A landlord which withdrew its objection to a right to manage application shortly before the hearing of the application has succeeded in its appeal against a costs order made on the grounds that its conduct of the proceedings had been unreasonable.
An RTM company had served the landlord with a claim under Part 2 of the Commonhold and Leasehold Reform Act 2002 to acquire the right to manage in respect of a building containing nine flats. The landlord disputed that Part 2 of the Act applied to the building. Two working days before the hearing at which the First-tier Tribunal (FTT) was to resolve the issue, the landlord sent an email to the RTM company and the FTT withdrawing its objection to the claim. The RTM company sought confirmation that the landlord accepted its entitlement to acquire the right to manage and, after it did not receive an immediate response to that request, informed the FTT that it still wished the hearing to go ahead.
At the hearing, the RTM company applied for an order for costs. The FTT accepted that the landlord’s conduct of the proceedings had been unreasonable and ordered the landlord to pay the full amount of the RTM company’s costs. The landlord appealed to the Upper Tribunal (UT).
The UT noted that the landlord was not required to rebut the RTM company’s case that it was entitled to acquire the right to manage, but rather was entitled to see if the RTM company could prove it. The FTT had criticised the landlord for ‘failure to engage in any dialogue or communication’ but had not said what dialogue it had in mind. The RTM company had not initiated any communications prior to filing evidence in support of its claim, and the FTT had not required the parties to take any formal steps.
The period between the RTM company filing its evidence and the landlord withdrawing its objection to the claim was only eight days and coincided with Passover, which was observed by the landlord’s directors. The UT did not accept that the FTT was entitled to conclude that there was no reasonable explanation for the landlord not withdrawing its objection earlier.
The FTT had also criticised the landlord’s ‘last minute and equivocal’ email withdrawing its objection. However, although the email had not stated in terms that the landlord accepted the RTM company’s entitlement to acquire the right to manage, neither the RTM company nor the FTT had explained what other meaning it could have had. In the UT’s judgment, the email was clear.
The UT concluded that the landlord’s conduct had not been unreasonable. The FTT’s decision to order payment of the RTM company’s costs was set aside.