Three points.

One: a lease may come with baggage. A successor in title may find his/her application to the FTT struck out for abuse of process if it re-litigates a point argued by a predecessor in title.

Two: like the wings of the wandering albatross, this case has a huge span, taking in not only abuse of process but also the increasingly litigated question of whether holiday chalets, mobile homes and other potentially portable structures are “buildings” within the meaning of the 1985 Act. Our old friend Phillips v Francis began that way.

Three: this is a cautionary tale for the superstitious. Initially the lessees of thirteen holiday lodges applied to the LVT. Twelve were struck out and refused leave to appeal. The Caddicks were the lessees of the thirteenth property.

The Whitsand Bay Holiday Park

The Whitsand Bay Holiday Park is located at the top of the peninsular between Plymouth Sound and the English Channel. Part of it used to be a fort and gun emplacement. It is now home to 58 or so units described in this case as “lodges”.

The application for recognition of the tenants’ association

In December 2010, 40 members of the Whitsand Lodge Owners Association applied for recognition as a tenants’ association under section 29 of the 1985 Act.

For that purpose they had to show that they were “qualifying tenants” within the meaning of section 29.

Section 29 provides that recognition may be granted to those who pay a service charge within the meaning of section 18.

Section 18 in turn required the members of the Association to show that they were tenants of a dwelling.

Dwelling was defined in section 38 as “a building or part of a building occupied or intended to be occupied as a separate dwelling”.

The landlord at the time, a Mr Wintle, opposed recognition on the grounds that:

• The lodges were not dwellings, because they were not buildings;
• The members of the Association were not tenants of the lodges, but tenants of the plots on which the lodges were sited.

The Southern Rent Assessment Committee (the “SRAC”), predecessor to the FTT, accepted those arguments. The certificate of recognition was refused.

The members of the Association did not appeal.

Fast forward to 2012

Mr and Mrs Caddick were not parties to the 2010 application: they became lessees at the holiday park after the dismissal of the application for recognition of the tenants’ association.

In November 2012, they and twelve other lessees applied, under section 27A of the 1985 Act, for a determination of their service charges.

In March 2013, under rule 11 of the old LVT rules, the LVT struck out twelve of the applications for want of jurisdiction to determine the section 27A application. It did so on the ground that, in 2010, the SRAC had held that the lodges were not “dwellings”.

The Upper Tribunal refused to grant permission to appeal to those twelve lessees.

Mr and Mrs Caddick’s application was not struck out at that stage. It seems that there was some lack of clarity on the part of the landlord as to whether they were included in the rule 11 application.

It was not long however before the LVT gave notice to the Caddicks that it was “minded to strike out the Caddicks’ case as being frivolous, vexatious or otherwise an abuse of process under Rule 11”.

On 01 July 2013, the LVT became the FTT.

The strike out hearing took place on 01 August 2013, which meant that technically, it was a hearing under rule 9(3)(d) of the FTT rules. Happily, both sides agreed that nothing turned on the change.

The FTT struck out the Caddicks’ case.

Permission to appeal

Martin Rodger QC granted permission to appeal.

He directed that the Upper Tribunal should consider “what approach should be taken by the First-tier Tribunal to an application made to it by the successor in title of a party to earlier proceedings in relation to the same lease, where the FTT’s decision was not appealed to the [Upper] Tribunal”.

He continued: “The extent to which successors in title may raise issues before the FTT which have already been determined under the same lease in earlier proceedings to which they were not a party is an issue of some importance which it is appropriate for this Tribunal to consider”.

The case was listed for a review with a view to a re-hearing before HHJ Mole QC, who heard the evidence and submissions relating to the appeal and the substantive issue together.

The hearing included a site visit on 10 December 2014, in the course of which HHJ Mole QC “undertook a detailed examination of the outside of Mr and Mrs Caddick’s lodge, its landscaping and decking, and included an inspection on hands and knees of what could be seen underneath the lodge with a torch”.

I have a feeling that direct and chilly experience informed HHJ Mole QC’s earlier observation as to the “comparatively exposed” position of the Park.

The FTT’s jurisdiction

The FTT is a creature of statute, and it must be able to satisfy itself that it has the power to deal with the matter before it.

The first legal question in HHJ Mole QC’s mind therefore was the FTT’s jurisdiction to hear the Caddicks’ section 27A application.

“The tribunal cannot”, said HHJ Mole QC, “be given jurisdiction by the parties’ failure to address a criterion [which is a pre-condition to the FTT’s jurisdiction] or an agreement by them to waive it”.

