordance with these directions in the two week period commencing 12 April 2021.(9) If an oral hearing is requested, it shall take place on a date to be fixed, by remote video hearing, with a time estimate of 3 hours. Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber). FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/17UB/LIS/2020/0008 HMCTS code (paper, video, audio) : V:CVPREMOTE Property : Heritage Court, Kedleston Close, Belper, Derbyshire Applicant : Heritage Court RTM Company Limited Representative : RTMF Services Limited Respondent : Fairhold Homes (No 14) Limited Representative : JB Leitch solicitors Type of application : Application for costs order under Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 Tribunal Members : Judge D Barlow Date of Hearing : 1 October 2021 DECISION Covid-19 pandemic: description of hearing This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was V:CVP . A face-to-face hearing was not held because it was not practicable, no one requested it and all issues could be determined in a remote hearing. DECISION OF THE TRIBUNAL The tribunal refuses the costs application. REASONS The background and procedural history[1]This application (‘the Costs Application’) arises from the Tribunal’s decision dated 8 January 2021 (‘the Decision’), made in proceedings under section 27A of the Landlord and Tenant Act 1985 (‘the Proceedings’).[2]The Costs Application was made at the hearing and directions for filing of statements and evidence made by the tribunal within the Decision. The Costs Application was then stayed pending the outcome of the Applicant’s applications for permission to appeal the Decision, which was refused by the Tribunal and the Upper Tribunal (‘UT’)[3]The Applicant is an RTM company which acquired the right to manage Heritage Court on 3 May 2011, pursuant to the provisions of Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) and from that date, took over all management functions of the “premises” pursuant to sections 96 and 97 of the 2002 Act.[4]The Respondent is both owner of the reversionary freehold title of Heritage Court and the registered leasehold proprietor of a wardens flat within Heritage Court (“ the Wardens Flat”) under title DY404540.[5]The background is largely set out in paragraphs 6 – 15 the Decision. The following events are also relevant.[6]In the Proceedings, the Applicant sought a determination under s27A of the 1985 Act (“the Act”) of two issues relating to rent charged by the Respondent for use of the Wardens Flat. First, whether under the terms of the lease the landlord was entitled to charge rent for the Wardens Flat for the service charge years in question and secondly, whether the rent charged for each of those years was a reasonable amount (“the Issues”).[7]The Applicant also requested a transfer of the case to the UT under Rule 25, for it to be heard with a pending appeal of Fountain Retirement Housing Association Ltd, concerning flats at Batworth Park House, under reference LRX/4/2020 (“the Fountain Retirement appeal”). Mr Joiner wrote to the tribunal explaining that the issues in both cases were the same, i.e. whether the landlord is entitled to charge rent for the use of a managers flat, as part of the service charge.[8]The Respondent filed a statement opposing the Rule 25 transfer, for three reasons. Under Reason A (the issues in disputes are likely to be further appealed to the UT), the Respondent raised an additional concern that the Applicant was an RTM company with management responsibilities and confirmed that it would be seeking advice regarding the jurisdiction of the FTT to consider the application. If a jurisdictional challenge was pursued, the Respondent stated that it should be dealt with as a preliminary issue in the FTT.[9]The transfer application was denied but the Proceedings were stayed on 25 May 2020, pending the handing down of the decision in the Fountain Retirement Appeal. The parties were given leave to apply for the stay to be lifted and directed to update the tribunal within 14 days of the handing down of the appeal decision.[10]The Fountain Retirement Appeal decision was handed down on 23 July 2020 (citation - Retirement Lease Housing Association Limited v Schellerup [2020] UKUT 0232 (LC)), but neither party notified the tribunal, applied for the stay to be lifted or sought further directions.[11]On 2 September 202o, the tribunal asked the parties to confirm if any issues remained in dispute, so that it could make further directions. On 8 September, the Respondent wrote to the Applicant explaining that the Issues differed from those in the ‘notional rent’ cases determined by the Fountain Retirement appeal, because the lease contained an explicit reference to ‘rent(s)’ for provision of the Wardens Flat. The letter concluded that the lease satisfied the requirement for the Wardens Flat rent(s) to be paid via the service charge in accordance with the reasons provided by the UT. Significantly however, the letter does not refer to any ongoing jurisdictional issue.[12]On 16 September 2020, the Respondent replied to the tribunal’s letter of 2 September 2020 requesting that the case be disposed of under Rule 6(2) on the grounds that Mr Joiner had not responded to their correspondence of 8 September to confirm whether or not there were any outstanding issues. The issue of jurisdiction was not raised.[13]The tribunal did not dispose of the proceedings, but instead on 16 September 2020, made substantive directions for the parties to file statements and evidence and for the matter to be set down for hearing. A hearing date of 8 January 2021 was later fixed.[14]The Applicant was represented throughout by Mr Joiner of RTMF Services Limited (“RTMF”). RTMF is also the company secretary of the Applicant.[15]Mr Joiner filed a Statement of Case on 16 October 2020, which made clear the Applicant was seeking to challenge the rent charged for the Wardens Flat because the lease failed to specify a rent, or include any mechanism for a rent to be calculated. Mr Joiner contended that it was reasonable therefore to assume that regular payment of a rack rent was not intended and reference to the words “together with rent(s)” in Schedule 4 paragraph 1.2.10 of the Lease was intended to mean only rent incurred if it was necessary to engage a relief or additional manager. Mr Joiner set out various authorities for this including The Earl of Cadogan v 27/29 Sloane Gardens Ltd [2006] L&TR; Panagopoulos v Earl Cadogan [2010] EWCA Civ 1259 and Gilje v Charlegrove Securities Ltd [2002] 1 EGLR 41. He also referred to the legal principles set out in Retirement Lease Housing Association Limited v Schellerup [2020] UKUT 0232 (LC).[16]On 7 November 202o, the Respondent filed its Statement of Case (settled by counsel), in which it set out the issue of jurisdiction as its principle case and sought a determination that the application should be struck out under Rule 9(2)(a). Detailed argument in support of the strike out request is at paragraphs 19 to 28 of the statement. The remainder of the Respondent’s statement, (paragraphs 29 – 58), addresses the substantive Issues in the case.[17]The directions of 16 September 2020, provide for the Applicant to file a Reply if it wished. No Reply was filed by Mr Joiner addressing the strike out request or otherwise.[18]On 7 January 2021 (the eve of the hearing), Mr Joiner filed a skeleton argument of 150 page including authorities, together with a 200 page bundle of additional authorities. He dismissed the jurisdictional challenge in four brief paragraphs that did not address the relevant points. His argument was simply that the RTM company was obliged to demand and collect the service charge and the tribunal had jurisdiction under s27A to determine both the proper construction of the lease (Southend-on-Sea BC v Skiggs [2006] 2 EGLR 87(LT)), where necessary to determine liability and quantum; and the scope of the service charge demanded. Furthermore, the application was prompted by the Respondent’s letter before action dated 16 January 2019 (in evidence). The remainder of the skeleton argument and authorities was directed to the substantive Issues.[19]Mr Joiner confirmed in evidence at the substantive hearing that the application had been made as a direct response to the letter before action dated 16 January 2019, received from the Respondent’s solicitors. The content of the letter is relevant to the Respondent’s Costs Application. It points out that the Heritage Court leases make provision for payment of service charge for accommodation of the House Manager, at paragraph 1.2.11 of the Fourth Schedule to the leases and that despite management functions having been acquired by the Applicant RTM, the rents remained payable to the Respondent. The letter goes on to threaten proceedings for recovery of the arrears including winding up proceedings.[20]On 8 January 2021, the Application was struck out by the tribunal after hearing argument on the Respondent’s jurisdictional challenge as a preliminary issue. A detailed Decision confirming the tribunal’s reasons was issued on 27 January 2021. The reasons were broadly consistent with the arguments put forward by the Respondent on 9 November 2020 in its statement of case.[21]On 24 February 2021, the Applicant sought permission from the FTT to appeal the Decision which was refused. This was followed by an application to the UT for leave to appeal on the same grounds, which was also refused on the grounds that there was no reasonable prospect of a successful appeal. The UT commenting that the FTT was right to strike out the application and that “It might have been preferable for the determination to have been made under rule 9(3)(e) (no reasonable prospect of the application succeeding) or rule 9(3)(d) (abuse of process) but given the way in which the applicant’s case was presented the FTT was also entitled to make use of rule 9(2) (absence of jurisdiction)”. The law[22]The Respondent seeks a costs order under rule 13(1)(b) of the 2013 Rules. It alleges that the Applicant acted unreasonably in bringing and conducting the Proceedings. It does not seek an order for wasted costs under rule 13(1)(a).[23]Rule 13(1)(b) is engaged where a party has acted “…unreasonably in bringing, defending or conducting proceedings…”. The Tribunal’s power to award costs is derived from section 29(1) of the Tribunals, Courts and Enforcement Act 2007 (‘the 2007 Act’), which provides: “(1) The costs of and incidental to –(a) all proceedings in the First-tier Tribunal, and(b) all proceedings in the Upper Tribunal, shall be in the discretion of the Tribunal in which the proceedings take place.” It follows that any Rule 13(1)(b) order must be limited to the costs of and incidental to the Proceedings before this Tribunal.[24]Rule 3(1) of the 2013 Rules provides that “The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.” This extends to “dealing with the case in ways that are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties and of the Tribunal” (rule 3(2)(a)).[25]Both parties referred to the UT’s decision in Willow Court Management Co (1985) Ltd v Alexander [2016] UKUT 290 (LC), which outlined a three-stage test for deciding rule 13 applications. The Tribunal must first decide if there has been unreasonable conduct. If this is made out, it must then decide whether to exercise its discretion and make an order for costs in the light of that conduct. The third and final stage is to decide the terms of the order. The second and third stages both involve the exercise of judicial discretion, having regard to all relevant circumstances and there need not be a causal connection between the unreasonable conduct and the costs incurred. Given the requirements of the three stages, Rule 13 applications are fact sensitive.[26]At paragraph 20, the UT referred to the leading authority on wasted costs, Ridehalgh v Horsefield [1994] Ch, where Sir Thomas Bingham MR considered the expressions “improper, unreasonable or negligent” and said: ““Improper” means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalties. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct that would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.” “Unreasonable” also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but is not unreasonable.”[27]At paragraph 24 of Willow Court, the UT said “An assessment of whether behaviour is unreasonable requires a value judgment on which views might differ but the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level. We see no reason to depart from the guidance in Ridehalgh v Horsefield at 232E, despite the slightly different context. “Unreasonable” conduct includes conduct which is vexatious and designed to harass the other side rather than advance the resolution of the case. It is not enough that the conduct leads in the event to an unsuccessful outcome. The test may be expressed in different ways. Would a reasonable person have conducted themselves in the manner complained of? Or Sir Thomas Bingham’s “acid test”: is there a reasonable explanation for the conduct complained of?”[28]At paragraph 26, the UT went on to say: “We also consider that tribunals ought not to be over-zealous in detecting unreasonable conduct after the event and should not lose sight of their own powers and responsibilities in the preparatory stages of proceedings. As the three appeals illustrate, these cases are often fraught and emotional; typically those who find themselves before the FTT are inexperienced in formal dispute resolution; professional assistance is often available only at disproportionate expense. It is the responsibility of tribunals to ensure that proceedings are dealt with fairly and justly, which requires that they be dealt with in ways proportionate to the importance of the case (which will critically include the sums involved) and the resources of the parties. Rule 3(4) entitles the FTT to require that the parties cooperate with the tribunal generally and help it to further that overriding objective (which will almost invariably require that they cooperate with each other in preparing the case for hearing). Tribunals should therefore use their case management powers actively to encourage preparedness and cooperation and to discourage obstruction, pettiness and gamesmanship.”