[2025] UKUT 293 (LC)

Following a two-day hearing on 3 and 4 October 2024 at which the appellants represented themselves, on 10 October 2024 the First-tier Tribunal (Property Chamber) (Residential Property) (‘the FTT’) determined four applications, three from the tenants (‘the appellants’) and one from the landlord (‘the respondents’) of residential premises at 9A Belsize Crescent, London NW3 5QY (‘the property’). The tenants’ three applications were as follows: for determination of certain service charges; for the appointment of a manager; and for an order limiting the landlords’ costs. The landlords’ application sought dispensation from the consultation requirements under Landlord and Tenant Act 1985 in respect of major works. The FTT allowed a sum in respect of major works; made no order on the application to be dispensed from consultation since it was unnecessary in view of the determination of the cost of the major works; and refused the application for the appointment of a manager. It gave directions for submissions on costs. There is no appeal from that decision.

The landlords applied for a costs order. Following written submissions on costs, in its decision dated 25 November 2024 (corrected under the slip rule on 5 December 2024), the FTT made a costs order against the tenants in the sum of £70,000 pursuant to rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, and refused the tenants’ application for an order under section 20C Landlord and Tenant Act 1985.

Permission to appeal the costs order was granted by this Tribunal on 5 February 2025. This is the Tribunal’s decision on that appeal.

As the FTT observed, save in relation to the fees payable to HMCTS, it is in principle a ‘no costs’ jurisdiction. However, so far as relevant, under rule ‘the Tribunal may make an order in respect of costs only… if a person has acted unreasonably in bringing, defending or conducting proceedings’: r.13(1)(b) of the 2013 Rules.

The FTT referred to Willow Court Management Co (1985) Ltd v Alexander [2016] UKUT 290 (LC), reminded itself that a sequential approach to applications under that provision should be adopted.

“At the first stage the question is whether the person has acted unreasonably. At the second stage it is essential for the tribunal to consider whether, in light of the unreasonable conduct it has found, it ought to make an order for costs or not. If so, the third stage is what the terms of the order should be.”

In summary, the appellants challenge the decision on the basis that the FTT, while correctly identifying the test for unreasonable behaviour at the first stage, misapplied it so as wrongly to conclude that the tenant’s behaviour had been unreasonable; alternatively, on the basis that the FTT exercised its discretion wrongly at the second stage, in concluding that it ought to make an order for costs against the tenants.