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You are here: Home / LVT/Property Chamber Survival / Bye, bye Leasehold Valuation Tribunal. Hello First-tier Tribunal

Bye, bye Leasehold Valuation Tribunal. Hello First-tier Tribunal

July 2, 2013 //  by Sebastian O'Kelly

AmandaGourlaymini

 

Barrister Amanda Gourlay – who has her debut in the new tribunal tomorrow – guides leasehold owners through the new tribunal service

 

The new context

The new rules begin with a definition section. The four jurisdictions now gathered under the First-tier Tribunal umbrella are defined here. Do not be caught out: service charge, enfranchisement and right-to-manage cases are known as “leasehold cases”, not “residential property cases”.

The rules then set the application process in context. The Tribunal is now guided by an over-riding objective, under which the parties are obliged to co-operate with the Tribunal, which itself is obliged to draw methods of alternative dispute resolution to the parties’ attention “where appropriate”.

There are provisions for formalising the appointment of a representative to act for a party: that representative need not be legally qualified.

Issue and service of applications

Rule 26 is the rule that explains how to start an application: the procedure is the same as it was under the old rules. An applicant must complete an application form.

At the date of writing, these forms have not yet been finalised.

If you are intending to begin proceedings before the forms become available, it is probably prudent to write a free-form application, following the format of the old LVT form, checking that any new requirements are complied with.

It is always sensible to include with the application a copy of the lease and any relevant paperwork, for example section 20 consultation notices, service charge demands or accounts: these documents are normally uncontentious, and will need to be disclosed at some stage in any event.

I understand that there will, in the near future, be a practice direction that will broadly require an applicant to provide the same information that was required by the Leasehold Valuation Tribunal in Schedule 2 to the old rules. Again, if in doubt, the best policy is probably to provide that information pending the arrival of the practice direction.

As before, a fee is payable when an application is issued. If it is not paid, the application will not see the light of day.

A respondent, on receipt of an application, is not under any obligation to send a response to either the Tribunal or the applicant.

Transfers

The Tribunal is no longer a one-way street for transfers. Cases continue to be transferrable to the First-tier Tribunal from other jurisdictions such as the county court.

The Tribunal is however no longer only a receiving jurisdiction: it now has the power to transfer cases to other jurisdictions.

The Tribunal can also refer a case up to the Upper Tribunal if, amongst other things, the issues in dispute are likely to be further appealed to the Upper Tribunal and will:

(a)    require lengthy or complex evidence or a lengthy hearing; or

(b)    involve a complex or important principle or issue; or

(c)    involve a large financial sum.

The Tribunal’s case management powers

The Tribunal has been empowered!

In the old days, the only real power to manage cases was contained in rule 11, which allowed the LVT to strike out a case if the applicant could overcome some seriously high hurdles.

In my experience, statements of case were regularly misconceived, but it was very rare that the LVT equated misconception with frivolity or vexatious behaviour.

Now however, there are rules setting out the procedure for:

(a)    Applying for directions;

(b)    Striking out a case for failure to comply with the rules;

(c)    Adding, substituting and removing parties;

(d)    Disclosure, evidence and submissions;

(e)    Summoning witnesses, and

(f)     Referring a person to the Upper Tribunal for contempt.

One of the major changes to the rules is the lifting of the £500 cap on the Tribunal’s powers to order one party to pay the other’s costs, and the wider discretion vested in the Tribunal when considering whether to make an order for costs against a party. Rule 13(1) reads:

“(1) The Tribunal may make an order in respect of costs only—

(a)    “under section 29(4) of the 2007 Act (wasted costs) and the costs incurred in applying for such costs;

(b)    “if a person has acted unreasonably in bringing, defending or conducting proceedings …”

When the Supreme Court’s judgment in Daejan v Benson [2013] UKSC 14 is factored in, this means that the new Tribunal’s costs-shifting powers have increased considerably over those of the LVT.

As a side note, the jurisdiction to make an order under section 20C of the Landlord and Tenant Act 1985 is untouched by these rules.

Hearings

As before, there is provision for a decision to be made on the papers, provided that all parties consent.

Will there be any change in the way that hearings themselves are run? I think it unlikely. The over-riding objective aims to avoid unnecessary formality and to achieve flexibility, although witnesses can now be required to give evidence on oath.