[29]The absence of legal advice is relevant at the first stage of the inquiry (paragraph 32) and, to a lesser extent, the second and third stages (paragraph 33). At paragraph 34, the UT referred to Cancino v Secretary of State for the Home Department [2015] UKFTT 00059 (IAC), which concerned a corresponding cost rule in the Immigration and Asylum Chamber. At paragraph 26 of Cancino the UT gave the following guidance: “First, the conduct of litigants in person cannot normally be evaluated by reference to the standards of qualified lawyers. Thus the same standard of reasonableness cannot generally be applied. On the other hand the status of unrepresented litigants cannot be permitted to operate as a carte blanche to misuse the process of the tribunal. The appropriate balance must be struck in every case. In conducting this exercise, tribunals will be alert to the distinction between pursuing a doomed appeal in the teeth of legal advice and doing likewise without the benefit thereof… Stated succinctly, every unrepresented litigant must, on the one hand be permitted appropriate latitude. On the other hand, no unrepresented litigate can be permitted to misuse the process of the tribunal. The overarching principle of fact sensitivity looms large once again.”[30]At paragraph 43 of Willow Court, the UT emphasised that Rule 13(1)(b) applications “…should not be regarded as routine, should not be abused to discourage access to the tribunal and should not be all0wed to become major disputes in their own right.” The Respondent’s application Unreasonable conduct[31]The costs application was prepared by the Respondent’s solicitor who submitted that the Applicant had acted unreasonably in several respects, principally by:a. Bringing proceedings against the Respondent that were misconceived.b. Failing to take account of the concerns about jurisdiction, highlighted by the Respondent in its written objection to the transfer application.c. Failing to notify the tribunal of the handing down of the decision in the Fountain Retirement appeal within 14 days of 23 July 2020, or at all.d. Failing to notify the tribunal or the Respondent whether the Applicant wished to continue with the application after the stay and if so the legal basis for proceeding with it.e. Failing to engage with the Respondent’s correspondence on 8 September and 16 September 2020 about restarting the proceedings.f. Failing to file a Reply or otherwise deal with the jurisdictional issue set out in detail in the Respondent’s Statement of Case dated 9 November 2021, causing the Respondent to incur the considerable costs and expenses of preparing for a full hearing of the substantive issues on 8 January 2021.[32]The Respondent contends that as a consequence of the Applicant’s failures, the Respondent was put to considerable unnecessary expense which was disproportionate to the claim. The conduct of the Applicant was not therefore in keeping with the overriding objective and was unreasonable.[33]A reasonable person in the Applicant’s position would, the Respondent contends, have complied with the tribunal’s directions, engaged with the Respondent and considered the issue of jurisdiction prior to submitting the application or, at the very least after it had been set out in detail within the Respondent’s statement of case on 9 November 2020.[34]The Respondent also contends that it is incumbent on a person bringing an application to ensure that it is within the jurisdiction of the tribunal. Particularly when the Applicant is represented by a person holding themselves out as having knowledge and experience of FTT process procedure. The failure of RTMF to act with competence in this regard was negligent and unreasonable.[35]At the hearing Mr Cohen expanded on the Respondent’s grounds. He began by explaining that the Issues in the application were a matter of some consequence to the Respondent. The rent for the Wardens Flat for the 6 year period in question totalled over £50,000.00, moreover, if the challenge was successful it would effectively deprive the Respondent from any future rental income leaving it with a worthless asset.[36]In relation to the bringing of misconceived proceedings, Mr Cohen made some additional points. First he argued that not only was this always a dispute between the landlord and the management company about rent, not a service charge case, but that Mr Joiner either knew that to be the case or, that he should have known it, given his level of experience and expertise. In fact, the jurisdiction point was so obvious the Applicant did not need to be legally qualified to see that the application was doomed.[37]Secondly, that the Applicant was not a litigant in person, it was represented by RTMF throughout. A limited company who deployed Mr Joiner as its advocate and which held itself out on its website as having considerable expertise and experience of FTT law and procedure, equivalent to that of a solicitor. It was, Mr Cohen contended, evident from the quality of the submissions made in the s27A application and the statement of case filed on 16 October 2020 that Mr Joiner was a sophisticated litigant. Furthermore, the quality of the argument put forward in Mr Joiner’s skeleton argument and authorities bundle filed on 7 January 2021, demonstrate that Mr Joiner had a good functional working knowledge of the law. To regard the Applicant as a litigant in person (LIP) would he submitted, completely mis-represent the position. The Applicant had a contractual and tortious relationship with RTMF who was representing it, and if a costs order was made because the Applicant had been poorly served by RTMF, it could sue in the same way as a party represented by a poor law firm.[38]During the hearing, mainly in response to the submissions of Ms Coyle concerning the limits of Mr Joiners experience, Mr Cohen went further and speculated that Mr Joiner not only knew the FTT did not have jurisdiction to determine the Issues under s27A of the Act, but also that he was hoping to manipulate the tribunal process to bring the case within s27A. Mr Cohen based his conjecture on Mr Joiners role as advocate for one on the tenants in the Fountain Retirement appeal, which was a bilateral case between a landlord and its tenants, i.e. not a case which involved an RTM company. This was a case in which full submissions were made by the tenants under s27A, whom Mr Joiner represented at the FTT and the UT as sole advocate. Mr Cohen submitted that it would have been evident to Mr Joiner from his experience in this case that the proper respondent to a challenge under s27A of the Act was the RTM company, but because that did not secure the desired outcome, Mr Joiner issued against the landlord Respondent, knowing it was no longer responsible for the service charges, but in the hope of manipulating the tribunal into hearing the claim. The application was therefore not only misconceived but also vexatious.[39]To summarise, Mr Cohen argued that the application was so obviously misconceived that an unqualified LIP should have been able to identify its failings, that in any event, the Applicant was represented by Mr Joiner of RTMF who was a sophisticated litigator well versed in FTT law and procedure, and finally that Mr Joiner did recognise that this was a rent dispute with the landlord that could not be brought under s27A, but he bowled ahead anyway hoping to manipulate the tribunal process.[40]In relation to Mr Joiner’s failings since issue of proceedings Mr Cohen also made several submissions. There were, he contended, repeated failures to comply with directions. It was accepted that Mr Joiner had suffered serious health during the Proceedings, but this was not communicated to the Respondent until July 2021 in connection with directions on the Costs Application. Mr Cohen submitted that it could not have been impossible for either Mr Joiner or his staff to have communicated with the Respondent on this sooner.[41]Although not required by the directions to file a Reply, as the central issue concerning jurisdiction raised by the Respondent on 9 November 202o required a rebuttal, it was unreasonable for this not to have been filed earlier than the eve of the hearing. This left the Respondent having to wrestle with a 150 page skeleton argument and an additional 2oo pages of authorities, on the eve of the hearing.[42]Even then Mr Joiner failed to engage with the issues set out in the Respondents statement, he dismissed the jurisdiction issue in a few brief paragraphs and so fervent was his belief in his misplaced cause, that he went on twice to seek leave to appeal the FTT decision.[43]Mr Cohen submitted that Mr Joiners application to the UT bore scrutiny not just as an illustration of Mr Joiners continued intransigence, but because the UT’s findings indicate that the case was so bad it was able to find no less than three Rules under which it could be struck out, including, Rule 9(3)(e) no reasonable prospect of success and Rule 9(3)(d) abuse of process. He also conjectured that the UT’s comments could be taken to indicate that the remaining grounds under rule 9(3)(d) frivolous or vexatious might also have been in play.[44]In relation to Willow Court, Mr Cohen submitted that the question - is there a reasonable explanation for the conduct? required a value judgement, but ultimately it was for the Applicant to provide the reasonable explanation. Mr Cohen said that he could see no reasonable explanation because the only explanation proffered by Mr Joiner was that set out in paragraph 8 of his Reply to the Respondent’s statement on the Costs Application; which in summary is that the FTT got it wrong, the UT got it wrong and neither provided any statutory or legal authority in support of the proposition that the FTT did not have jurisdiction. This was further evidence of Mr Joiners staggering intransigence.[45]The question does not change, whether the Applicant is an LIP or represented. The answer may however change because it alters the criteria against which the conduct is assessed. Mr Cohen submitted that the Applicant’s conduct should be adjudged against that of competently represented party. It may have been poorly advised by Mr Joiner to pursue this application, but the Applicant cannot now recast itself as an LIP. Ought the FTT make an order for costs[46]Mr Cohen submitted that at all stages the Applicant had behaved inappropriately, the consequence being that the Respondent had to carry the can in this case. The Respondent appreciated that Mr Joiner had been ill for a period, but he employs five staff and it is not difficult to respond to an email. The Respondent’s conduct was, Mr Cohen submitted, impossible to criticise. It agreed to the stay prior to statements of case being directed and it set out its jurisdictional challenge in full within its statement of case when directed to file it. The Respondent has complied with all directions of the tribunal unlike Mr Joiner whose 11th hour submissions put the Respondent in a tailspin.[47]The case was of significant consequence to the Respondent who began the proceedings £35,000 down and was obliged to defend the proceedings fully and properly because an adverse finding would have a prejudicial effect its proprietary interest. The Respondent was therefore obliged to incur substantial costs protecting its rights.[48]Mr Cohen further submitted that the Respondents costs were unnecessarily increased by Mr Joiner’s failure to respond to the Respondent statement of case in November 2020. Mr Joiner has since attempted to recast his conduct as a failure to understand the jurisdictional issue, but the claim failed for five separate reasons. It was always a case about rent which Mr Joiner knew full well, because that is how he described it in every document filed in the proceedings. He nevertheless proceeded with the case even after the jurisdictional challenge was set out fully in the Respondent’s 9 November 202o statement. Mr Joiner has appeared as advocate in many cases, his repeated appeals are vexatious and show that whatever the Respondent did, this was always going to end up before the tribunal because Mr Joiner believed in his case so fervently.[49]To summarise Mr Cohen submitted that an order for costs was appropriate when taking into account the degree of the Applicant’s failure, which the UT had characterised as an abuse of process; Mr Joiners expertise which included representing parties on serious UT cases; the way in which the claim was progressed by Mr Joiner; and the serious sums of money the Respondent was obliged to expend to deal with the claim. Terms of the order[50]As to the third limb of the three tests in Willow Court Mr Cohen invited the tribunal to summarily assess the costs on the standard basis. The Respondent had appended to the Costs Application, two detailed statements of costs with supporting invoices and fee notes.[51]The total amount claimed under the first Statement of Costs dated 24 February 2021, which covers the period from commencement of proceedings to preparation of the first statement of costs - totals £24,384.24, broken down as follows:• Solicitor’s costs £11,557.70• counsel’s fees £8,750.00• VAT £4,061.54• Court fee £15.00[52]The total amount claimed under the second Statement of Costs dated 31 August 2021, which covers the period from preparing the first statement of costs up to and including the costs hearing - totals £10,827.00, broken down as follows: Solicitor’s costs £4022.50 counsel’s fees £5,000.00 VAT £1,804.50[53]The hourly rate claimed by the solicitors in the first statement of costs was, grade A fee earner at £250 per hour, grade B at £192 per hour, grade C at £161 per hour and grade D at £118 per hour, in each case exclusive of VAT.[54]In the second statement of costs, grade A at £275 per hour, grade B at £192 per hour, grade C £161 per hour and grade D £118 per hour, in each case exclusive of VAT.[55]The cost statements summarised the fee earners time split between attendances and work done on documents. Miss Crampin’s fee note shows fees for advice, drafting the statement of case and updating it, totalled £2,250, plus VAT of £650, together with a brief fee for the hearing on 8 January 2021, of £5,500.oo plus VAT of £1,100.00. Mr Cohen’s brief fee for the costs hearing was shown on the second statement as being £5,000 plus VAT of £1,000.00. The Applicant’s case Unreasonable conduct[56]The Applicant filed a response to the Costs Application on 11 August 2021, setting out its grounds of opposition. Ms Coyle also filed a skeleton argument expanding on some of the Applicant’s points, which she developed further at the hearing in response to Mr Cohens submissions.