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Rotenberg & Ors v Point West GR Limited [2019] UKUT 68 (LC)

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27th June 2019

Summary

In deciding whether or not to make an order in the leaseholders’ favour under s20C of the Landlord and Tenant Act 1985, the First-Tier Tribunal had wrongly taken into account the issue of their representation. The landlord, Point West GR Limited (“Point West”) had unreasonably taken issue with the list of clients produced by Wallace LLP (solicitors for the leaseholders) (“Wallace”) given the effect of Rule 14 of The Tribunal Procedure (First-Tier Tribunal) (Property Chamber) Rules 2013 (“the 2013 Rules”).

Facts

In March 2017, the FTT handed down a decision that the costs which Point West intended to incur during major capital works were reasonable and that the leaseholders were liable to contribute to them through their service charges. Shortly before the hearing, Wallace had confirmed it was instructed to act on behalf of the members of the leaseholders’ Association and provided a schedule identifying 277 separate flats whose leaseholders were members.

It had been agreed during the hearing that, after the FTT had determined the total amount of the proposed expenditure which was recoverable, Point West would prepare a breakdown showing how that expenditure was to be apportioned between the different service charge categories so that the contribution by individual leaseholders could be ascertained.  If there was any dispute concerning apportionment the parties were to have the opportunity to apply to the Tribunal for a further determination. The breakdown followed in due course, and the leaseholders objected on four grounds.

Following the first CMC, the FTT directed Wallace to provide an updated list of the leaseholders they represented, which was subsequently provided and listed 276 flats. However, a month after receiving Wallace’s list of its clients Point West’s solicitors, Fladgate LLP (“Fladgate”), wrote to Wallace asserting that the list was “inaccurate and misleading as there are at least 10 tenants who you claim you represent in these proceedings for whom you cannot be acting”.  The flats in question were identified in the letter.  In four cases the registered proprietor was a limited company but Wallace had identified their client as an individual.  In five cases the individual for whom Wallace acted was no longer the registered proprietor of the lease.  In the final case a lease had been registered to a new proprietor after Wallace’s letter of 2 August had been written. Fladgate contended that those discrepancies cast doubt on the whole list and demanded a signed confirmation of instructions from each leaseholder client. Where a flat was owned by a company it was said also to be necessary that evidence of the authority of the person signing on behalf of the company should be provided.

Without waiting for a response to their letter Fladgate raised the issue of representation with the FTT on 8 September, seeking an order in the terms they had proposed. In response Wallace explained that the Association by which it was instructed did not always know when changes in the ownership of flats took place, and suggested that before the next hearing on 10 October it would either provide written confirmation that it acted on behalf of the leaseholders of the 10 flats identified by Fladgate or confirm that it did not do so.

On the following day Fladgate complained to the FTT that Wallace had failed to confirm for whom they acted and had not explained why they “purported to act for 10 tenants who are not tenants of the Building”.  Moreover, it suggested that it was likely that the tenants on Wallace’s list had no idea that they were represented in the proceedings by that firm.  Fladgate protested that it was “imperative that our clients know the identity of the [leaseholders] in these proceedings … so it knows which leaseholders it can/must contact directly in relation to certain items and which tenants’ correspondence must be sent to Wallace.”  It was said to be “vital that the leaseholders appearing on Wallace’s list know that they are so appearing, know that costs are being incurred in their names (and the risk to them associated with this) and have an opportunity to provide their input).”

The FTT accepted Fladgate’s submissions and in a further decision issued on 25 September it required Wallace to provide a witness statement by 29 September listing the leaseholders for whom it acted in the proceedings and setting out the steps which had been taken in order to ensure that the list was accurate. This deadline was later extended to 5 October. 

On 4 October Mr Simon Serota, a partner in Wallace, filed a witness statement in which he explained that the list of his firm’s leaseholder clients was a list of the members of the Association. In view of the Tribunal’s directions the members had been contacted and asked whether they agreed to be represented by his firm in the proceedings. Confirmation had already been received from the leaseholders of 102 flats that they did, and a list of their names and flats was provided. On 5 October Fladgate wrote again to the FTT responding to Mr Serota’s witness statement.  By now Point West had obtained a copy of the email sent by the Association to its members and Fladgate objected both to the content of Mr Serota’s witness statement and to the content of the email.  It was suggested that the email did not provide enough information to the leaseholders to enable them to make “an informed decision” thereby risking “biasing the response”; in particular it did not point out the cost to the leaseholders of being involved in the proceedings.  Nor was it clear whether Wallace had sent client care letters to all of the leaseholders on the list exhibited to Mr Serota’s witness statement.  As there were 70 fewer names on the 4 October list than on the list provided on 2 August, Fladgate demanded to know whether Wallace had ever acted for those leaseholders and accused it of “making misrepresentations to us and the Tribunal about who they are acting for”. 

