Anthony Orchard & Anor v Alison Mooney & Anor

Under rule 13(1)(b), a costs order requires objectively unreasonable conduct in bringing, defending or conducting proceedings. The tribunal must first identify such conduct before exercising its discretion on whether costs should be awarded and, if so, in what amount. The three-stage approach in Willow Court Management Company v Alexander is guidance rather than a rigid test. A reasonable explanation for the conduct defeats the threshold requirement. In assessing reasonableness, the tribunal must consider the full evidential context, including whether a party had a proper basis for challenging a tribunal-appointed manager and seeking disclosure. Conduct by the manager, including withholding material evidence, may be relevant both to the objective assessment and to the exercise of the costs discretion.

The appellants appealed against a costs decision of the First-tier Tribunal (Property Chamber). The FTT had ordered them to pay £7,000 to the tribunal-appointed manager and £10,500 to the second respondent, finding that they had acted unreasonably in applying to discharge the manager and in conducting that application.

The appeal concerned the proper approach under rule 13(1)(b), the effect of fresh evidence concerning a surveyor’s report, and the FTT’s failure to give the appellants an opportunity to respond to late material. The Upper Tribunal also considered whether the appellants’ disclosure application and their challenge to the manager’s impartiality had a reasonable basis.

1. Appeal allowed. The FTT’s costs decision was set aside. Costs under rule 13(1)(b) could be ordered only if the appellants had acted unreasonably in bringing, defending or conducting the proceedings.
2. The relevant standard was objective. A reasonable explanation for the conduct meant that the threshold for the costs jurisdiction had not been crossed. The three-stage approach described in Willow Court Management Company v Alexander was an aid to decision-making, not a straitjacket. As explained in Laskar v Prescott Management Ltd, the essential questions were whether there had been unreasonable conduct, whether the discretion was properly exercised, and whether the tribunal had adequately explained its decision: paras [11]-[13], [19].
3. The appellants had a reasonable basis for seeking the manager’s discharge. They were entitled to resist being made responsible for intrusive remedial works which, on the fuller evidence, were not justified. Their concern that the manager was not acting even-handedly was materially supported by her disclosure of the surveyor’s report to the second respondent and her advisers but not to the appellants. The absence of an alternative management proposal was not necessarily fatal to the application: paras [20]-[22].
4. The application for disclosure of the surveyor’s report was reasonable and should not have been necessary. Although other requests were irrelevant or disproportionate, the FTT should have distinguished between proper and excessive requests. It could not properly conclude that the appellants had misrepresented the report without reading it. The report showed that the manager’s account of the professional advice received was untruthful, which materially undermined the costs application: paras [23]-[24].
5. There was therefore a reasonable explanation for the appellants’ conduct, and they had not acted unreasonably. The manager’s withholding of the report was also relevant to the exercise of the costs discretion. The appeal was allowed and the FTT’s costs decision set aside. Any application concerning costs under section 20 C of the Landlord and Tenant Act 1985 or the Tribunal’s rules was to be made within 14 days: paras [25]-[28].

• First-tier Tribunal (Property Chamber): On 4 April 2022, ordered the appellants to pay £7,000 to the manager and £10,500 to the second respondent under rule 13(1)(b), on the basis that they had acted unreasonably.
• Upper Tribunal (Lands Chamber): Allowed the appeal and set aside the FTT’s costs decision.