[57]She submitted that the jurisdictional issue was not obvious. If it had been the tribunal would have raised it when first considering the application. Instead the application was considered by the tribunal, along with the transfer application, following which directions were made concerning the stay.[58]Although the Respondent raised a concern about the tribunal’s jurisdiction in its objection to the transfer application, it provided no detail or grounds for any such challenge, just that the Respondent was taking advice. The fact that the Respondent consented to the stay is, Ms Coyle submitted, inconsistent with any argument that the jurisdictional point was so obvious you didn’t need to be legally qualified to spot it. Furthermore, the correspondence from the Respondent on the 8 September and 16 September 2020, does not return to the issue of jurisdiction. It was reasonable therefore for the Applicant to assume that the Respondent had dropped it having received advice.[59]Ms Coyle said that Mr Joiner did not respond to the correspondence because from about July 2020 onward he was undergoing treatment for cancer. He did not have access to emails during this period and although RTMF has five employees, they are not qualified to deal with FTT matters. The emails would therefore have been directed to Mr Joiner. Regrettably therefore, Mr Joiner was unable to attend to the case from July through September 2020. It was accepted that Mr Joiners ill-health was not communicated to the Respondent until July 2021, but it would, she submitted, have been evident from the details provided on the nature of the cancer treatment that Mr Joiner had been in serious ill-health for some time.[60]The Respondent did not particularise its case on jurisdiction until the 9 November 2020. Ms Coyle submitted that if the point was an obvious one, the Respondent should have applied for the application to be struck out at the earliest time, before incurring substantial legal costs on the preparation of the statement of case, witness statements and counsel’s fees. If assessed against the failure of the Respondent to help itself or the tribunal by making an appropriate application at an earlier time, the Applicant’s conduct cannot be adjudged to be unreasonable.[61]When asked why Mr Joiner had failed to engage with the jurisdictional challenge after 9 November 2020, by filing a Reply, Ms Coyle said that the time frame to reply by 18 November 2020 was quite short for an LIP, and also that, at the time, Mr Joiner did not believe jurisdiction was an issue. This was because he was seeking was a determination that the rent was not a service charge under s18 of the Act, which he believed fell squarely within a s27A application. Ms Coyle said that the problem was, Mr Joiner’s failure to understand the distinction between leaseholders as tenants and leaseholders as shareholders of the RTM. Mr Joiner now appreciates that his stance was erroneous in law, but he isn’t legally qualified and at the time genuinely believed that he had named the correct parties to the proceedings.[62]Ms Coyle submitted that there was a reasonable explanation for the conduct of the Applicant. It had received a letter from the Respondent on 16 December 2019, threatening legal proceedings, including winding up proceedings, if the outstanding rent for the Wardens Flat was not paid. Mr Joiner did not believe that the leaseholders were liable to pay the rent and following recent tribunal success in challenging notional rents for a similar Wardens Flat, decided to issue the Proceedings under s27A. This was not designed to harass the Respondent but because Mr Joiner genuinely believed it to be the correct jurisdiction to challenge whether the rents were relevant costs under s18 of the Act.[63]Ms Coyle said that Mr Joiners failure to issue the Proceedings against the correct parties was a consequence of his lack of legal knowledge concerning the legal status of the leaseholders. The Proceedings were intended to determine a genuine issue and not to harass the Respondent, who had not helped itself by sending a letter before action that cast the rent as a service charge item that the Applicant was able to recover from the leaseholders under their leases. Had Mr Joiner named the correct parties to the claim, it was a solid claim which would have proceeded.[64]Ms Coyle pointed to various paragraphs in Mr Joiner’s statements which highlight his genuine, albeit mistaken belief, that the FTT did have jurisdiction to hear the claim, including paragraph 19 of Mr Joiners request to the UT for permission to appeal. Mr Joiner explains in paragraph 19 why in his view the leaseholders did not need to made parties to the proceedings. It would, he states, be an absurdity for the leaseholders to be in dispute with themselves and create a conflict of interest with the directors of the Applicant who were also leaseholders. The leaseholders were in agreement with the Applicant on the Issues and would not oppose the application, it would therefore be a waste of time and resources for all parties and contrary to the overriding objective.[65]Ms Coyle also took me to the grounds for Mr Joiners appeal in which he states that it must be the case that if a landlord (in this case the Applicant) is uncertain whether a particular item is chargeable and payable as service charge, the FTT is the appropriate tribunal to determine this under s27A. Mr Joiner’s reason for issuing and continuing the proceedings was to obtain a determination of the payability and reasonableness of the Wardens Flat rent as part of the service charge. It is not, she submitted, unreasonable or vexatious to challenge a letter before action through proceedings and Mr Joiners has put forward consistent sound reasons for the challenge, he just issued against the wrong parties because he genuinely did not understand why the leaseholders needed to be joined.[66]Ms Coyle said that this was not a case where the Applicant had attempted to mislead the tribunal or had been dishonest in its representations. The Issues in the claim were not she submitted misconceived or vexatious. Mr Joiner had already succeeded in a similar case before the FTT and genuinely believed that this case was correctly pursued. He simply misunderstood how the procedure applied in relation to this particular application, also, he was less attentive to the directions due to a period of serious ill-health.[67]Ms Coyle submitted that when assessing the standard against which the Applicant’s conduct should be adjudged, it should be that of an LIP. RTMF is the company secretary of the Applicant and was representing the Applicant in these proceedings for no additional fee. Mr Joiner is not legally qualified. Although RTMF holds itself out as having some expertise in FTT proceedings, the representations on its website are just in relation to RTM applications including applications to the FTT. Mr Joiners tribunal experience is mainly in relation to RTM applications under the 2002 Act and his website does not hold RTMF out as having any expertise in service charge cases.[68]Ms Coyle said that Mr Joiner was of course able to research the law independently because these days it was all accessible on the internet, but the fact that he bombarded the tribunal with authorities was more indicative of a lack of relevant knowledge than any real expertise. The Applicant is a group of retired people represented by Mr Joiner who is not legally qualified and at best can only be regarded as a McKenzie friend with no expertise in s27A applications. He is akin to a lay representative who is unfamiliar with substantive law and procedure and his conduct should not therefore be regarded as unreasonable.[69]Ms Coyle said that the issue in the Fountain Retirement appeal began life as a dispute concerning the operation of s94 of the 2002 Act, but was eventually determined under s27A of the Act. Furthermore, the appeal involved two cases, one of the other respondents was represented and she led the representations for the leaseholders, not Mr Joiner.[70]Mr Cohen made several points in response to Ms Coyle’s submissions. He objected to Ms Coyle introducing evidence of Mr Joiner’s ill-health in her skeleton argument and in her submissions. Mr Joiner had not raised his health as a reason for failing to comply with directions in the Proceedings when he responded to the Costs Application. Mr Cohen therefore invited the tribunal to disregard the submissions concerning Mr Joiner’s ill-health as being presented too late for the Respondent to fairly consider them. When it was suggested that Mr Joiner was present and could give evidence on this point, Mr Cohen said that he did not want to be bounced into cross-examining Mr Joiner on his health, he simply asked the tribunal to disregard Mr Joiner’s illness as providing any justification for the delays in this case.[71]Mr Cohen commented that Ms Coyle’s submissions concerning a couple of paragraphs in the application and the Applicant’s statement of case supported some elision between the issue of rent and service charge which in his view was not supportable. He submitted that the application had always been about the construction of the lease which was clear from paragraphs 12 and 16 of the Applicant’s statement of case and from the submissions in Mr Joiners skeleton argument, in particular conclusion at paragraph 57. Determination was always a two-step process, the first step being to determine the nature of the charge (i.e. is there liability to pay rent) and only if then do you get to step two, which is whether the rent is payable as service charge. As the FTT had no jurisdiction to determine the first step the application was misconceived.[72]Mr Cohen submitted that the motivation for the application was clearly set out in the documents submitted by Mr Joiner within the Proceedings, this was always a case about rent and not service charge, and his re-packaged submissions within the Costs Application should not be given any weight.[73]Mr Cohen also submitted that the Respondent’s conduct was not remotely relevant to the Costs Application. Had it raised the issue of jurisdiction earlier, it would have made no difference such was the fervency of Mr Joiners conviction that the FTT did have jurisdiction. The Respondent cannot be criticised for agreeing to a stay because statements of case had not been exchanged at that stage. Furthermore, it is unlikely to have been causative of any consequence, because even when the jurisdictional issues were subsequently pleaded in full Mr Joiner simply didn’t accept that the FTT lacked jurisdiction.[74]Moreover, even had the Respondent requested a preliminary issue hearing in September 2020, given the short timetable provided for in the September Directions, the issue would still more likely have been dealt with as a preliminary point at the substantive hearing. Ought the FTT make an order for costs[75]Ms Coyle submitted that the tribunal ought not to make an order costs because the Applicant was not legally represented, and the application was a genuine attempt to obtain determination as to whether that Wardens Flat rent is payable as a service charge.[76]Mr Joiner is not a specialist in section 18 or s27A of the Act . Although he has some specialism in the acquisition of rights to manage, the process of setting up RTM companies and of tribunal procedure in relation to RTM applications, he has little experience of service charge applications and made a genuine mistake about who should be the proper respondent to this application. In short Ms Coyle submissions were that Mr Joiner should be treated as a lay representative, and she relied in her skeleton argument on the observation in Willow Court – “for a lay person to be unfamiliar with the substantive law or with tribunal procedure, to fail properly to appreciate the strengths or weaknesses of their own or their opponent’s case, to lack skill in presentation, or to perform poorly in the tribunal room, should not be treated as unreasonable.”[77]Ms Coyle also submitted that this was not a case where Mr Joiner had sought to mislead the FTT or the Respondent, it was not one of zealous deceit or harassment, if anything Mr Joiner was following the issues identified by the FTT in the September 2020 directions.[78]To the extent that there was delay in complying with directions Ms Coyle submitted that this was due to ill-health and not improper motive Also, Mr Joiner’s conduct cannot be described as unreasonable just because the Applicant was unsuccessful or because other more cautious legal representatives might have acted differently.[79]Furthermore, the Respondent had not helped itself in this case. It could have applied for the jurisdictional issue to be determined at a preliminary hearing before incurring the substantial costs of preparing its statements and instructing counsel, but did not. The terms of any order[80]In his reply to the Respondents application for costs, Mr Joiner did not provide any argument on terms of any order or a detailed response to the Respondent’s Statements of Costs, other than to state that the total costs claimed by the Respondent were wholly disproportionate and that the Respondent was seeking to quash a legitimate claim by the sheer weight of its financial resources without any consideration of proportionality. Mr Joiner submitted that the Applicant’s resources were a factor because it is a management vehicle owned by retired individuals in sheltered accommodation.[81]In her skeleton argument Ms Coyle reserved the right to comment on the individual items of expenditure at the hearing where she made the following challenges: First Statement of Costs(a) In relation to the hourly charge out rates for fee earners, Ms Coyle offered no challenge.(b) Ms Coyle challenged the total hours charged on attendance on the client by letter out/email/telephone of 25.8 hours as excessive given that the issues were predominantly legal and would not involve that degree of client attendance. Mr Cohen submitted that the attendances were over a period of time and concerned the potential loss of 125 year rental.(c) Ms Coyle thought the attendance on opponents of 3.5 hours was also high having only seen a couple of emails and two letters from the Respondent’s lawyers.