[2024] UKUT 253 (LC)

The appellants have permission (granted by this Tribunal) to appeal that decision. The grounds of appeal go through the above points in turn and say – among other things - that the failure of both parties to refer to Q Studios (paragraph a above) is irrelevant, since their argument is that it was objectively unreasonable for a party represented by solicitors and counsel to issue proceedings which it did not believe the FTT had any jurisdiction to determine; that the proceedings were not issued “in order to achieve certainty” (paragraph d above) since it was at all times common ground that there was no jurisdiction in respect of the cluster units and indeed that the law was in no way uncertain on that point; and that contrary to paragraph f the appellants did incur significant costs in arguing the jurisdiction issue which could have been avoided if a letter before action had been sent so as to establish an agreed position. The appellants say that there is a considerable distance between issuing proceedings knowing that they might fail and issuing proceedings when a party does not believe that the FTT has jurisdiction.

In response, the respondents say that they did not act unreasonably in failing to send a letter before action. The problem was that there are so many leaseholders, including many based abroad, which meant that it was highly unlikely that common ground would be established with all of them; that the need for a dispensation under section 20ZA would have remained, whatever the stance of any of the leaseholders; and that a principal purpose of the application was to establish whether the FTT had jurisdiction.

The respondent’s arguments do not address what seems to me to be a fundamental problem with the FTT’s decision, which is that it failed to understand the basis of the application for costs.

I set out the FTT’s paragraph 40 in full (paragraph 44 above) because it is obvious on reading those reasons that the FTT focused on the arguments about jurisdiction in relation to the studios. Hence its starting point, that the important decisions were Q Studios and Goodrich (paragraph a), and its observation in paragraph e that neither party was familiar with those cases - which may well have been fair since neither party had referred to either of those cases, but the point is that they are relevant to jurisdiction in relation to the studios, not to the cluster units. Hence also the FTT’s reference at paragraphs 40 b and c to an uncertain legal position, its suggestion (by implication) at paragraph h that the law was not so obvious as the appellants said, and its reference at paragraph g to “the law in a complex area”; again, those comments make sense in relation to the disagreement between the respondents and the Second Group of leaseholders about the studios (to which the FTT devoted 24 paragraphs in its decision) but not in relation to the cluster units.

The appellants’ application, by contrast, was focused on the obviousness of the law as set out in Ezekwe; they were not arguing that the applications should not have been brought in respect of the studios, but only in respect of the cluster units, as to which of course they did refer to Ezekwe and as to which the law was, since Ezekwe, perfectly clear and indeed was not in dispute at all between any of the groups of parties in the FTT.

Once it is clear that the application for costs was based on the proposition that the respondents should not have issued proceedings in relation to the cluster units, because the law was clear and was not in dispute (as the respondents would have been able to establish if they had sent a letter before action), it can be seen that the FTT missed the point of the application and did not explain why it failed.

The FTT’s decision is therefore set aside because it did not explain why the application for costs failed.