Case No. UKUT-282-(LC)-UTLC-Case-Number:-LC-2022-117

46.Mr Loveday also takes issue with the way in which the FTT applied the test, even if his primary argument fails. As discussed, there is a two-stage test and the FTT had to look both at process and at outcome, which it did in its paragraphs 80 and 81.47.At its paragraph 80 (set out above at my paragraph 25) the FTT judged that on receipt of the Hydrock report, seeing how different was its conclusion from that of its earlier reports and of other reports of which it was aware, the sensible thing to have done would have been to commission a further report. “In failing to instruct a second report itself, the tribunal concludes that Assethold probably failed to act reasonably.”48.We noted above (at paragraph 33) that the Court of Appeal in Waaler took the view that the assessment of a landlord’s process is a rationality test. Mr Denehan argued strenuously that in the circumstances the only rational reaction to the Hydrock report was to commission another one in light of the report’s own flaws and of the content of the other reports available to the landlord including Hydrock’s previous report, given that there had been no change of circumstances since the previous reports had been delivered.49.There are two difficulties with that submission. The first is that the final Hydrock report, and the assessment of risk as “intolerable”, was not said to be made on the basis that circumstances had changed. It was a report based on a different inspection, in which different processes were followed and different aspects of the building examined. So the fact that this report reached a different conclusion from Hydrock’s and 4sites’s previous reports did not mean that there was a contradiction and did not itself mean that the latest report was wrong. The other difficulty is that I fail to see how any landlord, faced with a report from a reputable company signed by three professionals saying that the fire risk in the building was intolerable, could be said to be irrational for putting interim measures in place pending further reports or remedial work. 50.It might well be that a confident landlord, noting some of the flaws in the report that were evident to the careful but unqualified reader – in particular that the report was using standards appropriate for buildings more than 18m high, and that the risk matrix had been misapplied (see paragraph 23 above) – might have decided to do nothing pending a further report and that that would have been a rational choice in the circumstances. But I accept Mr Loveday’s argument that it was rational to act as this landlord did, and I take the view that the FTT’s conclusion to the contrary could not have been justified on the evidence before it.51.Turning to the FTT’s assessment of the outcome, in the second stage of the test, at its paragraph 81 the FTT concluded that because the Hydrock report was (to put it bluntly) wrong, the landlord’s decision to follow its advice was not reasonable. It did not look at a range of reasonable choices of outcome open to the landlord (Waaler paragraph 37), because it took the view that only one response could have been reasonable. That is not an automatically incorrect application of the test; there might well be cases where there truly is only one reasonable response. But did the FTT rationally conclude that this was such a case?52.The FTT went on to explain in paragraph 81 that it accepted the argument that “these costs were unnecessary, and that unnecessary costs will not have been reasonably incurred”.53.Mr Denehan argued that this was right. “The First Tier Tribunal could only objectively assess the outcome of Assethold’s decision-making process by making a finding as to whether or not the waking watch was objectively necessary” (skeleton, paragraph 28). And Parliament intended that the landlord, rather than the tenants, should take the risk under section 19(1)(b) of professional advice being incorrect just as the landlord rather than the tenant takes the risk of the work done not being of a reasonable standard.54.I disagree. What the FTT had to decide was whether it was objectively reasonable for the appellant to have put a waking watch in place as an interim measure in reliance upon the report in March 2015, in the light of what it knew or could readily have found out and of what the report said. Instead, the FTT made a decision on the basis of the hindsight provided by the evidence of the parties’ expert witnesses and following their cross-examination. As it turned out, as the FTT found, the report was wrong and it held that therefore expenditure incurred in reliance upon it could not have been reasonably incurred. That is an objective assessment, but it is one that depends upon the hindsight provided by the leaseholders’ expert witness. What the FTT had to look at was not what it knew as a result of the proceedings, but at whether the expenditure was reasonable in the circumstances and on the basis of the information available when the cost was incurred. 55.I have already said that to put in place an interim safety measure in response to a report that said the fire risk was “intolerable” cannot be said to have been irrational on the information then available. Nor can it be said to have been unreasonable. What the FTT had to decide was whether setting a waking watch in both buildings, pending further work or investigation, was a reasonable response to the advice the landlord received. It need not be the only reasonable outcome. But on the facts of this case only a supremely confident landlord would have done anything else. It had a report signed by three fire safety professionals telling it that the risk to life from fire was “intolerable”. There were obvious points to query, and the landlord’s agent raised some of them. But the writers of the report stood their ground and the final report made the same recommendation as the draft. I fail to see that the adoption of one of the interim measures recommended could be described as unreasonable, provided it was adopted purely as an interim measure, for as long as was needed either to implement the report’s main recommendations or to establish on taking further advice that they were not needed. There is no appeal from the FTT’s finding that that period was one month.56.Accordingly, while the FTT applied the correct test, on the evidence available to it it misapplied that test and its decision is set aside.