On 5 October Fladgate wrote again to the FTT responding to Mr Serota’s witness statement.  By now Point West had obtained a copy of the email sent by the Association to its members and Fladgate objected both to the content of Mr Serota’s witness statement and to the content of the email.  It was suggested that the email did not provide enough information to the leaseholders to enable them to make “an informed decision” thereby risking “biasing the response”; in particular it did not point out the cost to the leaseholders of being involved in the proceedings.  Nor was it clear whether Wallace had sent client care letters to all of the leaseholders on the list exhibited to Mr Serota’s witness statement.  As there were 70 fewer names on the 4 October list than on the list provided on 2 August, Fladgate demanded to know whether Wallace had ever acted for those leaseholders and accused it of “making misrepresentations to us and the Tribunal about who they are acting for”.

First instance

Although in its substantive decision the FTT significantly reduced the sums payable by the leaseholders towards the capital expenditure it refused their application for an order under section 20C. It did so, in part, because the leaseholders had not been “wholly successful” and, in part, because of what the FTT considered to be a lack of clarity over the identity of the leaseholders on whose behalf the application was made which was said to have caused additional expense and inconvenience to Point West and to the FTT. The FTT regarded the identity of the parties to the application as a fundamental issue and criticised the leaseholders and their solicitors for failing to be clear about that matter from the outset.

Issues

1. Whether the FTT failed to take into account “properly or at all” Point West’s conduct of the proceedings and their outcome when it refused to make an order under section 20C Landlord’s conduct;
2. Whether the FTT wrongly took into account the issue of the leaseholders’ representation;
3. Whether the decision was perverse, as being a decision which no reasonable tribunal could have made had it given proper consideration to the relevant matters.

Decision on appeal

Martin Rodger QC dismissed the first and third grounds of appeal. With regards to the first, he considered that there was no reason to suggest that the FTT had failed to take into account the extent to which the leaseholders had succeeded, nor was there any reason to consider that matters of conduct were left out of account. These was matters of judicial discretion and should not be interfered with lightly. As to the third ground of appeal, the Judge considered that although the FFT was concise it its explanation that the issue of representation was “fundamental”, it was not inappropriately so. In the Judge’s view, if the FTT was entitled to give weight to the representation issue then it was impossible to conclude that its assessment of what was just and equitable was not open to it.

Turning to the main issue, the second ground of appeal, Martin Rodger QC found that there had been no issue with the original list of leaseholder clients produced by Wallace before the March 2017 hearing. None of leaseholders had been removed from the proceedings, and they therefore all remained respondents by June 2017. The effect of rule 14(4)(b) of the 2013 Rules was that Point West was entitled to assume that each of those named on Wallace’s February 2017 list was still represented by the firm, and that the request to the FTT to give directions to resolve the apportionment issue was made on behalf of all those on that list. Fladgate’s list of criticisms overlooked this fact.

While in the circumstances there could be no objection to Wallace being required to provide a list of those whom it represented, the argument which then ensued over the content of the list provided a disturbing example of wasteful satellite litigation. A matter of peripheral procedural significance was taken up by one party for tactical advantage and to discomfort its opponent and was allowed to command a wholly disproportionate share of both the FTT’s and the parties’ resources which ought properly to have been devoted to the resolution of the main issues in dispute. It also lost sight of the general significance of the apportionment issue, which was relevant to all leaseholders irrespective of which ones Wallace represented.

Therefore, the FTT ought not to have given weight to the issue of suggested discrepancies in the list of Wallace clients when it determined the application under section 20C.

The Judge considered that, having allowed the appeal, he was also in the position to properly deal with the section 20C application itself. In his opinion, it was correct to make such an order given the level of success (which far exceeded an earlier without prejudice offer) and the conduct of Fladgate with regards to the representation issue, which he described parts of as being “positively mischievous”, involving “blatant gamesmanship”, and “entirely unjustified”.

Comment

Martin Rodger QC reiterated that “it is important that such cases do not become bogged down in unnecessary procedural complexities.  Ensuring that that does not happen is the responsibility of both the FTT itself and of the parties, especially parties with professional representation.”

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