[2025] UKUT 293 (LC)

Fecha: 01-Sep-2025

The FTT’s costs judgment

The FTT’s costs judgment

14.

Having briefly but accurately referred itself to the appropriate test, which this decision sets out in greater detail above, the FTT’s costs judgment proceeded by reciting the landlords’ submissions, then the tenants’ and then accepted the landlords’ submissions. Its conclusions must be read in the context of the submissions made to it; and its recital of those submissions in the context of its substantive judgment and the material before it. That is in line with the observation in Willow that ‘the underlying dispute can be taken as read”.

“The landlords submit:

…that the Tenants acted unreasonably in the following respects:

6.1.. Pursuing allegations which were obviously hopeless.

6.2

Making and pursuing serious allegations vexatiously.

As noted in the Decision, only one of the allegations in the s22 Notice was made out (the 2007 statutory declaration allegation at [D49]). However, this was 17 years old and was never going to get close to persuading the Tribunal that it would be appropriate to appoint a manager.

Other than the proven allegation, the Lessees raised many allegations in the s22 Notice that, as highlighted by the Tribunal at [D49—D56] were unsupported by the documents, inherently implausible, bad in law and/or so old as to be irrelevant to the Tribunal’s discretion under s24.

Not only were the allegations made hopeless, but they were also pursued in a vexatious manner. Some examples are:

9.1.

Repeated unfounded allegations of harassment, fraud and other improper behaviour directed against the Landlords, culminating in Mr Coogan’s skeleton accusing the Landlords of offences under the Bribery Act 2010 and appending a document seeking to compare the Landlords’ conduct to that of people who torture prisoners of war. By way of analogy, unwarranted allegations of fraud are often seen as founding a basis for indemnity costs in civil cases as constituting unreasonable behaviour.

9.2.

Frankly nonsensical interpretations of objectively benign events to suit the narrative, the most obvious examples being (1) the Paul Adams allegation [D16], (2) the allegation that it was the Landlords who ‘falsely accused’ the Lessees of removing an internal wall re: the Castle Trust Remortgage [D20—22] (3) the deeply suspicious circumstances relating to the 2017 Flood [D25—D27] and (4) the ‘special price’ [D31].

10.

Whilst the Service Charge and Dispensation Applications were simpler and less contentious, the fact remains that the Lessees’ position was hopeless. They persisted with a challenge to compliance with the Consultation Regulations which made no sense on the documents (thus forcing the Landlords to make the Dispensation Application) and they had no evidence in support of their challenge to the Major Works. The repeated references to mediation as some kind of defence was unattractive; the Lessees had no intention to negotiate unless it was entirely on their terms.

11.

Having heard Mr Coogan give evidence, it is difficult to conclude otherwise than the Lessees were willing to say whatever they could, truthful or not, to suit their purposes, and pursued the litigation without any regard for due process, fairness or courtesy. Put another way, no professionally advised litigant would ever have commenced, or pursued, this litigation in the manner it has been pursued. The Lessees’ conduct was manifestly unreasonable.”

The tenants submit:

“The decision in this matter reflects a genuine dispute on substantial grounds and a position legitimately held and pursued by the Lessees to reflect their concerns and experiences as the Lessors’ tenants. Whilst it is not intended to conflate issues pertaining to the reasonableness of the parties’ conduct or to relitigate issues which were determined, it is apparent from the reasoned decision that:
(a)
Issues between the parties can be traced throughout the period of the lease, over some 17 years, to when the Lessees are said to have ‘gazumped’ the Lessors attempts to purchase the property and unite the titles, initiating what went on to become highly regrettable and long-standing poor relations;
(b)
The Lessees spent a substantial amount on improving the property, particularly on relocating the boiler, which ought ordinarily to have been a constructive step for all parties. However the Lessors then threatened to forfeit the lease on the basis of the associated works, with Reza Taheri even attempting to force a written admission of breach from the Lessees;
(c)
Issues concerning the fire safety of the ceiling appear to have fomented further animosity, disagreement and distrust;
(d)
The Lessees attempted to sell their leasehold title in 2014 but consider the Lessors’ conduct to have contributed to that not progressing (albeit that the Tribunal did not accept that this was the principal cause of the buyers’ pulling out);
(e)
The Lessors were concerned with issues relating to the location of walls and structural integrity which predated the Lessees’ lease;
(f)
There were issues surrounding a flood and a disagreement as to the refusal for consent for a pet (albeit that this was found to have been carefully considered by the Lessors and therefore refused within the discretion afforded by the lease);
(g)
The Lessees, facing a demand for roof works (which would not affect them directly, being on the lowest floor, but for which they would be required to contribute 25%), sought permission to inspect the roof so that they could be satisfied that the works and their cost were justified;
(h)
The Lessees settled all ordinary, periodic service charge demands (see para.37);
(i)
The professional fees of the surveyor supervising major works were checked overnight during the hearing (see paras.39-40) such that they did not crystallise until that point;
(j)
Although the Tribunal determined that a s.20 notice allegedly served on 11th February 2022 had been seen by the Lessees, matters were nevertheless complicated by the intervention of issues with roof drainage (para.42) such that the Lessees’ reluctance to conclude the issue was rational and not merely an attempt to avoid paying, and it is clear that Mr Coogan sought clarification;
(k)
The Lessees suggested mediation (para.43), which was an entirely proportionate response to concerns which were legitimate and authentic whether or not the Lessors’ position was ultimately validated by the decision itself;
(l)
The Lessors had objected to the Lessees’ application for the appointment of a manager on jurisdictional grounds, only to withdraw that subsequently, albeit that the Tribunal decided not to do so. This was itself a wasteful diversion. The issues explored in this context again reflected a level of disagreement that might in appropriate circumstances realistically have been mollified by an independent intermediary such that it was a reasonable avenue for the Lessees to pursue.”

15.

The decision of the FTT, considering these competing submissions, as to whether the test for unreasonable behaviour had been met, was expressed in the following way.

“7.
In this section and the next we refer to the landlord as the applicant and the tenants as the respondents. We start by considering the first question (or questions): Would a reasonable person in the position of the party have conducted themselves in the manner complained of? Or, is there a reasonable explanation for the conduct complained of?
8.
We remind ourselves that the respondents are not lawyers. However, Mr Coogan had been a property professional and Mrs Coogan (who made the legal submissions on their behalf) was an impressive lay advocate who had clearly been able to research the law. Both were clearly intelligent. Only Mr Coogan gave evidence, but we accept the landlord’s submission that he was willing to say whatever, whether truthful or not, without any regard for due process, fairness or courtesy. We also accept the other points made on the landlord’s behalf, which are amply borne out by the evidence adduced before us.
9.
As to the respondents’ points, (a) and (b) were the only allegations made out by them, but the points (as they should have appreciated) were so old as to have negligible weight in the Tribunal’s determination whether to appoint a manager. (c), we are afraid, shows the unreality of the respondents’ approach to the case. There were and are major concerns about the fire safety of the ceiling of the respondents’ flat. As to (d), we did not in our substantive judgment accept that the applicant scuppered the sale of the flat. We have dealt with (e) and (f) in our substantive judgment: there is no valid criticism which could have been made of the applicant.
10.
(g) shows the respondents’ unreasonable approach to the litigation. The cost of roof repairs to them was about £162.50. Their complaint is that the landlord did not permit them to go on the roof, using a ladder and without any form of harness, despite potential health and safety issues and the absence of any contractual right to do so. It is in our judgment farfetched to suppose that this allegation could have supported the respondents’ application to appoint a manager.
11.
(h) is of little weight. If anything it tells against the appointment of a manager, because the applicant was managing the ordinary expenses in a proper manner. (i) and (j) are also make-weights.
12.
As to (k), having seen Mr Coogan give evidence, we agree with the landlord’s submissions that “the Lessees had no intention to negotiate unless it was entirely on their terms.”
13.
As to (l), we heard no argument about the jurisdictional matters raised, but then retracted, by the landlord. It cannot affect the reasonableness or otherwise of the respondents’ litigation behaviour. However, it is relevant to the second and third stages of our consideration.
14.
Looking at these matters in the round, in our judgment the respondents have behaved unreasonably in the manner in which they have brought their application and conducted the matter.”

16.

Having reached this conclusion, the FTT went on to consider stage 2 of the Willow test in the following terms.

“We turn then to the second question as to whether we should make a costs order. This is a discretionary matter. In our judgment this is a bad case. Obviously bad points were pursued vigorously. Serious allegations of fraud and bad faith were bandied about vexatiously. In our judgment, this is an appropriate case to exercise our discretion to make a costs order.”