(d) Ms Coyle also submitted that 13.7 hours for letters out/email/telephone attendance on others was excessive and questioned who the others were. Mr Cohen said the time had been spent liaising with counsel and Falcon Chambers to organise conferences and with the FTT chasing progress after the stay.(e) Mr Cohen also confirmed that the hours claimed in the Statements of Costs reflected actual time spent by the fee earners and were not based on unit costs.(f) Ms Coyle challenged the 6.2 hours claimed by the solicitors for the hearing on the basis that it lasted less than half a day. Mr Cohen said that the time possibly included travel time together with pre-and post-hearing calls with counsel and the clients.(g) In relation to documents Ms Coyle noted that there had been extensive use of counsel to draft the statement of case, advise on the issues and represent the Respondent at the hearing. She therefore challenged the amount charged for the preparation of bundles, considering the applicant statement and drafting instructions to counsel as being too high. Ms Coyle also thought three hours was excessive for preparation of the first Cost Statements but that one and a half hours might be reasonable.(h) Mr Cohen submitted that total time spent on documents over the period of time in question is not excessive given that the court bundle ran to some 900 pages.(i) Ms Coyle challenged counsel’s fees of £5,500 plus VAT for a half day hearing as being excessive but did not suggest what level of fee would be reasonable for counsel of Ms Crampin’s seniority. Mr Cohen said that if one assumed counsel’s charge out rate to be about £300 per hour, the fee note would include preparation time of approximately 12 hours, which he did not consider unreasonable given that this was a legally heavy matter involving a 900 page bundle. The brief fee was largely a consequence of the way Mr Joiner had gone about conducting his case. Ms Coyle disagreed submitting the counsel drafted the statement of case, was well acquainted with the issues and any sensible lawyer could see that the late submissions from Mr Joiner did not take his case much further. Counsel would have gone through any additional material quickly and 12 hours preparation for that is inflated. Second Statement of Costs (a) There was no challenge to the fee earner hourly rates charged. (b) Ms Coyle made the same challenges to the time spent on letters out/email/telephone attendances with the client as above, reiterating that the costs application was entirely a legal issue and not one that needed lengthy instructions from the client. Mr Joiner’s appeals did not involve the Respondent and no costs should be allowed for time spent on consideration of Mr Joiner’s appeals other than consideration of the short decisions of the FTT and UT refusing leave to appeal. (c) Ms Coyle challenged the 4 hours claimed for attendance on others, given that appeared to be just for liaising with counsel’s chambers and the FTT on the listing of the costs hearing. (d) Ms Coyle also challenged the two hours spent drafting the short reply to Mr Joiner’s response and the preparation time for the costs hearing of three hours as excessive. The court bundle was prepared for the substantive hearing and only needed updating with the costs application documents. (e) Ms Coyle challenged Mr Cohen’s fee of £5000 for a half day costs hearing on the basis that the work did not compare with that carried out for the substantive hearing by a more senior counsel whose fees were almost the same. Mr Cohen said that the costs application involved very different issues, he had to consider a 900 page bundle which covered the substantive hearing and had spent the best part of a day preparing, but was content to leave determination of the reasonableness of his fee to the tribunal. The tribunal’s determination Unreasonable Conduct[82]The threshold for making a Rule 13(1)(b) costs order is a high one. As stated at paragraph 24 of Willow Court “…the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level.”[83]I have first considered whether the Applicant had acted unreasonably in bringing and conducting the Proceedings. In doing so, I only considered the period from 24 April 2020, being the date of the section 27A application, until the conclusion of the hearing on 8 January 2021. The Applicant’s conduct on the appeals’ is not relevant, other than to possibly confirm a pattern of motivation or behaviour already identified when considering the Applicant’s conduct in the Proceedings.[84]The Respondent argues that the Applicant is not an LIP, it was represented by a sophisticated litigator whose conduct should be viewed against the standard one would expect from a legally qualified representative. Mr Joiner is certainly experienced in law and procedure relating the RTM legislation under the 2002 Act, as boasted on his website, and has extensive experience of representing RTM companies before the FTT on RTM applications and to a lesser extent the UT. However, there was no compelling evidence that Mr Joiners company, RTMF, holds itself out as having expertise on any other area of leasehold dispute including service charges. RTMF, is the Applicant’s corporate company secretary and Mr Joiner represented the Applicant in that capacity, presumably as part of the secretarial services provided for RTMF’s agreed fees.[85]Mr Joiner did present lengthy reasoned argument citing appropriate authorities in support of his primary case, much of which appears to follow the line of argument that was successfully deployed by the respondents to the Fountain Retirement appeal. However, the limits of Mr Joiners knowledge and experience are apparent in his failure to address some significant and material differences in the lease terms to that of the appeal case, or to correctly work out who the proper applicant and respondents should be to a s27A application affecting the leaseholders liability to pay, the RTM companies management obligations and also the proprietary interest of the landlord under the leases.[86]Mr Joiners involvement as representative of the Batworth Park House leaseholders in the Fountain Retirement appeal, appears from the UT decision to have been minimal, if he made any representations they are not mentioned. There is nothing in the decision to indicate that Mr Joiner’s knowledge of the substantive law and procedure of service charges or of general legal principle, was such as to make it fair for him to be held to the standards of a qualified lawyer. The case started in the FTT, a jurisdiction that encourages litigants to represent themselves regardless of their level of sophistication, and they shouldn’t be discouraged from appealing those decisions to the upper courts for fear it could be construed as giving them a gloss of professionalism, that might in turn cause them to be held to a higher standard.[87]Indeed, the limits of Mr Joiner’s expertise became painfully apparent at the substantive hearing where he struggled and ultimately failed to understand the fatal flaw in his case. It was a basic misapprehension about the rights and powers of the leaseholders as shareholders of the Applicant, as against their proprietary rights as leaseholders under their leases. Mr Joiner may have appreciated that a court cannot determine the liability of a non-party to pay anything, but he made what is a common error of believing that the leaseholders were, in effect, represented though their shareholding in the Applicant.[88]His belief was strongly held, he referred to it in both his appeals and in his response to the costs application. I am satisfied from observing Mr Joiner at the substantive hearing and from considering his representations and submissions since, that Mr Joiner is a serious and sincere representative who genuinely believed in his argument, genuinely believed that the FTT and the UT had got it wrong and that he was only able to reconsider his position after instructing counsel to represent him on the costs application.[89]I do not accept that there is any evidence to support Mr Cohen’s conjecture that Mr Joiner knew the application was vexatious but nevertheless pursued it with intent to mislead the tribunal and harass the Respondent. The reasons given by the UT when refusing Mr Joiners application for leave to appeal are not relevant. The UT did not consider Mr Joiner’s conduct or make any finding of unreasonableness against the Applicant. The UT simply confirmed that the application was liable to be struck out under three Rules, including Rule 9(3)(d) – for abuse of process. It did not suggest that the proceedings were either frivolous of vexatious.[90]There is nothing inherently unreasonable in pursuing an unsuccessful case, however it may be unreasonable to pursue a case that is totally devoid of merit, particularly if a fatal weakness has been spelt out by the other party. The Issues in the case were not devoid of merit, the Applicant sought a perfectly legitimate determination of the payability and reasonableness of the Wardens Flat rent. The fatal weakness was the absence of any leaseholder as a party.[91]The question is whether given Mr Joiner’s familiarity with tribunal procedure, it should have been obvious to him when issuing the Proceedings, or certainly after receiving the Respondent’s statement of case on 9 November 2020, that without joining at least one leaseholder as a party the application was bound to fail.[92]Ms Coyle argues that jurisdiction issue was far from obvious and I agree. It was not picked up by the tribunal when the application was first considered or when substantive directions were made in September 2020. The Respondent mentioned in its objection to the transfer, that it was seeking advice on a jurisdictional point but did not actually particularise its concerns until filing its statement of case on 9 November 2020. A statement that was settled by counsel after providing advice on 3 November 2020. Mr Joiner may be familiar with RTM legislation and tribunal procedure, but he is not a lawyer. Significantly, the Respondent who was represented by solicitors throughout, nonetheless required advice from counsel on the jurisdictional point and instructed counsel to settle the arguments put forward in its statement. This is completely inconsistent with Mr Cohen’s submission that the jurisdictional issue was so obvious it didn’t need a lawyer to spot it. Furthermore, Mr Joiner’s misapprehension about the status of leaseholders as shareholders, is all too common for his misapprehension on this point to be regarded as unreasonable.[93]Mr Joiner’s failure to engage with the Respondent’s argument after the 9 November 2020 is more surprising, although explicable. Ms Coyle said that he didn’t file a reply to the jurisdictional issue because he thought the Respondent had got it wrong. Mr Joiner instead focussed the limited time available to him on developing his skeleton argument in support of the substantive case, presumably anticipating the tribunal would dismiss the strike out application as a preliminary matter.[94]It is clear from the decision in Willow Court that although Mr Joiner is not a lawyer it does not follow that a costs award should never be made. His conduct needs to viewed in the proper context, including the standard or skill expected of someone with Mr Joiners experience, but without the benefit of professional legal advice. In considering his conduct after the 9 November 2020, I accept that it would have been helpful for Mr Joiner to have adopted a more flexible approach and to have given greater respect to the Respondent’s statement. His experience has, if anything, inspired over-confidence in the rightness of his arguments and a rather combative approach to Proceedings, which in this case has resulted in significant work for the parties and the tribunal. However, the jurisdictional point was not obvious in itself, or easy for a non-lawyer to grapple with, based only on the arguments set out in the Respondent’s statement. On balance therefore I do not find that Mr Joiner’s failure to properly appreciate the weakness of his case after the 9 November 2020, to be unreasonable.[95]As to the Respondent’s other grounds, which include Mr Joiner’s failure to comply with directions, in particular the direction to notify the tribunal of the handing down of the decision in the Fountain Retirement appeal. I find that neither party complied fully with that direction, in fact there was no response from either party until the tribunal wrote to them on the 2 September 2020 to ask what was happening and whether there were any outstanding issues. Although parties should comply with directions, they often fail to comply fully, and the late compliance by each party in this instance does not amount to unreasonable conduct.[96]Mr Joiner’s failure to engage with the Respondent’s correspondence of 8 and 18 September is also characterised as unreasonable conduct. Ms Coyle explained that Mr Joiner’s failure to attend to the letters from the tribunal and the Respondent in September 2020 was a consequence of treatment he was having for cancer. Mr Cohen objected to late submissions on this point but did not suggest that Mr Joiner had not been ill, just that the recent submissions should be disregarded because he didn’t communicate it at the time or mention it in his response to the costs application.[97]To the extent that it may be relevant to the Respondent’s allegation of unreasonable conduct, I have not needed to consider the submissions concerning Mr Joiners health. The tribunal issued substantive directions on 16 September 2020 which Mr Joiner complied with. His failure to engage with the Respondent over a comparatively short period of time in September 2020 does not amount to unreasonable conduct, with or without any consideration of Mr Joiner’s health.