The new rules expressly provide for the site inspections that are already a common feature of cases where the main focus is on the quality of works carried out. The Tribunal now has the power to request the attendance of the parties.

 Expert evidence

There was nothing in the old rules about the instruction of experts and disclosure of their reports.

That gap has now been filled by rule 19, which imposes on experts a duty “to help the Tribunal on matters within the expert’s expertise”.

Service charge disputes frequently involve experts, whether accountants, surveyors or other property professionals. It is therefore well worth taking the time to read this rule, which also introduces the concept of the single joint expert. Paragraphs 16-24 of Lord Woolf’s Access to Justice Final Report of July 1996 make interesting reading in that regard.

 Decisions

There are no changes to the decision-making process.

For the purposes of appeals and any application to set aside a decision, it is important to draw a distinction between the decision and the written reasons that must support it.

The Tribunal can give a decision orally, but that decision must be followed by written reasons so that the parties know how and why the decision was reached.

New is the requirement that the decision must be accompanied by information explaining the parties’ rights of appeal, any relevant deadlines and the manner in which a right of appeal may be exercised.

 Appeals and other animals

At first glance, Part 6 of the new rules appears to be rather a spaghetti junction of powers to correct, set aside, appeal and review decisions, but it unfurls well and provides for treatment of decisions on a sliding scale of complexity:

(a)    Accidental slips and errors can be corrected by a new slip rule;

(b)    Reasons can be amended – but the decision itself not reversed;

(c)    A decision can be set aside on procedural grounds such as non-receipt of a document at “an appropriate time”;

(d)    An appeal can still only be brought with the permission. As before permission must still be sought first from the Tribunal. On receipt of an application for permission to appeal, the Tribunal must first consider whether to review the decision. If it does review the decision it can:

  •        Do nothing;
  •        Correct an accidental slip or omission;
  •        Amend the reasons, or
  •        Set the decision aside.

(e)    If the Tribunal decides not to review the decision, or reviews it and takes no action, it must then consider whether to grant the appellant permission to appeal to the Upper Tribunal. As before, if permission to appeal is refused by the First-tier Tribunal, the application can be renewed before the Upper Tribunal.

Conclusion

I have described the new rules on my blog as the little brother to the Civil Procedure Rules.

There are undoubtedly areas where the two sets of rules diverge, but I suspect that some of the case law which informs interpretation of the Civil Procedure Rules will be useful when the new First-tier Tribunal puts its shoulder to the wheel.

For my part, I am glad to see more regulation of procedure.

I am not a subscriber to the procedure-for-procedure’s-sake school of dispute resolution, but I am keen to see the Tribunal drive cases towards an effective and fair conclusion.

For that reason, I am hopeful that, after some tweaking to iron out the inevitable wrinkles which will come to light, these bright new rules will give the Tribunal the means to achieve that end.

© Amanda Gourlay, July 2013. Not to be reproduced without the author’s written permission.

 Amanda Gourlay is a barrister at Tanfield Chambers and is the author of the leasehold law blog www.lawandlease.co.uk

Related posts:

Default ThumbnailShouldn’t this case have been dealt with by a more senior court than the ‘low-cost’ property tribunal? Default ThumbnailLegal Costs – Part II Judge Tim Powell explains First-Tier Tribunal … but leaseholders are not happy that justice is being done Default ThumbnailInformed leasehold owners increase Leasehold Valuation Tribunal actions by 165 per cent All change for Leasehold Valuation Tribunals on July 1

Category: LVT/Property Chamber Survival, NewsTag: Amanda Gourlay, First-tier Tribunal

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Reader Interactions

Comments

  1. Paul

    July 2, 2013 at 10:07 am

    I have found over the years having to go to the Leasehold Valuation Tribunal that the biggest flaw was that they could only look at a small part of a major problem, ie if a freeholder was not keeping his flats in poor condition which was effecting other leaseholders flats this could not be looked at in isolation plus if a freeholder was giving his accountant misleading accounts for the betterment of himself this would not be seen as any kind of fraud but just as flawed accounts and nothing more and carried no fine or penalty— so will there be any fines for the these activities that are causing chaos in blocks of flats?

