[2025] UKUT 378 (LC)

Case Nos: LC-2025-173

AN APPEAL AGAINST A DECISION OF THE FIRST-TIER TRIBUNAL (PROPERTY CHAMBER)

Ref: 2023/0687

Royal Courts of Justice, Strand, London, WC2A 2LL

5 November 2025

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

LAND REGISTRATION – costs – unreasonable refusal of offer

BETWEEN:

NEIL HOOD

Appellant

-and-

SOUTHERN LAND SECURITIES LTD AND UPSPACE 8 LIMITED

Respondent

Loft Space at 109 Leabank Square,

Berkshire Road,

London,

E9 5LR

His Honour Judge Neil Cadwallader

Determination on written representations

© CROWN COPYRIGHT 2025

Introduction

1. This is the appeal of Mr Hood (“the appellant”) against the decision of the First-tier Tribunal (Property Chamber) (Land Registration) (“the FTT”) dated 6 March 2025, following a hearing on 5 March 2025, the effect of which was to make him liable for the costs of the respondents in the sum of £8851. Permission to appeal was granted by this Tribunal on 24 June 2025 and the appeal was directed to be determined on the basis of written representations.

2. Mr Hood, who suffers significant mental health and other problems, and represented himself throughout (in itself inevitably stressful), had made an application the effect of which, if successful, would have been for him to acquire title to the loft space immediately above his leasehold flat at 109 Leabank Square, Berkshire Road, London E9 5LR. His application was successful before the FTT on the basis that the loft space was an accretion to his lease of the flat. An issue had arisen as to whether the applicable law related to or was affected by the law of adverse possession, but the FTT approach the matter on the basis that it did not.

The decision appealed

3. The FTT then awarded Mr Hood his costs up to 5 February 2025 in the sum of £1330; but awarded the respondents, his landlords, their costs since that date, in the sum of £10,181 including VAT. It is the latter order against which he has permission to appeal.

4. The FTT made the costs order against Mr Hood on the basis that he had failed to beat an offer which had been made without prejudice save as to costs on 05 February 2025, and then as an open offer on 21 February 2025. The offer had been to grant Mr Hood a lease of the loft for storage purposes at a peppercorn rent, but otherwise on the same terms as his lease of the flat. This was on the basis that each side agreed to withdraw from the proceedings and bear their own costs. On 12 February 2025, Mr Hood had replied by email saying, “You have taken it too far this time, your misconduct is unacceptable … how do you even have the nerve to threaten me with extortion and dishonesty?” The FTT could concluded that this was an apparent reference to Mr Hood’s complaint concerning the rights of first refusal under Part I of the Landlord and Tenant Act 1987. In any event, the reference before the FTT continued on the basis that agreement was not reached until at the hearing the respondents, which until then had, as the FTT Judge described it, clung to an argument based on adverse possession, finally conceded that Mr Hood’s application to be registered with a long leasehold title to the loft above his flat must succeed.

5. The FTT decision went on to state

“I regard Mr Hood’s refusal to engage meaningfully in any way with the offer as being unreasonable, even taking into account his disabilities to which he has drawn my attention. The offer gave him all he wanted in his original application. Regretfully, and after careful consideration, I accept the respondents’ submission regarding costs since 05 February 2025.”

The FTT’s refusal of permission to appeal

6. Mr Hood sought permission to appeal from the FTT. In refusing permission, the FTT judge went into more detail about the costs decision.

“5. On 05 February 2025, Ms O'Neill emailed Mr Hood: "I have received instructions from my client to propose that we settle this matter by way of granting a lease to you of the loftspace currently in dispute, for use as storage, at a peppercorn rent and otherwise on the same terms and conditions as your existing lease. This offer is on the basis that we both agree to withdraw from the current Lands Tribunal proceedings and each bear our own costs. Given the proximity of the hearing date and also the requirement to file a bundle with the court very shortly, please can you confirm your agreement in principle to this and I will prepare a draft order for your approval that will also need to be agreed and endorsed by the tribunal.

6. On 07 February 2025, Ms O'Neill emailed Mr Hood: "Please can you revert as soon as possible in terms of whether or not you wish to accept the offer below. If I do not hear from you by 5m on Monday 10 February. I will assume that you do not wish to accept and I will prepare the case for the hearing in accordance with the directions."

7. Mr Hood replied the same day, asking for the trial bundle.

8. On 10 February 2025, Ms O'Neill emailed Mr Hood [in reply]: "Thanks for your email. As we have made you an offer to settle on the terms you have applied for, I would put you on notice that we reserve the right to show the email to the court in respect of unreasonable behaviour and our costs. As you know, the offer is still open to accept however, in the event of a lack of response by the timeframe stated, the bundle will be sent to you in the post tomorrow and by WeTransfer (email). The instructions to download it will be contained in the link.

