[2023] UKUT 197 (LC)

In paragraph 29 of its decision (see paragraph 30 above) the FTT explained that it had carried out a summary assessment of the costs of the proceedings (including both the Court proceedings and the FTT proceedings). The sum it found to be payable was £8,197.50 (the aggregate of £6,425 plus £1,285 VAT, court fees of £455 and travelling costs of £32.50). At paragraph 32 of the decision the FTT ordered payment of that sum by Mr Davies within 28 days of the decision being served on the parties.

The County Court entered judgment for the sum which the FTT had assessed.

There are a number of difficulties with the way in which the FTT and the Court approached the question of costs.

The FTT was entitled to determine the sum which it was reasonable for Mr Davies to pay under paragraph 33(c) of the lease, because it was a variable administration charge over which the FTT is given jurisdiction by paragraph 5(1) of Schedule 11, Commonhold and Leasehold Reform Act 2002. Once it had made a determination, however, the charge would not become payable until it was properly demanded. By paragraph 4 of Schedule 11, 2002 Act a demand for the payment of an administration charge must be accompanied by a summary of the tenant’s rights and obligations and a tenant is entitled to withhold payment until that requirement is complied with.

In determining the sum payable, the FTT assumed that the RTM Company had succeeded in respect of the full amount it was claiming in the proceedings. It is now clear that it should not have done, and that it should have determined the costs recoverable under paragraph 33(c) on the basis that the £616.60 service charge, and the £2,400 administration charge dating from 2014 were not payable, and that the only sum payable was £840 for four debt collection letters. It cannot be said that its assessment would have been the same if it had appreciated that the RTM Company had succeeded in only a little over 20% of its claim. Its decision must therefore be set aside.

The FTT also failed to determine an application made by Mr Davies under paragraph 5A of Schedule 11, 2002 Act, which gives it jurisdiction to reduce or extinguish a tenant’s liability to pay an administration charge in respect of litigation costs (meaning the costs of proceedings before the FTT; the County Court has the same jurisdiction in respect of the costs of the proceedings before it).

For the RTM Company, Miss Gourlay’s primary submission was that the decision on costs was not a decision of the FTT at all but had been made by the Judge in his capacity as a judge of the County Court pursuant to its powers under section 51 Senior Courts Act 1981 and the Civil Procedure Rules 1998. On that basis Mr Davies had no right to challenge the decision in this Tribunal and should have brought a separate appeal against the County Court’s order.

I do not accept Miss Gourlay’s submission. It is clear from its decision that the Judge (and the surveyor member of the FTT) were not exercising a statutory jurisdiction to determine an award of costs, nor did they think they were making a determination in Court. They stated specifically that the RTM Company “also contractually sought the legal costs it had incurred in bringing this claim” and pronounced themselves satisfied that the costs were recoverable under paragraph 33. To put the matter beyond doubt, they referred to the assessment of costs as having been undertaken “by the tribunal” and concluded with; “The tribunal orders that the service and administration charges and the costs awarded are payable by the respondent within 28 days”. Nor does the Court’s order (mistakenly dated 1 August 2022, but presumably drawn up on 1 September, after the FTT’s decision) state that it had made any assessment of its own.

If Miss Gourlay was right, and if the costs were assessed by the Court, and not by the FTT, the Court would have exceeded its own jurisdiction under section 51(1) Senior Courts Act 1981, which is expressly stated to be subject to the provisions of any other enactment. By section 29(1), Tribunal, Courts and Enforcement Act 2007, the costs of and incidental to proceedings in the first-tier tribunal are “in the discretion of the tribunal in which the proceedings take place.” The Court of Appeal has confirmed in Mayor and Burgesses of the London Borough of Tower Hamlets v Khan [2022] EWCA Civ 831 at [56]-[69] that where part of proceedings has been transferred from the County Court to the FTT (usually under section 176A of the 2002 Act), the County Court has no jurisdiction to make any order for costs in respect of the FTT proceedings.