    • Sue Stuckey

      July 11, 2013 at 6:00 am

      “… this would not be seen as any kind of fraud but just as flawed accounts and nothing more”

      Paul when, with reference to the LVT, you say ‘this would not be see as any kind of fraud’ this is because (a) you the leaseholder have’t t brought a case for fraud in any case – what you don’t ask for you don’t get – and (b) fraud is crime and the LVT doesn’t hear criminal cases. The Old Bailey is where you should be heading, ultimately, if you want to bring an action for fraud.

      It seems to me that many leaseholders would be more successful in bringing rotten management to book if they were to pursue actions for fraud rather than focus on the much tamer ‘housekeeping’ issues dealt with by the LVT.

      It wouldn’t be difficult. Bad accounting for service charge is endemic across the leasehold sector ins spite of what the regulatory bodies – notably RICS with its Code of Practice – like to think. When I say ‘bad accounting’ I mean failure to observe the requirements of section 19(2) of the Landlord & Tenant Act 1985 relating to ‘Advance Payments & Adjustments’.

      Under the RICS Code, managing agents who are appointed as managers (typically by the board of lessee directors of a flat management or ‘right to manage’ company) are required to comply with the law including section 19(2).

      Any managing agent who can show that it does comply with section 19(2) will be in a minority of managing agents and deserves a medal for bravery. The rest are committing a fraud against leaseholders the length and breadth of England and Wales, where the law applies.

      To put it bluntly, most managing agents are committing a fraud against most leaseholders. The Old Bailey could be fairly buzzing with activity.

      A spokesperson told me recently: “RICS does take compliance incredibly seriously and the regulation team work hard to ensure RICS’ standards are upheld”.

      But not hard enough.

  2. LHA

    July 2, 2013 at 2:42 pm

    “if a freeholder was not keeping his flats in poor condition ” then surely the freeholder was not in breach of his covenant then ? 🙂 How far the LVT goes depends on the proceedings and they have limited jurisdiction( often covered by others). However in some cases failing to repair and the production of accounts as you say could well be within the LVT/FTT jurisdiction to appoint a manager, if applied for, removing his control of the building.

  3. Karen

    July 2, 2013 at 3:09 pm

    I think the proof of the pudding will be in the eating to be honest……………..

    The LVT system was set up as a low cost way of resolving legal issues that were on the face of it easy to decide if the rules were followed by both parties correctly and the people set in a position to do the deciding actually did decide and not pass the can.

    What we saw was the legal profession making an absolute meal of the system, literally.

    They would argue the most absurd facts and make mountains out of mole hills, and why? because they could and they got away with it.

    I can’t help feeling that this is going to be a little of the same – making a mountain into Mount Everest…. but I stand corrected if I am proved wrong… time will tell.

    Where are the cases that are going to be heard and decided upon going to be reported and archived?

    How quickly will these cases be reported so that we can judge how effectively the system is working?

  4. OMhostage

    July 2, 2013 at 5:43 pm

    I think there are two sides to this. The LVT got a lot of cases from leaseholders spluttering that they were obviously being overcharged because their service charges had gone up by more than the rate of inflation. Potentially being exposed to very much higher costs is going to cull the nuisance claims. Some suitably hefty awards may trigger a growing interest in settling out of court.

  5. Paul

    July 5, 2013 at 7:01 am

    As with LEASE with its commercial side … Blocks of flats have a conflict where this is a major problem: the roof of a major development was being let out to mobile phone companies at a premium (believed to be around £150,000 per annum) so that their masts could be sited. However, this caused problems, and accusations of roof leaks to the leaseholders flats. The LVT never resolved this conflict over more than seven years and in the end the massive site was demolished.

    I have seen another situation where a freeholder wants to change the use of eight of his flats into a
    restaurant. The LVT seem in general to lean towards most freeholders’ commercial angle.

  6. Lohn Law

    August 9, 2013 at 2:53 pm

    When a tribunal issues Directions, who ensures they are complied with? I have been informed that it is up to the Applicant to report to the Tribunal if the Respondent fails to comply with the Directions. This is not stated in any of the guidance notes that I can find.
    Any information would be very helpful.

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