Hyslop v 38/41 CHG Residents Company Ltd QBD 05/11/2018 (not on Bailii. Lawtel note of extempore judgment)

CHG were the freeholder of a property with various leasehold flats. The FTT had determined that Ms Hyslop and other leaseholders owed CHG certain service charges. H applied to the Upper Tribunal for permission to appeal out of time and this was granted. However CHG then brought a claim in the county court against H for non payment of service charges over a five year period.

At trial of the county court claim, H pointed out that CHG had not paid the trial fee in time (or at all) and had not applied for relief from sanctions. CHG’s counsel, on instructions, said that the trial fee had been paid, then, when that turned out not to be the case, CHG’s solicitors offered an undertaking to pay the fee that day. The Judge held it would be absurd to abandon proceedings as both parties were there and accepted the undertaking. The Judge found for CHG but suspended forfeiture to give Ms H time to pay.

It appears – it is not at all clear from the note – that Ms H’s Upper Tribunal appeal was allowed to the extent that it was remitted to the FTT for reconsideration. But the FTT then found that the liability for service charges claimed had been determined by the county court, so did not consider liability.

Ms H appealed the county court decision. She argued that a) CHG had been required to apply for relief from sanctions and b) s.81 Housing Act 1988 precluded forfeiture proceedings where the FTT (or UT) as appropriate tribunal under s.81(1)(a) had still been seised of the matter.

CHG argued that once the time limit for appealing the original FTT decision had expired the decision became final under s.81, so an out of time application for permission to appeal to the UT did not preclude a forfeiture claim.

The High Court held:

Relief from sanctions – the claim had been automatically stuck out when CHG failed to pay the trial fee. So an application from relief from sanctions was required to continue the claim. The court could grant relief of its own motion but this would be rare as evidence would usually be required to explain the failure. The first instance court should not have dispensed with the application. CHG should have explained the steps it had taken to ensure payment on time and why counsel had been told payment had been made, and the three stage relief test applied. The Judge had not applied the test, and had not carried out a proper balancing act.

FTT proceedings – If permission to appeal was granted out of time, then what had been a final determination then ceased to be final. There should be no forfeiture proceedings until the appeal was finally determined. The forfeiture proceedings should have ben stayed under s.81.  Alternatively, the Judge below should have stayed the claim under CPR case management powers. The Judge’s approach in suspending forfeiture was not correct, as it had led the FTT to decline to deal witht he issue of liability for the charges based on that judgment. Staying on forfeiture but deciding liability for service charges, as suggested by CHG, would be artificial, as the two were linked. S.81 should have meant staying both.

The trial should not have taken place.

Appeal allowed.