[2025] UKUT 97 (LC)

Under rule 13(1)(b) of the Rules the FTT may make an order for costs “if a person has acted unreasonably in bringing, defending or conducting proceedings.”

In Willow Court, at [28], the Tribunal suggested that a systematic or sequential approach might be adopted by tribunals asked to determine an application under rule 13(1)(b). That approach entailed asking three questions. First, applying an objective standard, had the person against whom the order was sought acted unreasonably? If so, secondly, in all the circumstances, should an order for costs be made? If so, thirdly, what should the terms of the order be?

The Court of Appeal has recently considered Willow Court in Lea v GP Ilfracombe Management Co Ltd [2024] EWCA Civ 1241. Coulson LJ emphasised that determining whether or not there has been unreasonable conduct, and if so, whether an adverse order for costs should be made, is a fact specific exercise on which general guidelines could not normally be laid down. Sufficient guidance in respect of rule 13(1)(b) had been provided in Ridehalgh and in Willow Court. Coulson LJclarified, at [9], that vexatious conduct or harassment were examples rather than requirements and that unreasonable conduct could be identified without those features being present.

In Lea the Court of Appeal also reminded itself of the function of an appellate body when considering an appeal against a determination not to award costs under rule 13(1)(b), and of the difficulty of the task faced by the appellant, at [28]:

“28.

The appeal against the finding by the FtT that GPIMC's conduct was not unreasonable is not an appeal against the exercise of discretion. As Willow Court makes clear at [28], such a finding is a matter of objective fact. But it remains an appeal against an evaluative decision and, in those circumstances, this court will always allow the original court or tribunal considerable latitude before concluding that its decision cannot be allowed to stand. Ultimately, the test is not whether the appellate court would have come to a different decision on the facts, but whether the judge reached a conclusion which no reasonable tribunal could have reached: […].”

The person said to have behaved unreasonably in Lea was a Mr Gubbay, who had brought a substantial claim for service charges without any genuine belief that the claim was justified. The FTT had acquitted him of unreasonable conduct partly because of his belief that "in his own way he was doing the best for everyone.Whether this view is misguided is not a matter we need to determine.” At [36], the Court of Appeal said that approach was wrong:

“[T]he FtT appeared to consider the reasonableness of Mr Gubbay's conduct from his own, subjective point of view. But what mattered is whether his conduct was objectively unreasonable. Thus the question of whether or not Mr Gubbay was "misguided" was a potentially relevant consideration: if he thought he was acting reasonably, but an objective observer would say that he was totally misguided and so was acting irrationally, that would indicate unreasonable conduct.”

In Waltham Forest London Borough Council v Hussain & Ors [2023] EWCA Civ 733, a decision of the Court of Appeal handed down three months before the FTT’s hearing of the improvement notice appeal, the Court explained the proper approach to be taken by tribunals in appeals against licensing decisions of local housing authorities under Parts 2 and 3 of the 2004 Act. The day before the hearing of this appeal, I invited the parties to consider whether, in the light of the Court of Appeal’s guidance, the FTT had been asked by them to consider the wrong question on the appeal against the improvement notice served under Part 1 of the Act, and if it had, whether that had affected the Costs Decision.

Appeals to the FTT against licensing decisions taken under Parts 2 and 3 of the 2004 Act are brought under paragraphs 31 or 32 of Schedule 5 to the Act. By paragraph 34(2), such an appeal:

“(a)

is to be by way of a re-hearing, but

(b)

may be determined having regard to matters of which the authority were unaware.”

Identical language is used in paragraph 15(2) of Schedule 1 to the 2004 Act, which concerns appeals under paragraph 10 of that Schedule against improvement notices served under Part 1 of the Act.

Hussain was an appeal from a decision of this Tribunal (Sir Timothy Fancourt, President): [2022] UKUT 241 (LC). The issue was whether when hearing an appeal against a licensing decision under Schedule 5 the FTT makes its own assessment whether, on the date of the appeal, the appellant is a fit and proper person to hold a licence; or whether, as the authority contended, the task of the FTT was to determine whether the decision of the local housing authority was wrong, and therefore to consider whether the individual concerned was a fit and proper person on the date on which that decision was made.

Andrews LJ explained, at [51], that statutory appeals "by way of re-hearing" may range from re-hearings "in the fullest sense of the word", where the appellate body treats the matter as if it arises for consideration for the first time, with the opportunity to rely on fresh evidence, unconstrained or restricted by the decision under appeal, to something much closer to a review of the decision under appeal. Where on the spectrum a particular type of appeal felldepended on the nature of the decision under appeal and the relevant statutory provisions. Having regard to the language of paragraph 34 and to Parliament’s intention that licensing decisions should be taken by the local housing authority, Andrews LJ concluded that the task of the FTT is to determine whether the decision under appeal was wrong at the time when it was taken. Lewison LJ agreed that the appellate tribunal is not entitled to decide an appeal by reference to facts which occurred after the date of the local authority's decision, except to the extent that they throw light on the question whether the local authority's decision was wrong. As he pointed out, at [101]:

“To decide otherwise, and to hold that the FTT may legitimately conclude that circumstances have changed since the local authority's decision and that, although it was right at the time, events have since moved on, would be to countenance an ever-moving target.”

Before turning to the appeal itself, it is necessary to consider the relevance of the Court of Appeal’s decision in Waltham Forest v Hussain to the proceedings before the FTT.