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Assethold Ltd v 63 Holmes Road (London) RTM Co Ltd

Practice and procedure – First-tier tribunal – Overriding objective – Duty to co-operate – Respondent RTM company refusing to disclose documents requested by appellant landlord until after appellant’s final submissions to FTT – FTT refusing to allow appellant to comment on documents – Whether fair procedure followed – Whether FTT’s decision should be set aside – Ruling accordingly

The appellant owned the freehold of a block of eight leasehold flats at 63 Holmes Road, London NW5. The respondent was an RTM company whose objects were to acquire the right to manage the premises. The respondent gave notice of its claim to the appellant which asked for information to enable it to make a full assessment of the claim. The respondent did not reply. Although the appellant did not have the information needed, it served a counternotice asserting that, for reasons related to specific qualifying conditions, the respondent was not entitled to acquire the right to manage.

The respondent applied, under section 84(3) of the Commonhold and Leasehold Reform Act 2002, for a determination that it was entitled to acquire the right to manage the block. The FTT directed that the application would be dealt with on paper. Further, the application and its accompanying documents were to stand as the respondent’s statement of case. The appellant was required to file a statement of case in response, with the respondent having the opportunity to file a brief statement in reply.

The appellant complied with the direction to file a statement of case. The respondent then filed a further statement of case in reply, providing most of the information which the appellant had previously requested. The appellant asked for an opportunity to respond to the new documents but the FTT decided that there was no need for further argument. It subsequently confirmed that the respondent was entitled to the right to manage.

The appellant appealed arguing that the procedure adopted denied it any opportunity to respond to the respondent’s substantive case, the details of which had been deliberately withheld until after the appellant had been required to state its grounds for resisting the application. Therefore, the decision was fatally compromised by a substantial procedural defect. The appeal was determined on written representations.

Held: A ruling was made accordingly.

(1) By rule 6(1) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the FTT might regulate its own procedure seeking to give effect to the overriding objective identified in rule 3(1), namely, to deal with cases fairly and justly. That included dealing with each case proportionately to its importance and complexity, the anticipated costs and the resources of the parties and of the FTT itself; it also included ensuring, so far as practicable, that the parties were able to participate fully in the proceedings, and avoiding delay, so far as was compatible with proper consideration of the issues (rule 3(2)(a)). Rule 3(4) placed a positive obligation on the parties in proceedings to help the FTT to further its overriding objective, and to co-operate with it generally. Although the rule did not say so explicitly, it also required parties to co-operate with each other: Lexi Holdings v Pannone and Partners [2010] EWHC 1416 and BPP Holdings Ltd v HMRC [2017] UKSC 55 considered.

(2) The onus of establishing that an RTM company was entitled to acquire the right to manage was on the company itself. The landlord or other party which had served a counter-notice had to have a proper opportunity to answer the case on which the RTM company relied. The case which a landlord was entitled to challenge was not limited to the company’s assertion that the qualifying conditions had been satisfied. It included the facts asserted by the company and the evidence relied on to make those assertions good.

The procedure adopted by the FTT in the present case ensured that the appellant had no opportunity to respond to the evidence on which the respondent relied. The FTT’s refusal to allow the appellant to respond to the documents produced by the respondent after the appellant had made its own submissions prevented the appellant from challenging the veracity of the documents themselves, or pointing out any respects in which they failed to satisfy the qualifying conditions. The FTT reached its conclusion, that the material belatedly relied on was sufficient to demonstrate the company’s entitlement, without considering any argument to the contrary or allowing the appellant the opportunity to adduce evidence which might cast doubt on it. That procedure was clearly unfair. The FTT’s assumption that there was nothing the appellant could say which would defeat the company’s entitlement to acquire the right to manage might turn out to be correct, but for the FTT to act on that assumption by refusing the appellant the opportunity to respond to the respondent’s case was not consistent with the FTT’s overriding objective: Elim Court RTM Co Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89; [2017] PLSCS 46 followed.

(3) The FTT’s suggestion that the appellant was safeguarded by the opportunity available to the FTT to review its own decision on an application for permission to appeal was not fair and proportionate. The FTT’s power to review its own decisions was limited to a point of law. Although, in appeals from tribunals, the scope of points of law was wide, it was not infinitely elastic, and a tribunal would not be entitled to review its decision on the basis of new evidence not adduced at the proper time. The onus would also be placed on the appellant of demonstrating that a decision in the respondent’s favour, made on incomplete evidence and argument, was wrong. That was not a fair approach to the determination of any application: Point West GR Ltd v Bassi [2020] EWCA Civ 795; [2020] PLSCS 126 followed.

(4) Although the appellant had been deprived of a fair opportunity to put its case in answer to the application, that did not necessarily mean that the FTT’s decision should be set aside. The unfairness created by the FTT’s refusal to consider further argument could be rectified by giving the appellant the opportunity now to identify any additional argument or evidence on which it would have relied. If such further submissions failed to disclose any grounds for thinking the respondent was not entitled to acquire the right to manage, the proper course would be to dismiss the appeal. If the appellant was able to cast doubt on the respondent’s entitlement, the tribunal would give further consideration to the best means of finally determining the application.

The case was decided was decided on written representations.

Eileen O’Grady, barrister

Click here to read a transcript of Assethold Ltd v 63 Holmes Road (London) RTM Co Ltd

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