[2025] UKUT 97 (LC)

What is the appropriate response to the combination of legal errors I have found in the Costs Decision?

On an appeal on a point of law under section 11 of the Tribunals, Courts and Enforcement Act 2007, if this Tribunal finds that the making of the FTT’s decision involved an error on a point of law, it may (but need not) set aside the decision (section 12(2)(a), 2007 Act). If the decision is set aside the Tribunal must then either remit the case to the FTT for reconsideration or re-make the decision.

Neither party was enthusiastic about the application for costs being remitted to the FTT. The normal course where the Tribunal finds that a decision of the FTT involved an error of law is for it to set aside and re-make the decision. But I am very poorly placed to evaluate Lambeth’s conduct as would be required if I were to remake the decision. There is no transcript of the hearing and the parties have agreed that the appeal bundle should not contain the evidence provided to the FTT or its direction or correspondence between the parties or with the tribunal. I know very little about how the proceedings were conducted. In addition, the FTT said that it had found the balancing exercise complicated, and it would be particularly difficult for me to assess the relative importance of the various flaws which it identified in Lambeth’s conduct, some of which were justified, but others not. For these reasons this is a case in which it would not be appropriate for this Tribunal to re-make the decision on Manaquel’s costs application.

The choice is therefore between remitting the case to the FTT or leaving its dismissal of the costs application undisturbed, notwithstanding its flaws. That choice is available under section 12(2)(a), which provides that the Tribunal “may (but need not)” set aside an FTT decision found to contain an error of law.

The question whether to set-aside a decision made on legally incorrect grounds, or to leave it undisturbed, involves the exercise of a discretion. In exercising that discretion I take account of the substantial sum of money claimed by Manaquel (£145,000). I need to consider the prospects of a different outcome if the FTT is asked to determine the application again. I will also have regard to the nature of the application and the resources of the parties and the justice system which it has already consumed. My decision must be consistent with the Tribunal’s overriding objective of dealing with cases fairly and justly. As rule 2(2) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules explains, fairness and justice require that cases be dealt with in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties.

For the reason I have already given, this is not a case in which it would be possible for me to re-make the FTT’s decision. It is nevertheless relevant to consider how many of the points originally relied on by Manaquel would still be material to any reconsideration by the FTT, having regard to Hussain.

Eight grounds were identified in the application notice as justifying an award of costs under rule 13(1)(b). For ease of reference I will group them as follows. (a) Two grounds concerned the form of the notice and the argument that it was “unsavable by variation” and therefore doomed to fail. (b) Two relied on Lambeth’s failure to reinspect and its reliance on the hazards of excess heat and hot surfaces and materials despite the works done by Manaquel to improve the operation of the heating and hot water system. (c) Two concerned Lambeth’s failure to disclose the record of its inspections and its hazard score calculations for the hot surfaces and materials hazard. (d) One suggested an inconsistency between reliance on the highest level of Category 1 hazard in respect of excess cold, and a statement in the improvement notice that a prohibition order was not required because there was no “imminent risk of serious harm to the health and safety of the occupants”. (e) And one focussed on Mr Ham’s invitation to the FTT to adjourn the hearing to allow more evidence to be adduced.

Grounds (b) and (e) were misconceived and could not properly support a finding of unreasonable conduct. Ground (d) was acknowledged by Mr Isaac KC to be a make weight (“not central” as he put it); additionally, although the FTT appears to have been impressed by the point, there is no inconsistency between a finding that there is a serious Category 1 hazard and a decision not to prohibit the use of the premises altogether.

The grounds which the FTT might consider of continuing relevance are (a) and (c).

As to ground (a), I have already explained why the lack of precision in the notice raised no doubt about two of the three hazards or more than two thirds of the prescribed actions and did not justify quashing the notice in its entirety. Variation (in the sense of prescribing different work to reflect the current condition of the Estate) was not a problem for Lambeth. What properly remains of ground (a) in support of the charge of unreasonable conduct is therefore that Lambeth served, and did not withdraw, an improvement notice requiring the installation of new double glazed windows throughout the Estate without excluding those flats which already had double glazing or identifying the flats where work was required. The FTT was entitled to regard the notice as flawed in that respect. But, the FTT having acquitted Lambeth of vexatious behaviour, and having found Ms Ward to be an experienced professional who took her responsibilities seriously, it is not difficult to see a perfectly reasonable explanation for the form of the notice, namely, that as Ms Ward explained in her evidence, Lambeth considered it unnecessary to identify each window, or each flat. It would have been obvious on inspection which windows were not already double glazed, and if there was any doubt, it could be resolved by liaison with Lambeth’s officers which the notice also required. The notice appears to me to be capable of a common sense reading and to be adequate for its purpose. The FTT was persuaded to take a different view, but the availability of an alternative interpretation of the notice would make it very difficult for the FTT to conclude, were it asked again, that there was no reasonable explanation for the form it took.

As to ground (c), Lambeth’s failure to preserve records of inspections is certainly a ground on which it could be found to have conducted the proceedings unreasonably. The absence of one of the hazard scores was of little or no consequence as the existence of the relevant hazard was not seriously disputed, but it was a further example of poor record keeping by Lambeth which could be taken into account.

On any view, Manaquel’s case for suggesting that Lambeth acted unreasonably is very much weaker than the case originally presented to the FTT. The FTT was not persuaded by the eight grounds originally relied on. There must be a significant chance that the much smaller catalogue of errors which have survived contact with Hussain would also fail to persuade the same panel if the application were remitted to them for reconsideration.

I also take into account that Manaquel was significantly responsible for directing the FTT’s attention away from the condition of the Estate when the notice was served and persuading it to focus instead on its condition more than two years later, which was legally irrelevant. It presented its case to the FTT without reference to Hussain, decided by the Court of Appeal more than three months earlier. Lambeth acquiesced in that error but was not the source of it. That point would be relevant to the second of the Willow Court stages, whether an order ought to be made (assuming the FTT was satisfied that there had been unreasonable conduct). It would also be relevant at the third stage, when any award of costs came to be quantified. Why, it might well be argued, should Manaquel recover its costs of preparing irrelevant evidence, including expert evidence, and of presenting flawed arguments?

A final factor to which I give weight is the nature of the application. Appeals to the FTT usually involve no costs shifting. It is implicit in the Rules that there is no injustice in each party bearing its own costs. The Tribunal stressed the exceptional nature of the current application in Willow Court, at [43], when we said that costs applications “should not be allowed to become major disputes in their own right” and that they should be determined summarily, and preferably without the need for a further hearing. Those aspirations have not been achieved in this case.

I have come to the conclusion that, in these proceedings, enough is enough, and that, taking all of the matters I have identified into account, despite the flaws in its reasoning, the appeal can be disposed of fairly and justly by refusing to set aside the FTT’s decision not to make an order for costs.