[98]To summarise, for the above reasons I do find that the Respondent has demonstrated that the Applicant had acted unreasonably for the purposes of Rule 13(1)(b) of the Tribunal Rules. As the application has failed to pass the first stage of the test set out in Willow Court, it follows that it is unnecessary to go on to consider stages two and three. Accordingly, the Respondent’s cost application is refused. Name: Judge D.Barlow Date: 22 November 2021 Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber). --- decision_2.pdf --- © CROWN COPYRIGHT FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/17UB/LIS/2020/0008 HMCTS code (paper, video, audio) : V:CVPREMOTE Property : Heritage Court, Kedleston Close, Belper, Derbyshire Applicant : Heritage Court RTM Company Limited Representative : RTMF Services Limited Respondent : Fairhold Homes (No 14) Limited Representative : JB Leitch solicitors Type of application : Application for costs order under Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 Tribunal Members : Judge D Barlow Date of Hearing : 1 October 2021 DECISION 2 Covid-19 pandemic: description of hearing This has been a remote video hearing which has been consented to by the parties. The form of remote hearing was V:CVP . A face-to-face hearing was not held because it was not practicable, no one requested it and all issues could be determined in a remote hearing. DECISION OF THE TRIBUNAL The tribunal refuses the costs application. REASONS The background and procedural history[1]This application (‘the Costs Application’) arises from the Tribunal’s decision dated 8 January 2021 (‘the Decision’), made in proceedings under section 27A of the Landlord and Tenant Act 1985 (‘the Proceedings’).[2]The Costs Application was made at the hearing and directions for filing of statements and evidence made by the tribunal within the Decision. The Costs Application was then stayed pending the outcome of the Applicant’s applications for permission to appeal the Decision, which was refused by the Tribunal and the Upper Tribunal (‘UT’)[3]The Applicant is an RTM company which acquired the right to manage Heritage Court on 3 May 2011, pursuant to the provisions of Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) and from that date, took over all management functions of the “premises” pursuant to sections 96 and 97 of the 2002 Act.[4]The Respondent is both owner of the reversionary freehold title of Heritage Court and the registered leasehold proprietor of a wardens flat within Heritage Court (“ the Wardens Flat”) under title DY404540.[5]The background is largely set out in paragraphs 6 – 15 the Decision. The following events are also relevant.[6]In the Proceedings, the Applicant sought a determination under s27A of the 1985 Act (“the Act”) of two issues relating to rent charged by the Respondent for use of the Wardens Flat. First, whether under the terms of the lease the landlord was entitled to charge rent for the Wardens Flat for the service 3 charge years in question and secondly, whether the rent charged for each of those years was a reasonable amount (“the Issues”).[7]The Applicant also requested a transfer of the case to the UT under Rule 25, for it to be heard with a pending appeal of Fountain Retirement Housing Association Ltd, concerning flats at Batworth Park House, under reference LRX/4/2020 (“the Fountain Retirement appeal”). Mr Joiner wrote to the tribunal explaining that the issues in both cases were the same, i.e. whether the landlord is entitled to charge rent for the use of a managers flat, as part of the service charge.[8]The Respondent filed a statement opposing the Rule 25 transfer, for three reasons. Under Reason A (the issues in disputes are likely to be further appealed to the UT), the Respondent raised an additional concern that the Applicant was an RTM company with management responsibilities and confirmed that it would be seeking advice regarding the jurisdiction of the FTT to consider the application. If a jurisdictional challenge was pursued, the Respondent stated that it should be dealt with as a preliminary issue in the FTT.[9]The transfer application was denied but the Proceedings were stayed on 25 May 2020, pending the handing down of the decision in the Fountain Retirement Appeal. The parties were given leave to apply for the stay to be lifted and directed to update the tribunal within 14 days of the handing down of the appeal decision.[10]The Fountain Retirement Appeal decision was handed down on 23 July 2020 (citation - Retirement Lease Housing Association Limited v Schellerup [2020] UKUT 0232 (LC)), but neither party notified the tribunal, applied for the stay to be lifted or sought further directions.[11]On 2 September 202o, the tribunal asked the parties to confirm if any issues remained in dispute, so that it could make further directions. On 8 September, the Respondent wrote to the Applicant explaining that the Issues differed from those in the ‘notional rent’ cases determined by the Fountain Retirement appeal, because the lease contained an explicit reference to ‘rent(s)’ for provision of the Wardens Flat. The letter concluded that the lease satisfied the requirement for the Wardens Flat rent(s) to be paid via the service charge in accordance with the reasons provided by the UT. Significantly however, the letter does not refer to any ongoing jurisdictional issue.[12]On 16 September 2020, the Respondent replied to the tribunal’s letter of 2 September 2020 requesting that the case be disposed of under Rule 6(2) on the grounds that Mr Joiner had not responded to their correspondence of 8 September to confirm whether or not there were any outstanding issues. The issue of jurisdiction was not raised.[13]The tribunal did not dispose of the proceedings, but instead on 16 September 2020, made substantive directions for the parties to file 4 statements and evidence and for the matter to be set down for hearing. A hearing date of 8 January 2021 was later fixed.[14]The Applicant was represented throughout by Mr Joiner of RTMF Services Limited (“RTMF”). RTMF is also the company secretary of the Applicant.[15]Mr Joiner filed a Statement of Case on 16 October 2020, which made clear the Applicant was seeking to challenge the rent charged for the Wardens Flat because the lease failed to specify a rent, or include any mechanism for a rent to be calculated. Mr Joiner contended that it was reasonable therefore to assume that regular payment of a rack rent was not intended and reference to the words “together with rent(s)” in Schedule 4 paragraph 1.2.10 of the Lease was intended to mean only rent incurred if it was necessary to engage a relief or additional manager. Mr Joiner set out various authorities for this including The Earl of Cadogan v 27/29 Sloane Gardens Ltd [2006] L&TR; Panagopoulos v Earl Cadogan [2010] EWCA Civ 1259 and Gilje v Charlegrove Securities Ltd [2002] 1 EGLR 41. He also referred to the legal principles set out in Retirement Lease Housing Association Limited v Schellerup [2020] UKUT 0232 (LC).[16]On 7 November 202o, the Respondent filed its Statement of Case (settled by counsel), in which it set out the issue of jurisdiction as its principle case and sought a determination that the application should be struck out under Rule 9(2)(a). Detailed argument in support of the strike out request is at paragraphs 19 to 28 of the statement. The remainder of the Respondent’s statement, (paragraphs 29 – 58), addresses the substantive Issues in the case.[17]The directions of 16 September 2020, provide for the Applicant to file a Reply if it wished. No Reply was filed by Mr Joiner addressing the strike out request or otherwise.[18]On 7 January 2021 (the eve of the hearing), Mr Joiner filed a skeleton argument of 150 page including authorities, together with a 200 page bundle of additional authorities. He dismissed the jurisdictional challenge in four brief paragraphs that did not address the relevant points. His argument was simply that the RTM company was obliged to demand and collect the service charge and the tribunal had jurisdiction under s27A to determine both the proper construction of the lease (Southend-on-Sea BC v Skiggs [2006] 2 EGLR 87(LT)), where necessary to determine liability and quantum; and the scope of the service charge demanded. Furthermore, the application was prompted by the Respondent’s letter before action dated 16 January 2019 (in evidence). The remainder of the skeleton argument and authorities was directed to the substantive Issues.[19]Mr Joiner confirmed in evidence at the substantive hearing that the application had been made as a direct response to the letter before action dated 16 January 2019, received from the Respondent’s solicitors. The content of the letter is relevant to the Respondent’s Costs Application. It points out that the Heritage Court leases make provision for payment of 5 service charge for accommodation of the House Manager, at paragraph 1.2.11 of the Fourth Schedule to the leases and that despite management functions having been acquired by the Applicant RTM, the rents remained payable to the Respondent. The letter goes on to threaten proceedings for recovery of the arrears including winding up proceedings.[20]On 8 January 2021, the Application was struck out by the tribunal after hearing argument on the Respondent’s jurisdictional challenge as a preliminary issue. A detailed Decision confirming the tribunal’s reasons was issued on 27 January 2021. The reasons were broadly consistent with the arguments put forward by the Respondent on 9 November 2020 in its statement of case.[21]On 24 February 2021, the Applicant sought permission from the FTT to appeal the Decision which was refused. This was followed by an application to the UT for leave to appeal on the same grounds, which was also refused on the grounds that there was no reasonable prospect of a successful appeal. The UT commenting that the FTT was right to strike out the application and that “It might have been preferable for the determination to have been made under rule 9(3)(e) (no reasonable prospect of the application succeeding) or rule 9(3)(d) (abuse of process) but given the way in which the applicant’s case was presented the FTT was also entitled to make use of rule 9(2) (absence of jurisdiction)”. The law[22]The Respondent seeks a costs order under rule 13(1)(b) of the 2013 Rules. It alleges that the Applicant acted unreasonably in bringing and conducting the Proceedings. It does not seek an order for wasted costs under rule 13(1)(a).[23]Rule 13(1)(b) is engaged where a party has acted “…unreasonably in bringing, defending or conducting proceedings…”. The Tribunal’s power to award costs is derived from section 29(1) of the Tribunals, Courts and Enforcement Act 2007 (‘the 2007 Act’), which provides: “(1) The costs of and incidental to –(a) all proceedings in the First-tier Tribunal, and(b) all proceedings in the Upper Tribunal, shall be in the discretion of the Tribunal in which the proceedings take place.” It follows that any Rule 13(1)(b) order must be limited to the costs of and incidental to the Proceedings before this Tribunal. 6[24]Rule 3(1) of the 2013 Rules provides that “The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.” This extends to “dealing with the case in ways that are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties and of the Tribunal” (rule 3(2)(a)).[25]Both parties referred to the UT’s decision in Willow Court Management Co (1985) Ltd v Alexander [2016] UKUT 290 (LC), which outlined a three-stage test for deciding rule 13 applications. The Tribunal must first decide if there has been unreasonable conduct. If this is made out, it must then decide whether to exercise its discretion and make an order for costs in the light of that conduct. The third and final stage is to decide the terms of the order. The second and third stages both involve the exercise of judicial discretion, having regard to all relevant circumstances and there need not be a causal connection between the unreasonable conduct and the costs incurred. Given the requirements of the three stages, Rule 13 applications are fact sensitive.[26]At paragraph 20, the UT referred to the leading authority on wasted costs, Ridehalgh v Horsefield [1994] Ch, where Sir Thomas Bingham MR considered the expressions “improper, unreasonable or negligent” and said: ““Improper” means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalties. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct that would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.” “Unreasonable” also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner’s judgment, but is not unreasonable.”[27]At paragraph 24 of Willow Court, the UT said “An assessment of whether behaviour is unreasonable requires a value judgment on which views might differ but the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level. We see no reason to depart from the guidance in Ridehalgh v Horsefield at 232E, despite 7 the slightly different context. “Unreasonable” conduct includes conduct which is vexatious and designed to harass the other side rather than advance the resolution of the case. It is not enough that the conduct leads in the event to an unsuccessful outcome. The test may be expressed in different ways. Would a reasonable person have conducted themselves in the manner complained of? Or Sir Thomas Bingham’s “acid test”: is there a reasonable explanation for the conduct complained of?”[28]At paragraph 26, the UT went on to say: “We also consider that tribunals ought not to be over-zealous in detecting unreasonable conduct after the event and should not lose sight of their own powers and responsibilities in the preparatory stages of proceedings. As the three appeals illustrate, these cases are often fraught and emotional; typically those who find themselves before the FTT are inexperienced in formal dispute resolution; professional assistance is often available only at disproportionate expense. It is the responsibility of tribunals to ensure that proceedings are dealt with fairly and justly, which requires that they be dealt with in ways proportionate to the importance of the case (which will critically include the sums involved) and the resources of the parties. Rule 3(4) entitles the FTT to require that the parties cooperate with the tribunal generally and help it to further that overriding objective (which will almost invariably require that they cooperate with each other in preparing the case for hearing). Tribunals should therefore use their case management powers actively to encourage preparedness and cooperation and to discourage obstruction, pettiness and gamesmanship.”