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On July 21st 2013, the LVT became a First Tier Tribunal (Property Chamber). It runs through the same network of five regional offices and appeals will continue to be heard in the  Lands Chamber (as part of the Upper Tribunal) except for those relating to land registration cases which must be made to the Tax and Chancery Chamber of the Upper Tribunal. The FTT will still be independent of government and will hear both sides of cases from landlords, tenants, freeholders and leaseholders such as:

  1. Enfranchisement disputes;
  2. Individual lease extension (houses and flats) disputes
  3. Right to Manage claims;
  4. Management orders;
  5. Lease variations;
  6. Breaches of covenant determinations;
  7. Variable service charge disputes;
  8. Determination of rent increases for ‘fair’ or ‘market’ rates;
  9. Recognising a tenants’ association
  10. Improvement notices and prohibition orders under the Housing Act 2004;
  11. Disputes about licences for houses in multiple occupation.

1: Pre-Trial Review

This first step will see the Tribunal try to clarify the issues, offer a mediation service and set out instructions for the conduct of the case. Regulations prescribe that at this Review the Tribunal will “endeavour to secure that the parties make all such admissions and agreements as ought reasonably to be made by them in relation to the proceedings; and record in any order made at the pre-trial review any such admission or agreement or any refusal to make such admission or agreement.”

In plain English this means that the Pre-Trial Review Order makes no reference to any offers made by leaseholders or that the freeholder may refuse to negotiate. It is therefore essential to have this information on record, for it may have a direct bearing on the issue of costs later on.

2: Application & Hearing Fee

The applicant will pay an application fee and, where a hearing is held, a hearing fee, after which each party normally pays their own costs. While the majority of leasehold owners choose to represent themselves (due to the potential cost of hiring legal representation) freeholders are much more likely to have recourse to legal representation, particularly the large players. This will however depend on the terms of the lease as to whether such costs will be paid by the lessees through the service charges, or directly from the leaseholder. It is however important to note that he payment of costs by leaseholders are limited only in certain circumstances. They can, in fact, be unlimited, and can be awarded by a superior court. This can only be avoided by the Tribunal making an order under s20c the Landlord and Tenant Act 1985.

The power to award unlimited costs if a person has acted unreasonably in bringing, defending or conducting proceedings is a significant and major change from the LVT’s current cost limit of £500. Rule 13(1) reads: the Tribunal may make an order in respect of costs only a) under s29(4) of the Tribunal , Courts and Enforcement Act 2007 (wasted costs) and the costs incurred in applying for such costs or b) if a person has acted unreasonably in bringing, defending or conducting proceedings.

It is however important to note that the jurisdiction to make an order under s20C of the Landlord and Tenant Act 1985 is untouched by these rules which can be found here.

3: Bundles

Papers submitted to the Tribunal are known as ‘bundles’ and the Tribunal may invite both parties to agree on what their respective bundles should contain. However, it is the freeholder who must adhere strictly to the agreed timetable for producing their documents for two reasons: a) because producing them too late prevents the Tribunal from merging the documents of both parties into one single Bundle and having to refer to two sets of page numbers is extremely time-consuming and b) the possibility of inadvertently referring to one bundle more than the other is very real and leaseholders could be at a major disadvantage if any of their submission was overlooked!

The Tribunal can be asked to ensure that there is plenty of time for leaseholders to examine all the documents, including any witness statements, (hearsay is admissable) before the day of the hearing.

If freeholders should dump their documents the day before the hearing then leaseholders should request an adjournment although its important to note that the Tribunal has the power to strike out a case if a party fails to comply with its directions regarding the producing of documents in a timely manner.

4: Tribunal Proceedings

These are semi-formal with neither side being required to be represented by a barrister, solicitor or valuer. If the choice is to forego legal representation then it is down to the leaseholder to present the case, (including arguments and evidence), and clearly, concisely and concern only the matter in dispute. After hearing the other side of the case, the Tribunal determines the issue on the basis of the evidence and the judgment and experience of the Tribunal members

If a representative (whether legally qualified or not) is appointed by a party to represent them in the proceedings they are subject to written notice of appointment meaning that their name and address are given to the Tribunal and the other parties.

Expert evidence cannot be introduced without the Tribunal’s consent and must be in the form of a written report provided to the Tribunal (and each other party) at least 7 days before the date of the oral hearing; or the date when the issue dealt with by the expert’s report will be decided without a hearing.

In cases of a technical nature, the rules mean that it is the duty of an expert to help the Tribunal on matters within their expertise so the Tribunal is usually assisted by expert evidence from a valuer or experienced property manager. This duty overrides any obligation to whoever instructs or pays the expert.

There is scope in the rules for the Tribunal to direct that the parties jointly instruct the expert and the experts report must contain certain statements and information as laid down by the rules, be addressed to the Tribunal and signed by the expert.

4: Decision

This can be given verbally at the hearing but regardless of who the decision favours, the Tribunal must, (as soon as it is reasonably practicable to do so), provide to each party a notice stating its decision along with written reasons as to how and why it was reached.

COSTS

When it comes to freeholder costs, the FTT will look at the lease first to ascertain a) whether the individual lessee agreed to pay the costs of any legal proceedings as a cost demanded directly (and in full) or b) whether the landlords legal costs are included in the list of services that the landlord covenants to provide and which is payable via the service charges. If the landlord does claim entitlement to legal costs through the service charges then the costs are shared amongst all the leaseholders in the building.

Whilst the Tribunal also has some powers to control landlord costs under s20C of the Landlord and Tenant Act 1985 such as making a ruling limiting the right of the landlord to pass his costs back to the leaseholders through the next year’s service charge this is made at the Tribunal’s discretion, depending on the outcome of the case. The leaseholder generally has to win a considerable amount of the case in order to have a chance of getting the landlord’s costs limited.

This power to limit costs doesn’t however apply where the landlord is entitled to some of their costs by statute, nor does it apply in many cases where the landlord initiates the action for breach of the lease. In the latter case, the landlord can argue that their costs are “administration costs” rather than service charges. In such cases the Tribunal’s powers to limit costs under s20C become immaterial and the leaseholder is obliged to pay the landlord’s costs to the extent that they are “reasonable”.

PERMISSION TO APPEAL

To appeal to the Lands Chamber, application to do so must be made first to the Property Chamber for them to grant permission. The Lands Chamber will not accept an appeal without such permission and they must receive it within 14 days of the parties being sent the decision of the Property Chamber. If such permission is refused, only then can an application for permission to appeal be made to the Lands Chamber.

Additionally (and with the agreement of the Upper Tribunal), complex cases which could have the potential to be appealed on points of law could be referred to the next level with no substantive hearing before the FTT, a move designed to save time.

Information on how to apply to the FTT can be read in the First Tier Tribunal Application Guide
Full information on the Property Tribunal can be read at The Tribunal Procedure (First-tier Tribunal) (Property Chamber) (Rules) 2013

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