Adriatic Land 5 Limited v The Long Leaseholders at Hippersley Point

The Court of Appeal considered whether schedule 8, paragraph 9 of the Building Safety Act applied to costs incurred and payable before that provision came into force on 28 June 2022, and whether, if conventional interpretation produced a retrospective effect, the court should instead read the Act compatibly with the Convention rights by applying section 3 of the Human Rights Act 1998 to avoid an unlawful interference with possessions under Article 1 of Protocol 1. The court set out an eight-stage approach to the interaction between conventional statutory interpretation and a section 3 Human Rights Act argument, including the need to examine legitimate aim and proportionality if incompatibility is argued.

Because the section 3 point had not been fully argued below, the court allowed the landlord to advance that argument on appeal but permitted the Secretary of State to adduce evidence on compatibility if she wished. The court directed that the appeal be relisted for substantive hearing by the end of the Hilary term 2025 and ordered that the related Triathlon appeal be heard sequentially by the same constitution.

The appellant landlord, Adriatic Land 5 Limited, appealed from a decision of the Upper Tribunal (Lands Chamber) that costs incurred before 28 June 2022 were not recoverable by way of service charge because of schedule 8, paragraph 9 of the Building Safety Act. The landlord wished to argue that paragraph 9 did not have retrospective effect and, alternatively, that if conventional interpretation produced retrospectivity the court should apply section 3 of the Human Rights Act 1998 to avoid incompatibility with Article 1 of Protocol 1 of the European Convention on Human Rights.

The Secretary of State objected that the Human Rights Act argument had not been taken below, was not included in the permission to appeal application, and that resolving compatibility would require evidence about the legislative aim and proportionality. The Upper Tribunal had considered retrospectivity but had not carried out a section 3 analysis.

The Court of Appeal (Lewison LJ) explained the procedural and substantive approach the court would ordinarily adopt: (i) apply conventional principles of interpretation including the presumption against retrospectivity; (ii) if the appeal would otherwise fail, consider whether the conclusion would be unlawful under A1P1; (iii) if unlawfulness is asserted, identify the legitimate aim and assess proportionality; and (iv) if incompatibility is found, consider whether section 3 permits a compatible reading. The court considered authorities on allowing new points on appeal, the reception of fresh evidence, and the mandatory duty under section 3.

The court concluded that the landlord should be permitted to advance the section 3 argument despite it being a new point, but that the Secretary of State should be permitted to adduce evidence on compatibility. The court directed a timetable allowing six weeks for the Secretary of State to put in evidence and ordered that the appeal be listed for hearing by the end of the Hilary term 2025, to be heard sequentially with a related appeal (the Triathlon appeal). The decision determined interlocutory procedural issues and did not adjudicate the substantive question whether paragraph 9 is retrospective or whether a section 3 reading is possible.

Allowed in part. The Court of Appeal permitted the appellant to advance a new argument under section 3 of the Human Rights Act 1998 that, if conventional interpretation made schedule 8 paragraph 9 retrospective and thus interfered with possessions under A1P1, the Act should be read compatibly. The court accepted that the Secretary of State should be entitled to adduce evidence on the legitimacy and proportionality of the provision and directed a timetable and listing for substantive hearing. The substantive merits of retrospectivity and compatibility were not finally decided.

Appeal from the Upper Tribunal (Lands Chamber) (Chamber President Edwin Johnson J) which had held that costs incurred before 28 June 2022 were not recoverable under schedule 8, paragraph 9 of the Building Safety Act and had granted the landlord permission to appeal. (Upper Tribunal citation: [2023] UKUT 271 (LC)).