[29]The absence of legal advice is relevant at the first stage of the inquiry (paragraph 32) and, to a lesser extent, the second and third stages (paragraph 33). At paragraph 34, the UT referred to Cancino v Secretary of State for the Home Department [2015] UKFTT 00059 (IAC), which concerned a corresponding cost rule in the Immigration and Asylum Chamber. At paragraph 26 of Cancino the UT gave the following guidance: “First, the conduct of litigants in person cannot normally be evaluated by reference to the standards of qualified lawyers. Thus the same standard of reasonableness cannot generally be applied. On the other hand the status of unrepresented litigants cannot be permitted to operate as a carte blanche to misuse the process of the tribunal. The appropriate balance must be struck in every case. In conducting this exercise, tribunals will be alert to the distinction between pursuing a doomed appeal in the teeth of legal advice and doing likewise without the benefit thereof… Stated succinctly, every unrepresented litigant must, on the one hand be permitted appropriate latitude. On the other hand, no unrepresented litigate can be permitted to misuse the process of the tribunal. The overarching principle of fact sensitivity looms large once again.”[30]At paragraph 43 of Willow Court, the UT emphasised that Rule 13(1)(b) applications “…should not be regarded as routine, should not be abused to discourage access to the tribunal and should not be all0wed to become major disputes in their own right.” 8 The Respondent’s application Unreasonable conduct[31]The costs application was prepared by the Respondent’s solicitor who submitted that the Applicant had acted unreasonably in several respects, principally by:a. Bringing proceedings against the Respondent that were misconceived.b. Failing to take account of the concerns about jurisdiction, highlighted by the Respondent in its written objection to the transfer application.c. Failing to notify the tribunal of the handing down of the decision in the Fountain Retirement appeal within 14 days of 23 July 2020, or at all.d. Failing to notify the tribunal or the Respondent whether the Applicant wished to continue with the application after the stay and if so the legal basis for proceeding with it.e. Failing to engage with the Respondent’s correspondence on 8 September and 16 September 2020 about restarting the proceedings.f. Failing to file a Reply or otherwise deal with the jurisdictional issue set out in detail in the Respondent’s Statement of Case dated 9 November 2021, causing the Respondent to incur the considerable costs and expenses of preparing for a full hearing of the substantive issues on 8 January 2021.[32]The Respondent contends that as a consequence of the Applicant’s failures, the Respondent was put to considerable unnecessary expense which was disproportionate to the claim. The conduct of the Applicant was not therefore in keeping with the overriding objective and was unreasonable.[33]A reasonable person in the Applicant’s position would, the Respondent contends, have complied with the tribunal’s directions, engaged with the Respondent and considered the issue of jurisdiction prior to submitting the application or, at the very least after it had been set out in detail within the Respondent’s statement of case on 9 November 2020.[34]The Respondent also contends that it is incumbent on a person bringing an application to ensure that it is within the jurisdiction of the tribunal. Particularly when the Applicant is represented by a person holding themselves out as having knowledge and experience of FTT process procedure. The failure of RTMF to act with competence in this regard was negligent and unreasonable. 9[35]At the hearing Mr Cohen expanded on the Respondent’s grounds. He began by explaining that the Issues in the application were a matter of some consequence to the Respondent. The rent for the Wardens Flat for the 6 year period in question totalled over £50,000.00, moreover, if the challenge was successful it would effectively deprive the Respondent from any future rental income leaving it with a worthless asset.[36]In relation to the bringing of misconceived proceedings, Mr Cohen made some additional points. First he argued that not only was this always a dispute between the landlord and the management company about rent, not a service charge case, but that Mr Joiner either knew that to be the case or, that he should have known it, given his level of experience and expertise. In fact, the jurisdiction point was so obvious the Applicant did not need to be legally qualified to see that the application was doomed.[37]Secondly, that the Applicant was not a litigant in person, it was represented by RTMF throughout. A limited company who deployed Mr Joiner as its advocate and which held itself out on its website as having considerable expertise and experience of FTT law and procedure, equivalent to that of a solicitor. It was, Mr Cohen contended, evident from the quality of the submissions made in the s27A application and the statement of case filed on 16 October 2020 that Mr Joiner was a sophisticated litigant. Furthermore, the quality of the argument put forward in Mr Joiner’s skeleton argument and authorities bundle filed on 7 January 2021, demonstrate that Mr Joiner had a good functional working knowledge of the law. To regard the Applicant as a litigant in person (LIP) would he submitted, completely mis- represent the position. The Applicant had a contractual and tortious relationship with RTMF who was representing it, and if a costs order was made because the Applicant had been poorly served by RTMF, it could sue in the same way as a party represented by a poor law firm.[38]During the hearing, mainly in response to the submissions of Ms Coyle concerning the limits of Mr Joiners experience, Mr Cohen went further and speculated that Mr Joiner not only knew the FTT did not have jurisdiction to determine the Issues under s27A of the Act, but also that he was hoping to manipulate the tribunal process to bring the case within s27A. Mr Cohen based his conjecture on Mr Joiners role as advocate for one on the tenants in the Fountain Retirement appeal, which was a bilateral case between a landlord and its tenants, i.e. not a case which involved an RTM company. This was a case in which full submissions were made by the tenants under s27A, whom Mr Joiner represented at the FTT and the UT as sole advocate. Mr Cohen submitted that it would have been evident to Mr Joiner from his experience in this case that the proper respondent to a challenge under s27A of the Act was the RTM company, but because that did not secure the desired outcome, Mr Joiner issued against the landlord Respondent, knowing it was no longer responsible for the service charges, but in the hope of manipulating the tribunal into hearing the claim. The application was therefore not only misconceived but also vexatious. 10[39]To summarise, Mr Cohen argued that the application was so obviously misconceived that an unqualified LIP should have been able to identify its failings, that in any event, the Applicant was represented by Mr Joiner of RTMF who was a sophisticated litigator well versed in FTT law and procedure, and finally that Mr Joiner did recognise that this was a rent dispute with the landlord that could not be brought under s27A, but he bowled ahead anyway hoping to manipulate the tribunal process.[40]In relation to Mr Joiner’s failings since issue of proceedings Mr Cohen also made several submissions. There were, he contended, repeated failures to comply with directions. It was accepted that Mr Joiner had suffered serious health during the Proceedings, but this was not communicated to the Respondent until July 2021 in connection with directions on the Costs Application. Mr Cohen submitted that it could not have been impossible for either Mr Joiner or his staff to have communicated with the Respondent on this sooner.[41]Although not required by the directions to file a Reply, as the central issue concerning jurisdiction raised by the Respondent on 9 November 202o required a rebuttal, it was unreasonable for this not to have been filed earlier than the eve of the hearing. This left the Respondent having to wrestle with a 150 page skeleton argument and an additional 2oo pages of authorities, on the eve of the hearing.[42]Even then Mr Joiner failed to engage with the issues set out in the Respondents statement, he dismissed the jurisdiction issue in a few brief paragraphs and so fervent was his belief in his misplaced cause, that he went on twice to seek leave to appeal the FTT decision.[43]Mr Cohen submitted that Mr Joiners application to the UT bore scrutiny not just as an illustration of Mr Joiners continued intransigence, but because the UT’s findings indicate that the case was so bad it was able to find no less than three Rules under which it could be struck out, including, Rule 9(3)(e) no reasonable prospect of success and Rule 9(3)(d) abuse of process. He also conjectured that the UT’s comments could be taken to indicate that the remaining grounds under rule 9(3)(d) frivolous or vexatious might also have been in play.[44]In relation to Willow Court, Mr Cohen submitted that the question - is there a reasonable explanation for the conduct? required a value judgement, but ultimately it was for the Applicant to provide the reasonable explanation. Mr Cohen said that he could see no reasonable explanation because the only explanation proffered by Mr Joiner was that set out in paragraph 8 of his Reply to the Respondent’s statement on the Costs Application; which in summary is that the FTT got it wrong, the UT got it wrong and neither provided any statutory or legal authority in support of the proposition that the FTT did not have jurisdiction. This was further evidence of Mr Joiners staggering intransigence.[45]The question does not change, whether the Applicant is an LIP or represented. The answer may however change because it alters the criteria 11 against which the conduct is assessed. Mr Cohen submitted that the Applicant’s conduct should be adjudged against that of competently represented party. It may have been poorly advised by Mr Joiner to pursue this application, but the Applicant cannot now recast itself as an LIP. Ought the FTT make an order for costs[46]Mr Cohen submitted that at all stages the Applicant had behaved inappropriately, the consequence being that the Respondent had to carry the can in this case. The Respondent appreciated that Mr Joiner had been ill for a period, but he employs five staff and it is not difficult to respond to an email. The Respondent’s conduct was, Mr Cohen submitted, impossible to criticise. It agreed to the stay prior to statements of case being directed and it set out its jurisdictional challenge in full within its statement of case when directed to file it. The Respondent has complied with all directions of the tribunal unlike Mr Joiner whose 11th hour submissions put the Respondent in a tailspin.[47]The case was of significant consequence to the Respondent who began the proceedings £35,000 down and was obliged to defend the proceedings fully and properly because an adverse finding would have a prejudicial effect its proprietary interest. The Respondent was therefore obliged to incur substantial costs protecting its rights.[48]Mr Cohen further submitted that the Respondents costs were unnecessarily increased by Mr Joiner’s failure to respond to the Respondent statement of case in November 2020. Mr Joiner has since attempted to recast his conduct as a failure to understand the jurisdictional issue, but the claim failed for five separate reasons. It was always a case about rent which Mr Joiner knew full well, because that is how he described it in every document filed in the proceedings. He nevertheless proceeded with the case even after the jurisdictional challenge was set out fully in the Respondent’s 9 November 202o statement. Mr Joiner has appeared as advocate in many cases, his repeated appeals are vexatious and show that whatever the Respondent did, this was always going to end up before the tribunal because Mr Joiner believed in his case so fervently.[49]To summarise Mr Cohen submitted that an order for costs was appropriate when taking into account the degree of the Applicant’s failure, which the UT had characterised as an abuse of process; Mr Joiners expertise which included representing parties on serious UT cases; the way in which the claim was progressed by Mr Joiner; and the serious sums of money the Respondent was obliged to expend to deal with the claim. Terms of the order[50]As to the third limb of the three tests in Willow Court Mr Cohen invited the tribunal to summarily assess the costs on the standard basis. The 12 Respondent had appended to the Costs Application, two detailed statements of costs with supporting invoices and fee notes.[51]The total amount claimed under the first Statement of Costs dated 24 February 2021, which covers the period from commencement of proceedings to preparation of the first statement of costs - totals £24,384.24, broken down as follows:  Solicitor’s costs £11,557.70  counsel’s fees £8,750.00  VAT £4,061.54  Court fee £15.00[52]The total amount claimed under the second Statement of Costs dated 31 August 2021, which covers the period from preparing the first statement of costs up to and including the costs hearing - totals £10,827.00, broken down as follows: Solicitor’s costs £4022.50 counsel’s fees £5,000.00 VAT £1,804.50[53]The hourly rate claimed by the solicitors in the first statement of costs was, grade A fee earner at £250 per hour, grade B at £192 per hour, grade C at £161 per hour and grade D at £118 per hour, in each case exclusive of VAT.[54]In the second statement of costs, grade A at £275 per hour, grade B at £192 per hour, grade C £161 per hour and grade D £118 per hour, in each case exclusive of VAT.[55]The cost statements summarised the fee earners time split between attendances and work done on documents. Miss Crampin’s fee note shows fees for advice, drafting the statement of case and updating it, totalled £2,250, plus VAT of £650, together with a brief fee for the hearing on 8 January 2021, of £5,500.oo plus VAT of £1,100.00. Mr Cohen’s brief fee for the costs hearing was shown on the second statement as being £5,000 plus VAT of £1,000.00. The Applicant’s case Unreasonable conduct[56]The Applicant filed a response to the Costs Application on 11 August 2021, setting out its grounds of opposition. Ms Coyle also filed a skeleton argument expanding on some of the Applicant’s points, which she developed further at the hearing in response to Mr Cohens submissions. 