Although an appeal against the First-tier Tribunal’s refusal to replace a manager for partiality had been dismissed, the facts ascertained on appeal indicated the behaviour of the appellants had not been unreasonable and the costs order made against them was set aside.
In Orchard and Another v Mooney and others [2023] UKUT 89 (LC), the Upper Tribunal considered an appeal against the costs order of the FTT that the appellants pay £7,000 to the manager and £10,500 to another lessee. The FTT made these costs orders after concluding the appellants had behaved unreasonably in making the application to discharge the manager and in the way they had conducted the application.
A FTT has the power to make a costs order under Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 exceptionally if a person has acted unreasonably in bringing, defending or conducting proceedings. Willow Court Management Company v Alexander [2016] UKUT 290 (LC) suggests a three-stage approach to making such orders – firstly, decide objectively if the party has acted unreasonably; secondly, consider whether (in the light of established unreasonable conduct and as a matter of discretion) an order for costs should be made or not; and thirdly, decide what the order should be. The logical sequence of steps is a framework and not a straitjacket (Laskar v Prescott Management Ltd [2020] UKUT 241 (LC)).
Although the FTT formed the view that the appellants conduct was extreme, the fresh evidence before the Upper Tribunal revealed the suspicions that fuelled the application to discharge the manager were justified. The manager had not behaved in an even-handed manner. The FTT criticism of the appellants’ failure to have an alternative management plan was unfair. If a manager’s conduct fell sufficiently below the proper standard, the absence of an alternative to a return to the contractual position should not necessarily be fatal to an application to remove the manager. While some of the disclosure sought by the appellants may have been irrelevant or disproportionate, the FTT ought to have been able to distinguish between what was important and what was not. The most recent report of the expert (which did not support the basis on which the manager purported to be acting) should have been disclosed voluntarily by the manager to the appellants and to the FTT. The costs orders against the appellants had to be set aside.
Additionally, the Upper Tribunal observed that it agreed with the proposition that the manager’s conduct in withholding the expert report from the appellants and from the FTT ought to have been treated by the FTT as relevant to the exercise of its discretion to make an order for the payment of the manager’s costs.
Elizabeth Haggerty is a barrister