9. On 12 February 2025, Mr Hood emailed Ms O'Neill. She replied as underlined within the email: "You have taken it too far this time, your misconduct is unacceptable ... how do you even have the nerve to threaten me with extortion and dishonesty?"

The lie:

You claim you... made me an offer to settle on the terms I applied for... but this is dishonest, you have done nothing of the sort, if you had, I would have accepted. I applied for adverse possession of the land I have occupied for 30 years (27 years at the time of application). Which is still over 5 years before your employer/client engaged in an illegal act to obtain the freehold.

The extortion:

You sent me a "Without Prejudice" which you know is inadmissible as evidence in which you refused to relinquish your claim to my loft but instead offered to let me lease it from you. The offer you have received is an offer equivalent to an accretion to your lease which is how the Land Registry and Land Registration tribunal have dealt with your application as evidenced by the correspondence attached to my earlier email of today. As per usual practice, it is being made 'Without Prejudice' meaning that it is being without any admission on my client's part and therefore cannot be produced to the court save in relation to the issue of costs which I have commented on below.

And now you threaten me with a costs application, trying to strongarm me into accepting your terms. I need to make it clear that as we have made you an offer in line with an accretion to the lease and to date, you have chosen not to accept it, as per my correspondence, we reserve the right to bring it to the Tribunal's attention on the issue of costs should that prove necessary.

Over the last few yours I have witnessed numerous examples of reprehensible conduct from solicitors, but you are right up there amongst the worst.

[He then referred to his mental health]

The scam:

I see through what you are doing, you have created a false narrative to make it appear you offered me the terms I sought, safely knowing that your real offer will never see the light of day as it is contained within a "without prejudice" email (all of which I deleted from the chain below). Therefore, using financial coercion, you are threatening to present a false claim to the Property Tribunal that I have 'unreasonably' turned down your 'reasonable' settlement to provide me what I sought (though you suggest no logical reason as to why on earth I would do that). I don't know why you would be so bold as to act this way, perhaps it's purely a money issue, your multimillionaire employers have ample resources to fund legal claims, whereas because I live in a humble 2-bedroom flat in Hackney, it's likely that I can't afford those kinds of contests. And you'd be right, I can't, but regardless, you won't stop me fighting for what is mine.

[He then referred to the SRA]

12. On 21 February 2025, Ms O’Neill emailed Mr Hood: “I have received instructions from my client to make our previous offer to you on an open basis. We therefore propose that we settle this matter by way of granting a lease to you of the loftspace currently in dispute, for use as storage, at a peppercorn rent and otherwise on the same terms and conditions as your existing lease. This offer is on the basis that we both agree to withdraw from the current Lands Tribunal proceedings and each bear our own costs. Given the proximity of the hearing, if this offer is of interest to you, please confirm your agreement in principle as soon as possible and I will prepare a draft order for your approval that will also need to be agreed and endorsed by the tribunal.

If you have any queries regard the nature of this offer and its meaning for you then please seek your own independent legal advice.”

13. On 22 February 2025, Mr Hood emailed Ms O'Neill:

[1] As you have changed your previous without prejudice offer to "an open basis", I have copied it into this email as a. it is no longer submitted 'without prejudice', and b. it's challenging for me to keep track of different chains of emails. (We've discussed my disabilities before, therefore, as you said you appreciated (or acknowledged) them, it would only be a duplication for me to flesh out their negative impacts on me again here).

[2] I have owned and occupied my loft space since 1994, your boss ("client"), Southern Land Securities, engaged in an illegal sale to acquire the freehold of this building in 2000. In around 2018 your boss/ "client" created a lease for all the loft spaces here and sold it to himself for £100, I think the lease he created for himself was 999 years. No one here (the interested parties) knew about the lease he had made for himself until he submitted plans to put an extra x2 floors of small, low-quality flats in the space currently occupied by the lofts/roof. The quality didn't need to be up to the same standards as if he was going to sell the flats, he wasn't, he was going to retain all of them for himself and keep them purely for the rental incomes, and as most people are aware, the build 'quality' and amenities of flats for rent can be well below the expected standards of the 'like' flats for sale. A further advantage your boss/ "client" would obtain through this scheme would be to make it harder for the owners here to exercise either their Right To Manage or Right To First Refusal as the 50% threshold of owners agreeing to either would still apply but out of the now 30 flats that would be in this building, which would be difficult because he would retain ownership of the newly constructed 12 flats. Meaning that he would only need 4 owners out of the present 18 owners to not agree to either the RTM or RFR in order to block any moves in those directions. (I apologise for digressing).