13[57]She submitted that the jurisdictional issue was not obvious. If it had been the tribunal would have raised it when first considering the application. Instead the application was considered by the tribunal, along with the transfer application, following which directions were made concerning the stay.[58]Although the Respondent raised a concern about the tribunal’s jurisdiction in its objection to the transfer application, it provided no detail or grounds for any such challenge, just that the Respondent was taking advice. The fact that the Respondent consented to the stay is, Ms Coyle submitted, inconsistent with any argument that the jurisdictional point was so obvious you didn’t need to be legally qualified to spot it. Furthermore, the correspondence from the Respondent on the 8 September and 16 September 2020, does not return to the issue of jurisdiction. It was reasonable therefore for the Applicant to assume that the Respondent had dropped it having received advice.[59]Ms Coyle said that Mr Joiner did not respond to the correspondence because from about July 2020 onward he was undergoing treatment for cancer. He did not have access to emails during this period and although RTMF has five employees, they are not qualified to deal with FTT matters. The emails would therefore have been directed to Mr Joiner. Regrettably therefore, Mr Joiner was unable to attend to the case from July through September 2020. It was accepted that Mr Joiners ill-health was not communicated to the Respondent until July 2021, but it would, she submitted, have been evident from the details provided on the nature of the cancer treatment that Mr Joiner had been in serious ill-health for some time.[60]The Respondent did not particularise its case on jurisdiction until the 9 November 2020. Ms Coyle submitted that if the point was an obvious one, the Respondent should have applied for the application to be struck out at the earliest time, before incurring substantial legal costs on the preparation of the statement of case, witness statements and counsel’s fees. If assessed against the failure of the Respondent to help itself or the tribunal by making an appropriate application at an earlier time, the Applicant’s conduct cannot be adjudged to be unreasonable.[61]When asked why Mr Joiner had failed to engage with the jurisdictional challenge after 9 November 2020, by filing a Reply, Ms Coyle said that the time frame to reply by 18 November 2020 was quite short for an LIP, and also that, at the time, Mr Joiner did not believe jurisdiction was an issue. This was because he was seeking was a determination that the rent was not a service charge under s18 of the Act, which he believed fell squarely within a s27A application. Ms Coyle said that the problem was, Mr Joiner’s failure to understand the distinction between leaseholders as tenants and leaseholders as shareholders of the RTM. Mr Joiner now appreciates that his stance was erroneous in law, but he isn’t legally qualified and at the time genuinely believed that he had named the correct parties to the proceedings.[62]Ms Coyle submitted that there was a reasonable explanation for the conduct of the Applicant. It had received a letter from the Respondent on 16 14 December 2019, threatening legal proceedings, including winding up proceedings, if the outstanding rent for the Wardens Flat was not paid. Mr Joiner did not believe that the leaseholders were liable to pay the rent and following recent tribunal success in challenging notional rents for a similar Wardens Flat, decided to issue the Proceedings under s27A. This was not designed to harass the Respondent but because Mr Joiner genuinely believed it to be the correct jurisdiction to challenge whether the rents were relevant costs under s18 of the Act.[63]Ms Coyle said that Mr Joiners failure to issue the Proceedings against the correct parties was a consequence of his lack of legal knowledge concerning the legal status of the leaseholders. The Proceedings were intended to determine a genuine issue and not to harass the Respondent, who had not helped itself by sending a letter before action that cast the rent as a service charge item that the Applicant was able to recover from the leaseholders under their leases. Had Mr Joiner named the correct parties to the claim, it was a solid claim which would have proceeded.[64]Ms Coyle pointed to various paragraphs in Mr Joiner’s statements which highlight his genuine, albeit mistaken belief, that the FTT did have jurisdiction to hear the claim, including paragraph 19 of Mr Joiners request to the UT for permission to appeal. Mr Joiner explains in paragraph 19 why in his view the leaseholders did not need to made parties to the proceedings. It would, he states, be an absurdity for the leaseholders to be in dispute with themselves and create a conflict of interest with the directors of the Applicant who were also leaseholders. The leaseholders were in agreement with the Applicant on the Issues and would not oppose the application, it would therefore be a waste of time and resources for all parties and contrary to the overriding objective.[65]Ms Coyle also took me to the grounds for Mr Joiners appeal in which he states that it must be the case that if a landlord (in this case the Applicant) is uncertain whether a particular item is chargeable and payable as service charge, the FTT is the appropriate tribunal to determine this under s27A. Mr Joiner’s reason for issuing and continuing the proceedings was to obtain a determination of the payability and reasonableness of the Wardens Flat rent as part of the service charge. It is not, she submitted, unreasonable or vexatious to challenge a letter before action through proceedings and Mr Joiners has put forward consistent sound reasons for the challenge, he just issued against the wrong parties because he genuinely did not understand why the leaseholders needed to be joined.[66]Ms Coyle said that this was not a case where the Applicant had attempted to mislead the tribunal or had been dishonest in its representations. The Issues in the claim were not she submitted misconceived or vexatious. Mr Joiner had already succeeded in a similar case before the FTT and genuinely believed that this case was correctly pursued. He simply misunderstood how the procedure applied in relation to this particular application, also, he was less attentive to the directions due to a period of serious ill-health. 15[67]Ms Coyle submitted that when assessing the standard against which the Applicant’s conduct should be adjudged, it should be that of an LIP. RTMF is the company secretary of the Applicant and was representing the Applicant in these proceedings for no additional fee. Mr Joiner is not legally qualified. Although RTMF holds itself out as having some expertise in FTT proceedings, the representations on its website are just in relation to RTM applications including applications to the FTT. Mr Joiners tribunal experience is mainly in relation to RTM applications under the 2002 Act and his website does not hold RTMF out as having any expertise in service charge cases.[68]Ms Coyle said that Mr Joiner was of course able to research the law independently because these days it was all accessible on the internet, but the fact that he bombarded the tribunal with authorities was more indicative of a lack of relevant knowledge than any real expertise. The Applicant is a group of retired people represented by Mr Joiner who is not legally qualified and at best can only be regarded as a McKenzie friend with no expertise in s27A applications. He is akin to a lay representative who is unfamiliar with substantive law and procedure and his conduct should not therefore be regarded as unreasonable.[69]Ms Coyle said that the issue in the Fountain Retirement appeal began life as a dispute concerning the operation of s94 of the 2002 Act, but was eventually determined under s27A of the Act. Furthermore, the appeal involved two cases, one of the other respondents was represented and she led the representations for the leaseholders, not Mr Joiner.[70]Mr Cohen made several points in response to Ms Coyle’s submissions. He objected to Ms Coyle introducing evidence of Mr Joiner’s ill-health in her skeleton argument and in her submissions. Mr Joiner had not raised his health as a reason for failing to comply with directions in the Proceedings when he responded to the Costs Application. Mr Cohen therefore invited the tribunal to disregard the submissions concerning Mr Joiner’s ill-health as being presented too late for the Respondent to fairly consider them. When it was suggested that Mr Joiner was present and could give evidence on this point, Mr Cohen said that he did not want to be bounced into cross- examining Mr Joiner on his health, he simply asked the tribunal to disregard Mr Joiner’s illness as providing any justification for the delays in this case.[71]Mr Cohen commented that Ms Coyle’s submissions concerning a couple of paragraphs in the application and the Applicant’s statement of case supported some elision between the issue of rent and service charge which in his view was not supportable. He submitted that the application had always been about the construction of the lease which was clear from paragraphs 12 and 16 of the Applicant’s statement of case and from the submissions in Mr Joiners skeleton argument, in particular conclusion at paragraph 57. Determination was always a two-step process, the first step being to determine the nature of the charge (i.e. is there liability to pay rent) and only if then do you get to step two, which is whether the rent is payable as service charge. As the FTT had no jurisdiction to determine the first step the application was misconceived. 16[72]Mr Cohen submitted that the motivation for the application was clearly set out in the documents submitted by Mr Joiner within the Proceedings, this was always a case about rent and not service charge, and his re-packaged submissions within the Costs Application should not be given any weight.[73]Mr Cohen also submitted that the Respondent’s conduct was not remotely relevant to the Costs Application. Had it raised the issue of jurisdiction earlier, it would have made no difference such was the fervency of Mr Joiners conviction that the FTT did have jurisdiction. The Respondent cannot be criticised for agreeing to a stay because statements of case had not been exchanged at that stage. Furthermore, it is unlikely to have been causative of any consequence, because even when the jurisdictional issues were subsequently pleaded in full Mr Joiner simply didn’t accept that the FTT lacked jurisdiction.[74]Moreover, even had the Respondent requested a preliminary issue hearing in September 2020, given the short timetable provided for in the September Directions, the issue would still more likely have been dealt with as a preliminary point at the substantive hearing. Ought the FTT make an order for costs[75]Ms Coyle submitted that the tribunal ought not to make an order costs because the Applicant was not legally represented, and the application was a genuine attempt to obtain determination as to whether that Wardens Flat rent is payable as a service charge.[76]Mr Joiner is not a specialist in section 18 or s27A of the Act . Although he has some specialism in the acquisition of rights to manage, the process of setting up RTM companies and of tribunal procedure in relation to RTM applications, he has little experience of service charge applications and made a genuine mistake about who should be the proper respondent to this application. In short Ms Coyle submissions were that Mr Joiner should be treated as a lay representative, and she relied in her skeleton argument on the observation in Willow Court – “for a lay person to be unfamiliar with the substantive law or with tribunal procedure, to fail properly to appreciate the strengths or weaknesses of their own or their opponent’s case, to lack skill in presentation, or to perform poorly in the tribunal room, should not be treated as unreasonable.”[77]Ms Coyle also submitted that this was not a case where Mr Joiner had sought to mislead the FTT or the Respondent, it was not one of zealous deceit or harassment, if anything Mr Joiner was following the issues identified by the FTT in the September 2020 directions.[78]To the extent that there was delay in complying with directions Ms Coyle submitted that this was due to ill-health and not improper motive Also, Mr Joiner’s conduct cannot be described as unreasonable just because the 17 Applicant was unsuccessful or because other more cautious legal representatives might have acted differently.[79]Furthermore, the Respondent had not helped itself in this case. It could have applied for the jurisdictional issue to be determined at a preliminary hearing before incurring the substantial costs of preparing its statements and instructing counsel, but did not. The terms of any order[80]In his reply to the Respondents application for costs, Mr Joiner did not provide any argument on terms of any order or a detailed response to the Respondent’s Statements of Costs, other than to state that the total costs claimed by the Respondent were wholly disproportionate and that the Respondent was seeking to quash a legitimate claim by the sheer weight of its financial resources without any consideration of proportionality. Mr Joiner submitted that the Applicant’s resources were a factor because it is a management vehicle owned by retired individuals in sheltered accommodation.[81]In her skeleton argument Ms Coyle reserved the right to comment on the individual items of expenditure at the hearing where she made the following challenges: First Statement of Costs(a) In relation to the hourly charge out rates for fee earners, Ms Coyle offered no challenge.(b) Ms Coyle challenged the total hours charged on attendance on the client by letter out/email/telephone of 25.8 hours as excessive given that the issues were predominantly legal and would not involve that degree of client attendance. Mr Cohen submitted that the attendances were over a period of time and concerned the potential loss of 125 year rental.(c) Ms Coyle thought the attendance on opponents of 3.5 hours was also high having only seen a couple of emails and two letters from the Respondent’s lawyers.