Assethold Limited v Piano Works Building RTM Company Limited

For the purposes of rule 13(1)(b), unreasonable conduct is assessed objectively and factually. The conduct must lack a reasonable explanation; it need not be vexatious or intended to harass. A landlord receiving a right-to-manage claim is entitled to put the claimant to proof and is not required to volunteer agreement or initiate dialogue merely to accelerate the statutory process. A short delay in withdrawing an objection may be reasonable where new evidence was sent to the wrong representative and decision-makers were observing a religious holiday. Where conduct is objectively reasonable, the tribunal has no discretion to award costs under rule 13(1)(b).

Piano Works Building RTM Company Limited applied to acquire the right to manage premises under Part 2 of the Commonhold and Leasehold Reform Act 2002. Assethold Limited initially disputed the claim, principally on the basis that the premises were excluded because of allegedly connected buildings in different ownership.

The First-tier Tribunal accepted the entitlement after Assethold withdrew its objection shortly before the hearing, but ordered Assethold to pay Piano Works’ costs under rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. The appeal concerned whether the matters relied on by the FTT, including a period of non-communication and the timing and terms of the withdrawal, met the objective standard of unreasonable conduct.

1. Appeal allowed. The FTT’s costs order was set aside because the conduct relied on was not objectively unreasonable and the discretion to award costs under rule 13(1)(b) was therefore not engaged.
2. Under section 29 of the Tribunals, Courts and Enforcement Act 2007, the FTT’s costs jurisdiction is subject to its procedural rules. Rule 13(1)(b) permits a costs order where a party has acted unreasonably in bringing, defending or conducting specified proceedings. The inquiry is fact-specific and involves an objective assessment of whether the conduct permits of a reasonable explanation. Vexatiousness or harassment is only one possible form of unreasonable conduct.
3. The statutory right-to-manage procedure places the burden on the RTM company to establish that the statutory conditions apply and have been followed. A landlord is entitled to wait for the RTM company to prove its case according to the statutory and tribunal timetable. It need not volunteer agreement, rebut the claim, or engage in informal dialogue merely to hasten the process.
4. Assethold had confined its objection to whether the premises were a self-contained building or self-contained part of a building. The respondent’s material supplied on 6 March was equivocal and did not adequately address the degree of physical connection. The appellant was therefore entitled to maintain its position until affirmative evidence was supplied.
5. The period from 6 March to 17 April involved no unreasonable conduct. There was no requirement for informal communications, the respondent had not initiated dialogue, and Assethold had a reasonable explanation for waiting for evidence. The further eight-day period before withdrawal was also reasonably explained by the witness statement having been sent to an uninstructed managing agent and by the religious observance of the appellant’s directors.
6. Objectively, the email withdrawing the counter-notice was clear. It conveyed agreement that the respondent was entitled to acquire the right to manage, even though it did not use those exact words. Its timing was attributable to the late provision of evidence and was not unreasonable. The FTT’s conclusion was therefore outside the range of assessments properly open to it.

• Upper Tribunal (Lands Chamber): appeal allowed and the First-tier Tribunal’s costs decision set aside.
• First-tier Tribunal (Property Chamber): by a decision published on 12 June 2024, ordered Assethold to pay Piano Works’ costs of £9,120 under rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.