[3] All interested parties (the owners of flats here) were excluded from taking part in this leasehold purchase process, it was done in secret. This is precisely how Southern Land Securities took part in their original illegal purchase of the freehold of 94-111 Leabank Square, it was done in secret.

[4] Therefore, if you wish to discuss "accretion", which Google's dictionary defines as: "growth or increase by the gradual accumulation of additional layers or matter." Then it should be the 'accretion' (land grab) committed by your boss/ "client"."…

[12] However, if you can prove me wrong, by demonstrating that your boss/ "client" somehow did not engage in the illegal purchase of the freehold of this building, 94-111 Leabank Square, e.g. by providing the genuine dates and details including the terms of the sale, then I will acquiesce to your offer of "a peppercorn rent"

[13] As a 'natural' consequence of accepting this offer, then I also accept as you stated "that we both agree to withdraw from the current Lands Tribunal proceedings and each bear our own costs".

[14] I believe this is the most reasonable, amicable and cost-effective way of resolving this dispute and trust you will agree.

(15] However, if you refuse (i.e. in any way 'fail') to provide the proof requested in item #12, I will take this as confirmation your boss / client, acknowledges they know they acted unlawfully when they acquired the freehold here…

[19] Given the proximity of the hearing, please confirm your acceptance ("agreement in principle") as soon as possible, which (as I've learned from you tonight) "will need to be agreed and endorsed by the tribunaI"."

13. On 24 February 2025, Ms O'Neill replied: "The acquisition of the freehold by my client is not connected with this claim and as the tribunal has previously outlined, the hearing is connected only your claim regarding adverse possession/accretion to your lease. Unless I receive an unequivocal acceptance of my client's offer on the terms set out then I will assume that it has been rejected."

7. The FTT judge concluded in the following terms.

“14. It is clear from the above that the applicant would only be prepared to settle if he was given satisfaction regarding his complaint that there had been a breach of the 1987 Act. But the latter had nothing to do with the present proceedings.

15. It would appear from his grounds of appeal that Mr Hood was disinclined to accept what was being offered: (a) with regard to the offer itself because he did not understand what a peppercorn rent was; and (b) not on the basis of the reasonableness of the offer itself, but on the basis that he found the behaviour and actions of the respondent dishonest in respect of a different and extraneous matter (namely an infringement of Part I of the 1987 Act).

16. The latter is picked up in Mr Hood's email to Ms O'Neill dated 22 February 2025 when he said that his only condition was that the respondent could show that its purchase of the freehold was not illegal.

17. In my judgment neither of these reasons is reasonable or justified.

18. If Mr Hood did not know what a peppercorn rent was he could have asked, taken legal advice or simply Googled the word.

19. This is why I found that Mr Hood unreasonably refused the offer he should have accepted. Reasonable adjustments do not extend to a party refusing to accept a reasonable offer.”

The Upper Tribunal’s grant of permission to appeal

8. Mr Hood sought and obtained permission to appeal from this Tribunal, which so far as relevant was granted in the following terms.

“2. The applicant was the successful party in the proceedings. The costs order was made against him in respect of the period after his landlord made a settlement offer which he refused. The judge took the view that he had failed to better that offer and therefore made an order against him in respect of the subsequent period.

3. It is clearly arguable that the applicant did better the offer. He was not seeking a separate lease of the loft; he sought and was awarded an enlargement of the demised premises. Permission is granted on that ground.”

The respondent’s submissions

9. The respondent’s written objections to the appeal contained the following.

“1. The Applicant did not achieve a better result at the first-tier tribunal

hearing than the Respondents’ offer to settle. The use of the Flat as per paragraph 9 of the Fourth Schedule of the Lease dated 22 November 1980 (the Lease) (attached) is as “a single private dwelling" and Fifth Schedule paragraph 2 as “private residential accommodation”. On the basis that the Property was not originally demised with the Lease, it was never intended for it to be a habitable space and for that to be the case would require alterations for it to comply with building regulation approval which would necessitate lessor consent pursuant to Clause 6(a) and (b) of the Fourth Schedule of the Lease and potentially other alterations to areas that fall outside of the Applicant's now extended demise to comply with fire safety regulations. The Respondents (as lessor) have discretion to grant or refuse consent depending on the type and nature of the alterations.

2. The Applicant acknowledges that the Property is being used for storage (as opposed to habitable space) and the photographs attached to the Applicant’s form ST1 (attached) evidence that. The offer to settle made by the Respondents is therefore in line with the actual use and use permitted under the Lease as to use otherwise would require lessor consent for alterations, building regulation and/or fire safety approval, none of which are guaranteed and in place at the current time.

