[2023] UKUT 135 (LC)

Permission to appeal was given by the Tribunal on the following two grounds:

Having set out the background to the appeal at some length, I can deal with the argument more concisely, because well into his oral submissions Mr Hardman made another surprising concession when he informed the Tribunal that the respondents did not seek to uphold the FTT’s decision on the grounds it had given. In particular he suggested that the three reasons given in the original decision which had survived the application for permission to appeal were insufficient to justify an order for costs. It was not unreasonable without more for an unrepresented applicant to pursue an application for recognition without the support of at least 50% of the qualifying tenants. Nor was it a sufficient reason to award costs that the application had not been signed by all the members of the Association. Nor was it unreasonable, without more, that the application had not been withdrawn earlier than it was.

Mr Hardman’s concession was subject to an important rider, to which I will return, but in principle each of the points he made was realistic. As they involve the FTT’s core reasoning, and as Mr Hardman did not concede that the appeal should be allowed, it is necessary for me to explain in a little more detail why I agree that the reasons given by the FTT did not justify the making of the order for costs it eventually made against Mr Connell alone.

It is important to begin by addressing Mr Connell’s role in the proceedings. There is no power in the FTT Rules to make a third-party costs order (unless it is an order for wasted costs against a representative). The FTT has the power to make an order for costs under rule 13(1)(b) only against a person “bringing, defending or conducting proceedings”. The FTT did not address the question whether Mr Connell had done any of those things in its original decision, in which it did not distinguish between things done by the Association and things done by Mr Connell. It was not until it refused him permission to appeal that it considered Mr Connell’s position separately from that of the Association. At that point it concluded that an order could properly be made against him because he was the Secretary of the Association and had signed the application form and other documents and attended the hearings. Although it did not say so, the FTT’s decision is only explicable on the basis that it took Mr Connell to be the person bringing and conducting the proceedings.

A tenants’ association will not usually have a legal personality in its own right. It will be an “unincorporated association”, meaning a group of individuals who join together on agreed terms to further a joint purpose (in Conservative and Unionist Central Office v Burrell [1982] 1 WLR 522, 525, Lawton LJ described an unincorporated association as “two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules …”). Except where a statute permits it to do so, an unincorporated association cannot sue or be sued: London Association for the Protection of Trade v Greenlands Ltd [1916] 2 AC 15.

By rule 26(1) of the FTT’s Rules proceedings are brought by “an applicant” sending an application to the tribunal. By rule 1(3) an “applicant” means “the person who commences tribunal proceedings”. Although those provisions are a little circular, they make it clear that only “a person” may bring proceedings in the FTT.

By section 5 and Schedule 1 of the Interpretation Act 1978, except where there is a contrary indication in the context, the word ‘person’ includes ‘a body of persons corporate or unincorporated’, and so includes an unincorporated association.

Mr Hardman argued that an unincorporated association could not make an application for recognition under section 29 in its own name, but he did not refer to the Interpretation Act and having regard to its terms it does not seem to me that his argument is correct. An unincorporated association can be a “person” for the purpose of a statutory provision unless the context otherwise requires. I In my judgment there is nothing in the context to require a more restricted meaning to be given to that word where it is used in the FTT Rules. An unincorporated Association can therefore make an application in its own name.

Of course, the Interpretation Act does not change the nature of an unincorporated association and does not confer on it a separate legal personality, distinct from that of its members. The Association is simply a shorthand or collective term for the members of the Association when they act in connection with their common purpose within their rules.

Whether that means that proceedings brought in the name of the Association are to be treated as having been brought by the whole of its membership, although not named individually and perhaps not even aware of what is being done on their behalf, is a point on which I did not receive submissions. There is no procedure in the FTT Rules akin to rule 19.8 of the Civil Procedure Rules, which permits a claim to be brought by one person as representative of a group of persons with the same interest, but where a tenants’ association brings an application in its own name it might reasonably be understood as doing so on behalf of its members. The application in this case appears to have been made in the Association’s name on that basis (the application expressly stated that “we seek recognition”).

Fortunately, it is not necessary for me to decide the consequences of an application made in the name of the Association because the respondents made it clear in their response to the application for permission to appeal that they did not want an order for costs against the Association or its members.

Where does that leave Mr Connell? In my judgment he cannot be said to have brought the application. It is true that he signed the application form, but he did so expressly in his capacity as Secretary of the Association and therefore as its agent. It was in that capacity that he signed documents and corresponded with the FTT, and in each case the party taking those steps was the Association itself. Mr Connell did not purport to make any application of his own, nor did he claim to do so as a representative of the Association (the part of the application form identifying a representative was left blank). Nor did the procedural judge who gave the original directions consider that Mr Connell was the applicant; he correctly identified the Association in that capacity. Nor even did the FTT when it made its decision consider that Mr Connell was the applicant, since it identified him on the front page of its decision as a “Third Party”, although no order appears ever to have been sought or made joining him as a party to the proceedings.

There was therefore no basis on which it could be said that Mr Connell personally was responsible for “bringing” the proceedings. Nor did he “conduct” them. The proceedings were conducted by the Association, making decisions through its management committee and giving effect to those decisions through Mr Connell, its agent and Secretary.

