Company Denied Costs of Improvement Notice Appeal

The Upper Tribunal (UT) has declined to set aside a decision of the First-tier Tribunal (FTT) not to make an order for costs in favour of a company which successfully appealed against an improvement notice served on it by the local housing authority under Part 1 of the Housing Act 2004. In its decision, the UT concluded that appeals against an improvement notice are to be determined based on the facts at the time the notice was served.

The improvement notice required the company to carry out works to an estate it owned which consisted of eight Grade II-listed blocks containing 96 flats. After the company appealed against the notice, the FTT quashed it in its entirety. The company then applied under Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 for an order requiring the housing authority to pay its costs.

The FTT was critical of the housing authority's conduct of the appeal. The improvement notice was 'seriously flawed' and it should have been clear that it was unlikely to be upheld. However, the housing authority had identified many hazards and had been under a statutory duty to act; it had faced very a difficult task, since the hazards were different in each flat; and the company had failed to engage with it for long periods. The FTT concluded that the housing authority had not acted unreasonably in its conduct of the proceedings. The application was therefore refused.

Ruling on the company's appeal against that decision, the UT noted the Court of Appeal's decision in Waltham London Borough Council v Hussain and Others, which established that the FTT's task in considering an appeal against a licensing decision under Part 3 of the Act was to determine whether the decision was wrong at the time it was taken. The UT found that the same test applied to appeals against improvement notices. Significant parts of the company's case had therefore been presented to the FTT on a legally incorrect basis. The question for the FTT should have been whether the housing authority was wrong to serve the notice it did, when it did. Works carried out since then were irrelevant.

The UT observed that the works, to the extent that they had remedied some of the defects, tended to justify service of the notice. The UT doubted that the way the notice dealt with a requirement to replace windows was as flawed as the FTT had accepted, and observed that these flaws may have justified the removal of the requirement to replace the windows but did not justify quashing the notice in its entirety. The FTT had asked itself whether there was a reasonable explanation for the housing authority's conduct but had failed to answer that question.

The UT took into account that the company was significantly responsible for directing the FTT's attention away from the condition of the estate when the notice was served and persuading it to focus instead on its condition more than two years later. The UT also noted that it is implicit in the Rules that there is no injustice in each party bearing its own costs. Despite the flaws in the FTT's reasoning, the UT found that the appeal could be disposed of fairly by refusing to set aside its decision not to make an order for costs.