Assethold Limited v 159-167 Prince of Wales Road RTM Company Limited

For the purposes of a statutory costs regime, estoppel may prevent a party from denying a fact which is an essential condition of the court’s existing statutory jurisdiction. It does not enlarge that jurisdiction or contradict the statute. An RTM company which issues proceedings against a person as the landlord may therefore be estopped from denying that status when costs are claimed after withdrawal. The principle does not apply where it would validate a transaction which legislation requires to have a particular form.

The respondent RTM company applied to the First-tier Tribunal for a determination that it was entitled to acquire the right to manage, naming the appellant as landlord. It withdrew the application shortly before the hearing. The appellant sought costs under sections 88 and 89 of the Commonhold and Leasehold Reform Act 2002. The respondent argued that the appellant was not the legal landlord because registration of its acquisition of the freehold and headlease remained pending, and that estoppel could not confer jurisdiction or override the statutory scheme. The First-tier Tribunal refused costs. The central issue was whether the respondent was estopped from denying the appellant’s landlord status for the purpose of the costs application.

1. Appeal allowed on ground 1. The appellant was entitled to rely on an estoppel in relation to its application for costs. The amount of costs was to be determined separately.
2. Sections 88 and 89 of the Commonhold and Leasehold Reform Act 2002 make an RTM company liable for reasonable costs incurred by a landlord in consequence of a claim notice where the RTM proceedings are dismissed or withdrawn, subject to the statutory limits. The statute restricts the persons and circumstances giving rise to liability, but does not prevent an estoppel concerning an essential fact within that statutory framework.
3. Estoppel cannot enlarge the FTT’s jurisdiction. It may, however, prevent a party from denying a fact necessary to establish a claim which already falls within that jurisdiction. The distinction drawn in Benedictus v Jalaram was applicable.
4. By issuing proceedings against the appellant as landlord, the respondent represented by its conduct that the appellant had that status. The appellant relied on that position by engaging with the proceedings and incurring costs. The respondent’s later denial was inconsistent and unfair. The reasoning in Plintal SA v 36-48A Edgewood Drive RTM Co Ltd was preferred and applied.
5. The decisions concerning statutory formalities, including Cobbe v Yeoman’s Row Management Ltd and Actionstrength Ltd v International Glass Engineering, did not govern. The obiter reasoning in Lough's Property Management Limited v Robert Court RTM Company Limited was not followed to the extent that it was inconsistent with Plintal.

• First-tier Tribunal (Property Chamber): refused to make a costs order under section 88 of the Commonhold and Leasehold Reform Act 2002.
• Upper Tribunal (Lands Chamber): allowed the appeal on the estoppel ground, held that the respondent was estopped from denying the appellant’s landlord status for costs purposes, and directed that the amount of costs be determined separately.