Rule 9(2) of the FTT rules (obligation to strike out where there is no jurisdiction and/or the application is not transferred to another jurisdiction) made that clear.

Rule 9(3) (c)-(e) (discretion to strike out) gives the FTT “the ability to avoid, in proper cases as defined by the rules, the necessity to revisit that jurisdictional question on every occasion that it arises. It is a desirable procedural power to prevent the FTT being faced with an unnecessary number of applications on essentially the same point”.

The particular jurisdiction of the Caddicks’ case

Whilst section 27A does not expressly state that the FTT can only consider applications where the service charge is demanded from the tenant of a building, the definitions in sections 18 and 38 impose that limit on its jurisdiction.

This meant that, before the FTT could hear any argument about the charges made of Mr and Mrs Caddick, it had to be satisfied that:

• The Caddicks’ lodge was a dwelling which was a building, and
• There was a tenancy of that building.

If they could not persuade the FTT that the lodge was a building, the second question as to the tenancy fell away and the FTT had no power to consider their service charges because they were not service charges within the meaning of the 1985 Act.

For the Caddicks, the additional problem was that, in 2010, the SRAC had decided both of those points against their fellow lessees in their application for recognition as a tenants’ association.

The landlord, no longer Mr Wintle, but the Whitsand Bay Holiday Park Limited, insisted that it was an abuse of process to relitigate issues which had already been decided and that the Caddicks’ application should therefore be struck out.

Abuse of process: the rules of engagement

Regulation 11 and rule 9

This was a case which began under the old, LVT rules. Those who are long in the service charge tooth will recall regulation 11 of the old rules. Those who remember my marathon “Rule A Day” series in the advent of the FTT will be familiar with the FTT’s power to strike out a statement of case under rule 9.

HHJ Mole QC set out both rules so far as they applied to the Caddicks’ case. You can read regulation 11 here, and rule 9 here.

The good news is that when the case reached the Upper Tribunal, the parties still agreed – and HHJ Mole QC concurred – that there was no material difference between old rule 11(1)(a) and new rule 9(3)(d) for the purposes of the appeal. Both rules allowed for strike out where proceedings were being conducted in a frivolous or vexatious manner or were otherwise an abuse of the process of the Tribunal.

Parliament, said HHJ Mole QC, saw the FTT as “the gatekeeper whose primary responsibility is to bar vexatious or abusive claims and underlines the importance of the Upper Tribunal not intervening in such matters unless it is obliged to do so”.

By contrast, the rule 8 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 contained no power to strike out for vexation or abuse of process.

Johnson v Gore-Wood & Co (No.1)

In Johnson v Gore-Wood & Co (No.1) [2002] 2 AC 1, Lord Bingham made the following points about abuse of process:

• Abuse of process has much in common with cause of action estoppel and issue estoppel;
• The public interest in reaching finality in litigation underpins all three;
• A party should not be “twice vexed” in the same matter;
• Efficiency and economy are twin goals of modern litigation for the sake of the parties and that of the public.

However:

• The mere fact that a matter was not litigated in earlier proceedings, when the opportunity first arose, is insufficient of itself to support dismissal of that matter as an abuse in later proceedings. Such an approach would be too dogmatic;
• A judgment on abuse of process should be broad and merits-based;
• It should take account of the public and private interests involved;
• It should take account of all the facts of the case;
• There can be no hard and fast rule to determine whether abuse is to be found because there so many possible forms of abuse;
• The crucial question is whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.

Appealing a decision on abuse of process

In Aldi Stores Ltd v WSP Group, WSP London Ltd and Aspinwall & Co Ltd [2007] EWCA Civ 1260, Thomas LJ held that, when considering an appeal from a decision on abuse of process, the appeal court was not reviewing the exercise of the lower court’s discretion.

Emphasising that there is no formula for identifying abuse of process, he held that such a decision is one “involving the assessment of a large number of factors to which there can, in such a case, only be one correct answer to whether there is or is not an abuse of process… It is sufficient for the purposes of this appeal to state that an appellate court will be reluctant to interfere with the decision of the judge in the judgment he reaches on abuse of process by the balance of the factors; it will generally only interfere where the judge:

• “Has taken into account immaterial factors;
• “Omitted to take account of material factors,
• “Erred in principle or
• “Come to a conclusion that was impermissible or not open to him”.

The Caddicks’ arguments

The Caddicks argued that the FTT had erred on four points:

1. It had failed to take into account a change in the legal landscape;
2. It had given weight to an unnecessary floodgates argument;
3. It had not taken into account the length of the Caddicks’ lease, and
4. It had not considered the difference between an application under section 29 for recognition of a tenants’ association and an application under section 27A.