The FTT seem to have considered that Mr Connell’s attendance at hearings was a ground for making him personally liable for the costs of the proceedings, but it did not suggest that he misconducted himself, or explain why his attendance should make him any more an appropriate subject for an order than any other member of the association.

The Association did nominate a representative, who attended the two telephone hearings and spoke on its behalf. That representative was Mr Fernie. No application for the costs of these proceedings has been made by the respondents against Mr Fernie, despite their suggestion that the application was simply a cover for him to pursue a vendetta against them. By representing the Association at hearings Mr Fernie could be said to have conducted the proceedings, and if he truly was acting for an improper purpose, as suggested, then a wasted costs order could also have been sought against him under rule 13(1)(a).

In my judgment there was therefore no basis on which an order for costs could properly have been made against Mr Connell personally. In short, he did not bring or conduct the proceedings and did not fall within the scope of the rule.

Even if I am wrong and Mr Connell should be regarded as the person bringing and conducting the application, I agree with Mr Hardman that, without more, taking the steps identified by the FTT was not sufficient to amount to unreasonable conduct. It is apparent from the original application, and from the statement of case, that the Association proceeded under a misconception of which it was not disabused by the FTT until the hearing on 7 May 2021. They had read the Tribunal’s decision in Rosslyn Mansions and appear to have understood that the FTT had a residual discretion to grant recognition even where an association did not command majority support (as indeed it had before the making of the 2018 Regulations, and even after that if the regulation 4(5) conditions are met). Whether they were in fact aware of, or understood, the 2018 Regulations, and whether they understood that the usual threshold was 50% or believed that it was still 60%, as it had been in practice before Rosslyn Mansions, they clearly believed that the Tribunal could overlook that requirement in an appropriate case. They may have been encouraged in that view by what was said in the HMCTS information leaflet about the FTT’s power to recognise an association without majority support where a landlord had failed to comply with a direction to supply details of qualifying tenants. They had made such a request and later asked the FTT to make such a direction.

Putting oneself in the position of a lay person having that flawed understanding of the FTT’s powers, the material included in the Association’s statement of case explaining its members’ view that the estate had been mismanaged and that there was collusion between the landlords and the Residents’ Group, would all have been highly relevant to the exercise the Tribunal had described in Rosslyn Mansions. The FTT does not appear to have undertaken that exercise or to have tried to understand for itself why the application was being advanced in the way it was. Had it done so it would have identified the basis of the mistake.

For a lay person to misunderstand the law is not unreasonable. I therefore agree with Mr Hardman that the first example of conduct relied on by the FTT did not fall below the objective standard of unreasonableness.

It is not clear to what extent, in the end, the FTT relied on the absence of signatures from the list of the qualifying tenants supplied with the application. That was the second of the two matters referred to in the original decision, but it was qualified by the suggestion that the deficiencies in the original document should have been identified by the judge who issued directions. The point did not then feature in the summary contained in the reviewing decision, nor was it listed as one of the defaults held against Mr Connell. To the extent that it was relied on I am satisfied that it ought not to have been.

Neither section 29 itself, nor the 2018 Regulations, nor the FTT Rules, nor any practice direction, requires an applicant for a certificate of recognition to supply a list of qualifying tenants signed by each of them when the application is submitted. The application form asks for such a list, but I am inclined to think that is concerned with the provision of evidence; if the applicant was able to prove sufficient support by some other means the FTT would not be entitled to refuse a certificate because no signed list had been provided. Neither the staff who checked the application nor the procedural judge who gave directions suggested that the failure to comply with that request was unreasonable or required to be rectified. Rule 8(2) of the FTT Rules provides that a failure to comply with the Rules, a practice direction or a direction does not of itself render the proceedings or any step taken in them void. Once again, I agree with Mr Hardman that failing to supply the signed list was not unreasonable conduct.

Finally, the FTT relied on the fact that the application was not withdrawn until 28 July 2022 as unreasonable. There is no record of the hearing on 7 May 2022, at which the Association was represented by Mr Fearnie, and it is not clear why the application was not struck out on that occasion. Neither of the panel which dealt with the costs application had participated in that hearing and the FTT accepted in its review decision that no request for an adjournment was made. Mr Connell believes that the application was withdrawn at the hearing on 22 July but again there is no record of those proceedings. It cannot be unreasonable to withdraw an application which is under threat of being struck out, and the only question is whether it ought to have been withdrawn sooner. If, as Mr Hardman acknowledges, it was not unreasonable to commence and continue an application which lacked sufficient support, the precise circumstances in which it was withdrawn are unlikely to amount to unreasonable conduct. In any event, those circumstances are obscure, and I agree with Mr Hardman that they do not provide a justification for making a costs order.

That would be sufficient to dispose of the appeal in Mr Connell’s favour were it not for the qualification applied by Mr Hardman to his concession that, without more, the grounds relied on by the FTT did not justify making an order for costs against him. Mr Hardman suggested that there was more, and that seen in the light of matters which the FTT had not touched upon in its decision, the order ought to be upheld. That submission was made to the FTT in response to the Association and Mr Connell’s application for permission to appeal, when it received the treatment recorded at paragraph 50 above. It now forms the basis of a respondent’s notice and an application for permission to cross appeal.