Manaquel Company Limited v London Borough of Lambeth

On an appeal against an improvement notice under Part 1 of the Housing Act 2004, the FTT must determine whether the authority’s decision was wrong when made. It must not treat later works or later changes in conditions as undermining the original decision. Those matters may instead support an application to the authority to vary or revoke the notice.

For costs under rule 13(1)(b), unreasonable conduct is assessed objectively. Vexatiousness and harassment are examples, not requirements. The tribunal must identify whether the conduct was unreasonable and, where relevant, whether there was a reasonable explanation for each legitimate criticism. An appellate tribunal should allow considerable latitude to the FTT’s evaluative assessment, but may intervene where the decisive question has not been answered.

Manaquel appealed against an improvement notice served by Lambeth under Part 1 of the Housing Act 2004. The First-tier Tribunal allowed the substantive appeal and quashed the notice. It later refused Manaquel’s application under rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 for recovery of costs, finding that Lambeth’s conduct, although incompetent, was not unreasonable.

Manaquel appealed against the Costs Decision. The central issues were whether the FTT had assessed Lambeth’s conduct by reference to the legally correct subject matter of the improvement-notice appeal, whether it had applied the objective test for unreasonable conduct, and what consequence should follow from errors in its reasoning.

1. Appeal dismissed. Although the FTT’s reasoning contained errors of law, the Upper Tribunal declined to set aside its refusal to make a costs order.
2. Under paragraph 15(2) of Schedule 1 to the Housing Act 2004, an appeal against an improvement notice is by way of a rehearing, but the question remains whether the authority’s decision was wrong when made. The approach in Waltham Forest London Borough Council v Hussain [2023] EWCA Civ 733 applied equally to improvement notices. Later works, later conditions, later occupiers and later technological developments cannot make the original decision wrong. They may instead be addressed through an application to vary or revoke the notice under section 16(8).
3. The FTT had therefore been invited to consider legally irrelevant matters. Lambeth was not required to reinspect the Estate or reformulate the notice by reference to works undertaken after service. The FTT was nevertheless entitled to criticise the lack of precision concerning the windows and Lambeth’s failure to preserve inspection records. Those matters did not justify quashing the notice in its entirety.
4. The three-stage approach in Willow Court Management Ltd v Alexander [2016] UKUT 290 (LC) remained applicable. In accordance with Lea v GP Ilfracombe Management Co Ltd [2024] EWCA Civ 1241, unreasonable conduct is assessed objectively, but the determination is evaluative and an appellate tribunal must allow the FTT considerable latitude. Vexatiousness or harassment is not required.
5. The FTT failed to answer its own question whether there was a reasonable explanation for each aspect of Lambeth’s conduct which it regarded as legitimately open to criticism. That error vitiated its reasoning. However, the surviving criticisms were substantially narrower than those originally advanced, Manaquel had contributed to the mistaken focus on the date of the hearing, and the prospects of a different result on remission were limited.
6. It was not appropriate for the Upper Tribunal to remake the costs decision because it lacked the hearing evidence and other material necessary to evaluate the conduct. In the circumstances, fairness and proportionality justified leaving the FTT’s dismissal of the costs application undisturbed.

• Upper Tribunal (Lands Chamber): The appeal against the FTT’s refusal to award costs was dismissed. The Upper Tribunal found errors of law but declined to set aside the decision.
• First-tier Tribunal, Property Chamber: The substantive appeal against the improvement notice was allowed and the notice was quashed. The subsequent application for costs under rule 13(1)(b) was refused.