3. The additional reason why the Respondents offered a lease of the Property is due to the fact that a deed of variation of the Lease would have operated as a surrender and re-grant for the purposes of the Leasehold Reform (Ground Rent) Act 2022. This would have resulted in the ground rent of the Flat being reduced to a peppercorn which would have unfairly prejudiced the Respondents by diminishing the value of the reversionary interest. An additional lease of the Property combined with the Lease equates to the enlargement of the demise. Two leases are no less commodious than one in this case-they are the same and what the Applicant achieved at first-tier tribunal was equivalent to the offer to settle made by the Respondents complete with adverse costs consequences to the Applicant in light of that.

4. To proceed in any other way other than in line with the offer to settle would have disproportionately adversely affected the Respondents in the manner set out and was unnecessary given that the two leases achieve the same result.

Notwithstanding and without prejudice to the above, the Respondents would also highlight the following to the Upper Tribunal:

5. As the successful party in the case at the First-Tier tribunal, the Applicant was entitled to claim costs. The Applicant lodged no costs schedule ahead of the hearing and following determination of the case in the Applicant’s favour was asked again by Judge Brilliant whether he wanted to claim costs and the Applicant confirmed that he did not.

6. Following the Respondents’ application for costs, the Applicant submitted a last-minute verbal request which was denied by Judge Brilliant. Had the Applicant made an application for costs and submitted a costs schedule, the Respondents would have had the opportunity to make representations which they were denied on the basis that a unilateral decision was made by Judge Brilliant to award costs to the Applicant post-hearing.”

Discussion

10. The difference between what was offered and what was ordered by the FTT, was that the offer was for a separate lease of the loft space, whereas the FTT’s decision expanded the extent of premises let by the existing lease; the separate lease was to restrict the use of the loft space to storage (its current use) whereas the existing lease provided for use as “private residential accommodation.”

11. The restriction on user is neither here nor there, given that it appears the loft space could not be used otherwise than for storage in any event. This was not a concern raised by Mr Hood.

12. This Tribunal is unable to identify a basis on which it could be said that having a single lease represented an improvement on having a separate lease of the loft space at a peppercorn rent (that is, effectively, no rent). Mr Hood appears to have been concerned that it would come to an end if he sold the flat, but this Tribunal can see no reason why it would have done so, or why it could not have been sold with the flat. There was no evidence before the FTT that having two leases rather than one would have made it harder to sell, or reduce the value, and it is not obvious that it would; and this is not a concern voiced by Mr Hood in any event. His conveyancing costs on sale might have been somewhat higher than otherwise, but that was not a matter to which he referred either, and appears to this Tribunal not to carry appreciable weight. Had no offer been made, and had Mr Hood succeeded at the hearing as he did, he would very likely have obtained an order for all his costs, if he had asked for it. In fact he did not, until a costs order was made against him. It is impossible to say that the offer of no order as to costs gave him less than he wanted or would have obtained. He himself regarded it (subject to the points in the next two paragraphs below) as a reasonable, amicable and cost-effective way of resolving the dispute.

13. The order of the FTT may not in fact have given Mr Hood all he had wanted in his original application, since he appears to have wanted to acquire title by adverse possession, and it seems that he hoped, at the outset at least, to acquire a freehold title rather than a leasehold title. He was prepared to compromise on that, however.

14. An important concern of Mr Hood was, however, that he did not want to take a lease from a landlord whose title he regarded as having been obtained unlawfully and unethically. He felt that to do so would be to approve their behaviour. He indicated that he would accept their offer if they could prove him wrong, by demonstrating that “your boss/ "client" somehow did not engage in the illegal purchase of the freehold”. That establishes that he himself did not regard the offer as being unacceptably worse than his aspirations required, despite his other concerns.

15. It is hardly surprising that his demand to be proved wrong on a point extrinsic to the matters before the FTT and on which he had already expressed a committed opinion did not commend itself to the respondents. Requiring to be satisfied on that point as a condition of his acceptance of the offer (he says it was not a condition, but he is mistaken about that) was found by the FTT to be unreasonable, and that conclusion was plainly right.

16. His indignation over being ‘extorted’ and ‘strong-armed’ when the respondents indicated that they would seek costs if he did not accept their offer was misplaced. That is the usual approach to the consequences of making a reasonable offer which is not accepted, and there is usually nothing improper about it. In this case, it does seem likely that by this point the respondents had realised that their case had at the very least serious problems if the matter were approached on the basis of the law of accretion, but the appellant was not approaching it on that basis, and there was nothing improper about their seeking to de-risk the situation by making the offer which they did, or in seeking to pursue their case (until the judge intervened) when it was not accepted. To hold otherwise would be to hold that they ought simply have dropped their opposition, accepted and documented a case based on accretion, and paid the costs voluntarily. But not every case that fails is improperly or unreasonably pursued, and this was not.

Decision