[2023] UKUT 207 (LC)

When the application commenced the leaseholders named “E & J Estates”, described as the freeholder, as the sole respondent. After further investigation they applied to the FTT on 26 April 2022 to change the name of the respondent to “E & J Estates (trading style of Eyre & Johnson Ltd)” and to add both RMB and Penult Capital Partners Ltd (another company in the E&J Estates group) as additional respondents, in the mistaken belief that the FTT could only direct the disclosure of information from those involved in procuring the buildings insurance if they were parties to the application. In fact, the FTT has power under rule 20 of its procedural rules, on the application of a party or on its own initiative, to require any person to attend as a witness at a hearing or to order any person to answer any question or produce any documents in their possession or control relating to any issue in the proceedings.

The FTT added RMB alone. The apparent complexity of the case and disagreement over disclosure of documents sought by the leaseholders then caused it to direct on 20 June that the final hearing due to take place on 27 July would instead be a case management hearing to consider disclosure and further directions. That would have provided an opportunity for the leaseholders to explain what documents they believed that they needed to see, and in whose possession they believed them to be, and for the FTT to consider the most convenient procedure to ensure that it had all the information it required to determine the application fairly.

In the event, however, a week before the case management hearing the respondents issued an application to strike the proceedings out, on the grounds that the leaseholders did not have “legal standing to bring a section 27A application” against RMB in respect of insurance which is the responsibility of the management company under the terms of the lease.

In a skeleton argument prepared for the hearing by counsel instructed on behalf of the respondents (not Mr Allison) the FTT was invited to strike the application out under rule 9(2)(e) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, on the basis that there was no reasonable prospect of the leaseholders’ case succeeding. Reference was made to the Court of Appeal’s decision in Berrycroft Management Co Ltd v Sinclair Gardens Investments (Kensington) Ltd [1997] 1 EGLR 47 in support of that proposition.

The case put to the FTT by the respondents’ counsel was that the building insurance costs were not “relevant costs” within the meaning of section 18, 1985 Act on the grounds that they were not incurred on behalf of the landlord. On that basis it was said that the leaseholders had no standing to bring the application. The FTT accepted that proposition and at paragraph 39 it held that “it was bound by the decision of the Court of Appeal in Berrycroft to find that although the insurance charges were payable by the leaseholders as part of the service charges, they were not to be regarded as having been incurred by or on behalf of the landlord and were therefore not relevant costs. It struck out the leaseholders’ application and made no costs protection order under section 20C, 1985 Act. Its order also removed E&J Estates as a respondent and declined an application by the leaseholders to add the landlord’s insurance broker, A J Gallagher, as a further respondent.