(d) Ms Coyle also submitted that 13.7 hours for letters out/email/telephone attendance on others was excessive and questioned who the others were. Mr Cohen said the time had been spent liaising with counsel and Falcon Chambers to organise conferences and with the FTT chasing progress after the stay.(e) Mr Cohen also confirmed that the hours claimed in the Statements of Costs reflected actual time spent by the fee earners and were not based on unit costs.(f) Ms Coyle challenged the 6.2 hours claimed by the solicitors for the hearing on the basis that it lasted less than half a day. Mr Cohen said that the time possibly included travel time 18 together with pre-and post-hearing calls with counsel and the clients.(g) In relation to documents Ms Coyle noted that there had been extensive use of counsel to draft the statement of case, advise on the issues and represent the Respondent at the hearing. She therefore challenged the amount charged for the preparation of bundles, considering the applicant statement and drafting instructions to counsel as being too high. Ms Coyle also thought three hours was excessive for preparation of the first Cost Statements but that one and a half hours might be reasonable.(h) Mr Cohen submitted that total time spent on documents over the period of time in question is not excessive given that the court bundle ran to some 900 pages.(i) Ms Coyle challenged counsel’s fees of £5,500 plus VAT for a half day hearing as being excessive but did not suggest what level of fee would be reasonable for counsel of Ms Crampin’s seniority. Mr Cohen said that if one assumed counsel’s charge out rate to be about £300 per hour, the fee note would include preparation time of approximately 12 hours, which he did not consider unreasonable given that this was a legally heavy matter involving a 900 page bundle. The brief fee was largely a consequence of the way Mr Joiner had gone about conducting his case. Ms Coyle disagreed submitting the counsel drafted the statement of case, was well acquainted with the issues and any sensible lawyer could see that the late submissions from Mr Joiner did not take his case much further. Counsel would have gone through any additional material quickly and 12 hours preparation for that is inflated. Second Statement of Costs (a) There was no challenge to the fee earner hourly rates charged. (b) Ms Coyle made the same challenges to the time spent on letters out/email/telephone attendances with the client as above, reiterating that the costs application was entirely a legal issue and not one that needed lengthy instructions from the client. Mr Joiner’s appeals did not involve the Respondent and no costs should be allowed for time spent on consideration of Mr Joiner’s appeals other than consideration of the short decisions of the FTT and UT refusing leave to appeal. (c) Ms Coyle challenged the 4 hours claimed for attendance on others, given that appeared to be just for liaising with counsel’s chambers and the FTT on the listing of the costs hearing. (d) Ms Coyle also challenged the two hours spent drafting the short reply to Mr Joiner’s response and the preparation time 19 for the costs hearing of three hours as excessive. The court bundle was prepared for the substantive hearing and only needed updating with the costs application documents. (e) Ms Coyle challenged Mr Cohen’s fee of £5000 for a half day costs hearing on the basis that the work did not compare with that carried out for the substantive hearing by a more senior counsel whose fees were almost the same. Mr Cohen said that the costs application involved very different issues, he had to consider a 900 page bundle which covered the substantive hearing and had spent the best part of a day preparing, but was content to leave determination of the reasonableness of his fee to the tribunal. The tribunal’s determination Unreasonable Conduct[82]The threshold for making a Rule 13(1)(b) costs order is a high one. As stated at paragraph 24 of Willow Court “…the standard of behaviour expected of parties in tribunal proceedings ought not to be set at an unrealistic level.”[83]I have first considered whether the Applicant had acted unreasonably in bringing and conducting the Proceedings. In doing so, I only considered the period from 24 April 2020, being the date of the section 27A application, until the conclusion of the hearing on 8 January 2021. The Applicant’s conduct on the appeals’ is not relevant, other than to possibly confirm a pattern of motivation or behaviour already identified when considering the Applicant’s conduct in the Proceedings.[84]The Respondent argues that the Applicant is not an LIP, it was represented by a sophisticated litigator whose conduct should be viewed against the standard one would expect from a legally qualified representative. Mr Joiner is certainly experienced in law and procedure relating the RTM legislation under the 2002 Act, as boasted on his website, and has extensive experience of representing RTM companies before the FTT on RTM applications and to a lesser extent the UT. However, there was no compelling evidence that Mr Joiners company, RTMF, holds itself out as having expertise on any other area of leasehold dispute including service charges. RTMF, is the Applicant’s corporate company secretary and Mr Joiner represented the Applicant in that capacity, presumably as part of the secretarial services provided for RTMF’s agreed fees.[85]Mr Joiner did present lengthy reasoned argument citing appropriate authorities in support of his primary case, much of which appears to follow the line of argument that was successfully deployed by the respondents to the Fountain Retirement appeal. However, the limits of Mr Joiners knowledge and experience are apparent in his failure to address some significant and material differences in the lease terms to that of the appeal case, or to correctly work out who the proper applicant and respondents 20 should be to a s27A application affecting the leaseholders liability to pay, the RTM companies management obligations and also the proprietary interest of the landlord under the leases.[86]Mr Joiners involvement as representative of the Batworth Park House leaseholders in the Fountain Retirement appeal, appears from the UT decision to have been minimal, if he made any representations they are not mentioned. There is nothing in the decision to indicate that Mr Joiner’s knowledge of the substantive law and procedure of service charges or of general legal principle, was such as to make it fair for him to be held to the standards of a qualified lawyer. The case started in the FTT, a jurisdiction that encourages litigants to represent themselves regardless of their level of sophistication, and they shouldn’t be discouraged from appealing those decisions to the upper courts for fear it could be construed as giving them a gloss of professionalism, that might in turn cause them to be held to a higher standard.[87]Indeed, the limits of Mr Joiner’s expertise became painfully apparent at the substantive hearing where he struggled and ultimately failed to understand the fatal flaw in his case. It was a basic misapprehension about the rights and powers of the leaseholders as shareholders of the Applicant, as against their proprietary rights as leaseholders under their leases. Mr Joiner may have appreciated that a court cannot determine the liability of a non-party to pay anything, but he made what is a common error of believing that the leaseholders were, in effect, represented though their shareholding in the Applicant.[88]His belief was strongly held, he referred to it in both his appeals and in his response to the costs application. I am satisfied from observing Mr Joiner at the substantive hearing and from considering his representations and submissions since, that Mr Joiner is a serious and sincere representative who genuinely believed in his argument, genuinely believed that the FTT and the UT had got it wrong and that he was only able to reconsider his position after instructing counsel to represent him on the costs application.[89]I do not accept that there is any evidence to support Mr Cohen’s conjecture that Mr Joiner knew the application was vexatious but nevertheless pursued it with intent to mislead the tribunal and harass the Respondent. The reasons given by the UT when refusing Mr Joiners application for leave to appeal are not relevant. The UT did not consider Mr Joiner’s conduct or make any finding of unreasonableness against the Applicant. The UT simply confirmed that the application was liable to be struck out under three Rules, including Rule 9(3)(d) – for abuse of process. It did not suggest that the proceedings were either frivolous of vexatious.[90]There is nothing inherently unreasonable in pursuing an unsuccessful case, however it may be unreasonable to pursue a case that is totally devoid of merit, particularly if a fatal weakness has been spelt out by the other party. The Issues in the case were not devoid of merit, the Applicant sought a perfectly legitimate determination of the payability and reasonableness of 21 the Wardens Flat rent. The fatal weakness was the absence of any leaseholder as a party.[91]The question is whether given Mr Joiner’s familiarity with tribunal procedure, it should have been obvious to him when issuing the Proceedings, or certainly after receiving the Respondent’s statement of case on 9 November 2020, that without joining at least one leaseholder as a party the application was bound to fail.[92]Ms Coyle argues that jurisdiction issue was far from obvious and I agree. It was not picked up by the tribunal when the application was first considered or when substantive directions were made in September 2020. The Respondent mentioned in its objection to the transfer, that it was seeking advice on a jurisdictional point but did not actually particularise its concerns until filing its statement of case on 9 November 2020. A statement that was settled by counsel after providing advice on 3 November 2020. Mr Joiner may be familiar with RTM legislation and tribunal procedure, but he is not a lawyer. Significantly, the Respondent who was represented by solicitors throughout, nonetheless required advice from counsel on the jurisdictional point and instructed counsel to settle the arguments put forward in its statement. This is completely inconsistent with Mr Cohen’s submission that the jurisdictional issue was so obvious it didn’t need a lawyer to spot it. Furthermore, Mr Joiner’s misapprehension about the status of leaseholders as shareholders, is all too common for his misapprehension on this point to be regarded as unreasonable.[93]Mr Joiner’s failure to engage with the Respondent’s argument after the 9 November 2020 is more surprising, although explicable. Ms Coyle said that he didn’t file a reply to the jurisdictional issue because he thought the Respondent had got it wrong. Mr Joiner instead focussed the limited time available to him on developing his skeleton argument in support of the substantive case, presumably anticipating the tribunal would dismiss the strike out application as a preliminary matter.[94]It is clear from the decision in Willow Court that although Mr Joiner is not a lawyer it does not follow that a costs award should never be made. His conduct needs to viewed in the proper context, including the standard or skill expected of someone with Mr Joiners experience, but without the benefit of professional legal advice. In considering his conduct after the 9 November 2020, I accept that it would have been helpful for Mr Joiner to have adopted a more flexible approach and to have given greater respect to the Respondent’s statement. His experience has, if anything, inspired over- confidence in the rightness of his arguments and a rather combative approach to Proceedings, which in this case has resulted in significant work for the parties and the tribunal. However, the jurisdictional point was not obvious in itself, or easy for a non-lawyer to grapple with, based only on the arguments set out in the Respondent’s statement. On balance therefore I do not find that Mr Joiner’s failure to properly appreciate the weakness of his case after the 9 November 2020, to be unreasonable. 22[95]As to the Respondent’s other grounds, which include Mr Joiner’s failure to comply with directions, in particular the direction to notify the tribunal of the handing down of the decision in the Fountain Retirement appeal. I find that neither party complied fully with that direction, in fact there was no response from either party until the tribunal wrote to them on the 2 September 2020 to ask what was happening and whether there were any outstanding issues. Although parties should comply with directions, they often fail to comply fully, and the late compliance by each party in this instance does not amount to unreasonable conduct.[96]Mr Joiner’s failure to engage with the Respondent’s correspondence of 8 and 18 September is also characterised as unreasonable conduct. Ms Coyle explained that Mr Joiner’s failure to attend to the letters from the tribunal and the Respondent in September 2020 was a consequence of treatment he was having for cancer. Mr Cohen objected to late submissions on this point but did not suggest that Mr Joiner had not been ill, just that the recent submissions should be disregarded because he didn’t communicate it at the time or mention it in his response to the costs application.[97]To the extent that it may be relevant to the Respondent’s allegation of unreasonable conduct, I have not needed to consider the submissions concerning Mr Joiners health. The tribunal issued substantive directions on 16 September 2020 which Mr Joiner complied with. His failure to engage with the Respondent over a comparatively short period of time in September 2020 does not amount to unreasonable conduct, with or without any consideration of Mr Joiner’s health.[98]To summarise, for the above reasons I do find that the Respondent has demonstrated that the Applicant had acted unreasonably for the purposes of Rule 13(1)(b) of the Tribunal Rules. As the application has failed to pass the first stage of the test set out in Willow Court, it follows that it is unnecessary to go on to consider stages two and three. Accordingly, the Respondent’s cost application is refused. Name: Judge D.Barlow Date: 22 November 2021 23 Rights of appeal By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).