[2025] UKUT 115 (LC)

I can now come to the Hearing itself which, as I have said, took place on 15^th and 16^th April 2024. The FTT at the Hearing comprised Judge Robert Latham and Antony Parkinson MRICS. The earlier directions hearings had been dealt with by Judge Latham, sitting alone. All parties were represented by counsel. The Applicants were represented by Ms Whitehouse, who had been instructed on a direct access basis. The Appellant was represented by Ms Traynor. Cudweed was represented by Mr Allison. All three counsel provided skeleton arguments for the Hearing.

In very brief summary, the skeleton arguments of counsel set out their respective approaches to the Hearing in the following manner:

There is no transcript of the Hearing. In granting permission to appeal and giving directions for the conduct of the appeal, the Deputy President requested counsel and solicitors who attended the hearing to agree between themselves a note of the Hearing “to the extent that it is relevant to ground 2 of the grounds of appeal”. Pursuant to this request two notes of the hearing have been prepared. The first is a note agreed between the representative of the Appellant and the solicitor for Cudweed who attended the Hearing. The second is a note agreed, subject to some identified differences of recollection, between the three counsel who attended the Hearing. There is also an email which was sent by Mr Allison to Ms Traynor on 19^th April 2024; that is to say very shortly after the Hearing. In that email Mr Allison commiserated with Ms Traynor, and expressed his concern in relation to what had happened in the Hearing. I also have the Interim Decision itself. I also have what I have been told by Dr Hakobyan in her skeleton argument for the hearing of the appeal and in her further written submission, in addition to what I was told by Dr Hakobyan and Ms Labruzzo in their oral submissions.

Acting pursuant to its powers under Rule 5(3)(n) of The Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, the Tribunal provided the notes of the Hearing, mentioned above, to Judge Latham and Mr Parkinson, the judge and professional member of the FTT in this case. Judge Latham and Mr Parkinson were requested to consider the notes and their own notes of the Hearing, and to inform the Tribunal whether the notes prepared by the solicitors and counsel accorded substantially with their own recollection and records. There is no doubt that the Tribunal had the power, under Rule 5(3)(n), to take this step. I should add however that the Supreme Court, in Serafin v Malkiewicz [2020] UKSC 23 [2020] 1 WLR 2455, confirmed that in a case where there was no transcript of a hearing which was the subject of a complaint of unfair process, it might well be appropriate to invite the judge to comment in writing or perhaps to provide their own note of the hearing; see the judgment of Lord Wilson, with whom the President and other Justices agreed, at [45].

Both Judge Latham and Mr Parkinson made helpful responses to the request of the Tribunal. Each provided their own note, responding to the notes prepared by solicitors and counsel. Judge Latham also provided a chronology of the Application and the Hearing.

I am most grateful to Judge Latham and Mr Parkinson for their co-operation in this respect, which has done much to alleviate, albeit not to remove entirely the problem that there is no transcript of the Hearing in existence. In order to distinguish between the various notes I will refer to the note prepared by counsel as “Counsels’ Note”, to the note prepared by the representative of the Appellant and the solicitor for Cudweed as “the Solicitor Note”, and to the notes provided by Judge Latham and Mr Parkinson as “the Response Notes”. I should also mention that the Response Notes were the further documents in the case, mentioned at the outset of this decision, on which I gave the parties the opportunity to make further submissions. In her further written submission Dr Hakobyan has stated that the Response Notes and chronology “are accurate”.

I will need to come back to the Hearing in more detail when I come to the grounds of appeal, but for the present purposes the following summary of events at the Hearing will suffice.

On the first day of the Hearing the FTT raised the issue of whether the Applicants were contractually liable to pay the Service Charges/Payments which were in dispute. By reference to the terms of the Interim Decision the point which appears to have concerned the FTT was that no demands for payment of the Service Charges/Payments, either between Cudweed and the Appellant or between the Appellant and the Applicants had been produced, notwithstanding that disclosure of the demands by the parties had been required by the May 2023 Directions. The FTT was concerned as to whether demands for payment of the disputed Payments had been made in accordance with the provisions of the Occupational Underleases. The FTT indicated that it wished to be addressed on this question, in the face of protests from Ms Traynor (i) that she was not in a position to deal with this question and (ii) that it was not open to the FTT to raise this issue, given that the issue had not been raised by the Applicants in their statements of case. In particular, Ms Traynor explained to the FTT that she had been instructed on a watching brief for the Hearing. This position had been foreshadowed in paragraph 5 of the Appellant’s revised statement of case, which I have quoted above. It appears that, in taking the stance that it was not open to the FTT to raise this issue, Ms Traynor was supported by Mr Allison for the Second Respondent.

