[2023] UKUT 108 (LC)

Mr Gubbay’s conduct and the conflict of interest

Mr Gubbay’s conduct was the main focus of the appeal hearing; Mr Verduyn argued that Mr Gubbay acted entirely in his own interests, and that GPIMCL allowed itself to be used for Mr Gubbay’s own interests, and that that made the bringing and conducting of the proceedings unreasonable on both their parts.

Mr Gubbay’s own conduct and the conflict of interest between him and GPIMCL was clearly a matter of concern for the FTT at the hearing, the transcript of which I have read. It came to the conclusion that Mr Gubbay had really not understood the position he had adopted; his intention was to have service charges paid to Epworth SW Limited as agent for GPIMCL, but he had failed to understand that the GPIMCL was nevertheless entitled to the service charges and that in bringing the application he was asking the FTT to order the leaseholders to make payments to a company controlled by shareholders he did not trust.

The FTT concluded, as I said above, that Mr Gubbay believed he was doing the best for everyone, including the appellants. Having read the transcript of the hearing I take the view that that was a view that it was open to the FTT to have taken.

At the hearing of the appeal Mr Verduyn placed great emphasis on the receipt of rent by Ilfracombe Resorts Limited for the holiday lettings (see paragraph 29 above). He referred to the £2.1 million as having been “misappropriated”, and I note that the £2.1 million was mentioned only obliquely in the appellants’ application to the FTT for costs, and was not referred to at all in Mr Verduyn’s skeleton argument on that application or in the grounds of appeal to the Tribunal. As Mr Allison said, that was the first time that such an accusation had been made. Mr Gubbay in cross-examination in the hearing of the service charges application made it clear that he was willing to account for it to the long leaseholders; of course, none of the appellants wanted him to do so because they could not put themselves in the position of having affirmed their leases. As I said above, the FTT was aware of the receipt of rent from the holiday lettings when it found that Mr Gubbay was trying to do the best for everyone. The FTT was best placed to make that assessment and I do not see any reason for the Tribunal to interfere with it, especially as this was not one of the grounds for making the costs application in the first place.