The exchanges between Ms Traynor and the FTT on this question appear to have occupied a certain amount of time on the first day of the hearing, but ultimately what happened was that Ms Traynor was required to address the issue of contractual liability to pay on the second day of the hearing, shortly after 10.00am. The Appellant had also been required, on the first day of the Hearing, to produce copies of the missing service charge demands. Copies of the missing demands were, I believe, provided to the FTT on the first and second days of the Hearing. I will refer to the issue of contractual liability raised by the FTT at the Hearing as “the Contractual Liability Issue”. I stress that I am referring to the Contractual Liability Issue as it was raised by the FTT. My knowledge of the FTT’s formulation of the Contractual Liability Issue derives from my reading of the Interim Decision. There has been no formulation of the Contractual Liability Issue by the Applicants.

Ms Traynor duly addressed the FTT on the second day of the Hearing. I have had the benefit of a Note which Ms Traynor prepared for the FTT, setting out her submissions on the Contractual Liability Issue. In this Note Ms Traynor reviewed the directions and statements of case in the Application and maintained her argument, which she supported by reference to authority, that it was not open to the FTT to raise, for itself, an issue which had not been raised by the Applicants in their statement of case. Ms Traynor argued that the Applicants were and should be confined to their pleaded case, which challenged the reasonableness of the disputed Payments/Service Charges, not the question of whether they were payable at all. Ms Traynor also protested the unfairness of requiring the Appellant to deal with the Contractual Liability Issue on what was effectively 24 hours notice. As Ms Traynor also pointed out, what I am referring to as the Contractual Liability Issue did not comprise an identified issue or issues. There was nothing pleaded in this respect, by which the Appellant could be expected to understand the case which it was being required to meet.

Ms Traynor’s Note is an impressive document, particularly given the limited preparation time available to Ms Traynor. The Note and Ms Traynor’s oral submissions were however only partially successful. The FTT was not persuaded that it was not open to it to raise the Contractual Liability Issue. In the relevant part of the Interim Decision, and after reviewing the authorities cited by Ms Traynor, the FTT concluded that it could and should raise the Contractual Liability Issue and that the Applicants and the Appellant should address the Contractual Liability Issue. The FTT was however also persuaded that it was not in a position to deal with the Contractual Liability Issue at the Hearing. The FTT concluded at paragraph 60 of the Interim Decision, in the following terms, that it had no option but to adjourn the case and give further directions:

“60.

It is a matter of regret that the Tribunal has been unable to determine this issue of liability to pay at this two day hearing. Ms Traynor rather directed her attention to drafting a Skeleton Argument seeking to argue why we should not do so. If we are to deal with this matter fairly, we were satisfied that we had no option but to adjourn the case and give further Directions. This issue does not involve the Second Respondent and no further submissions are required from them. This Tribunal is accustomed to dealing with litigants in person. Neither the Applicants nor the First Respondent should feel the need to be legally represented.”

The FTT proceeded to give directions for the determination of the Contractual Liability Issue (“the Interim Decision Directions”). By the Interim Decision Directions, under the heading “The Respondent’s Case on the Issue of Liability to Pay”, the Appellant was required first to file and serve a statement of case, setting out:

“• The relevant provisions in the underlease relevant to the tenant’s liability to pay, including any legal argument, particularly with regard to Clause 3.3.

• Whether it is contended that the Lead Applicant is liable to pay to the First Respondent any sum pursuant to Clause 3.3 of her lease for the 2019 service charge year, and, if so, what sums have been demanded and/or paid by the Lead Applicant.

• In respect of each of the calendar years 2019 to 2023, all sums that it is alleged that the Lead Applicant has been obliged to pay pursuant to Clause 3.3 of her lease, the dates upon which the said sums became payable, the demands made for these sums, and all sums paid by the Lead Applicant.”

The Appellant was also required, by the Interim Decision Directions, to file and serve a bundle of documents including a variety of service charge documents, including statements of accounts, demands and accounts. Finally, the Appellant was required to file and serve any additional witness statements upon which it wished to rely. Directions were also given for Dr Hakobyan, as lead Applicant, to respond with her own statement of case “setting out her case on the issue of liability to pay, including any legal argument.”, and with a bundle containing any additional documents upon which she wished to rely, and any further witness statements upon which she wished to rely. The FTT also directed that it would fix the case for a one day hearing of the Contractual Liability Issue. Cudweed was not included in the Interim Decision Directions, on the basis that the Contractual Liability Issue “does not involve the Second Respondent and no further submissions are required from them”.

The FTT also heard, at the Hearing, the dispute over the reasonableness of the service charges, which was the issue which had been pleaded in the statements of case (“the Reasonableness Issue”). The FTT did not however give a decision on the Reasonableness Issue. It is apparent that the FTT has made a decision on the Reasonableness Issue, but it appears that the FTT has decided not to issue that decision until the Contractual Liability Issue has been determined; see paragraph 65 of the Interim Decision, which states that the FTT will issue its decision on the Reasonableness Issue in the event that Dr Hakobyan should “concede, having seen the First Respondent’s Statement of Case and Bundle, that the sums demanded have been lawfully due”.