HHJ Mole QC addressed each one in turn.

Change in the legal landscape

In 2010, the tenants’ association argued that there was a tenancy of the lodge because the lodge had become annexed to the plot – in other words that it had become part of the land – or that it was a tenant’s fixture attached to the land. The SRAC was unpersuaded.

Before the FTT in 2013, the Caddicks’ position was that the legal landscape had changed since 2010 as a result of Peel Land and Property (Ports No.3) Ltd v TS Sheerness Steel Ltd [2013] EWHC 1658 (Ch).

The FTT did not agree: Peel Land and Property had followed the existing House of Lords authority of Elitestone v Morris [1997] 1 WLR 687 (of which more later). The legal landscape was unchanged.

HHJ Mole QC was with the FTT, which had, he said, “accurately recorded the point the [Caddicks] were making and clearly understood it”.

The floodgates

In 2010, the SRAC decided that the lodge was not a dwelling because it was not a building.

Before the FTT, the Caddicks argued that they should be entitled to argue that point again. The FTT refused, saying that it could not allow a successor in title to re-litigate a case on pretty much the same grounds as had previously been relied on.

In rather apocalyptic tones, it intoned that “to do so would potentially open the floodgates to litigation from assignees who do not wish to accept the previous ruling”.

HHJ Mole QC held that that was not an irrelevant factor in the FTT’s decision-making process. Citing Thomas LJ in the Aldi case, he added:

“The fact that the new party is a successor in title who played no part in the previous litigation, is one of the important facts that must be taken into account, but it is for the FTT to weigh that fact with the rest in reaching its overall judgment. In this case, the FTT plainly did take the position of the Caddicks as successors in title into account and weighed it in the balance. It had in mind Article 6 of the Convention on Human Rights and the right of a person to have his case heard. The [Upper Tribunal] can only interfere if the FTT came to a decision that was not reasonably open to it on the facts”.

The length of the lease

The Caddicks’ lease had some 119 years left to run: this was a factor, they argued, that the SRAC had not considered in the original decision, and was highly relevant now.

Not so, responded HHJ Mole QC – the original SRAC decision of 2010 was clear that the leases under consideration were long leases. The FTT had given the Caddicks the opportunity of explaining why their case should be viewed differently to the lessees’ case in 2010, but the Caddicks had not done so.

Different applications

The Caddicks’ final argument on the abuse of process point was founded in the difference between the 2010 and the 2012 applications.

In 2010, the application before the SRAC was made under section 29 of the 1985 Act for recognition of a tenants’ association.

In 2012, the application before the FTT, challenging the service charges, was made under section 27A of the 1985 – for a determination of the recoverability of a service charge.

The first application was a collective effort. The second was an individual one.

HHJ Mole QC was unmoved – both applications required a positive answer to the question of whether an occupier was a “tenant of a dwelling”. In that respect, applications under sections 27A and 29 of the 1985 Act could not be distinguished from each other.

Outcome of the appeal

The appeal failed: HHJ Mole QC upheld the FTT’s determination that the Caddicks’ section 27A application was an abuse of process.

However – not one to waste time spent inspecting the lodge on his hands and knees on a relatively exposed holiday park in mid-December, HHJ Mole QC turned to the substantive question of whether the lodge was a building.

In so doing, he was at pains to emphasise that, unless there was a successful appeal of his judgment on abuse of process, his determination on this point would be obiter dicta – ie, not binding.

Was the lodge a building – and therefore a dwelling?

The lodge

HHJ Mole QC’s description of Mr and Mrs Caddicks’ lodge runs to just over two pages of single-spaced type, bearing witness to the close scrutiny to which he subjected it:

• All of the lodges on the park followed the same basic principles of construction;
• Mr and Mrs Caddick’s lodge was manufactured by Omar Park Homes Ltd, and was brought onto the site in 2005;
• It was created from two sections which were joined together by tiles on the roof and by a cover stripe on the walls;
• Once complete, it was 6.667m wide and 13.07m long;
• There was a metal chassis formed from two “substantial welded steel cross-braced frames which run the length of the unit”;
• The two frames forming the chassis were held together by steel bolts;
• The chassis rested on timber blocks at the axle;
• The wheels of the lodge had been removed;
• The tow hitch had been removed, but its fitting remained.

The lodge stood on a concrete base of approximately the same size as the lodge:

• Two U-shaped brackets, one at each end of the lodge, appeared to be screwed into the base, and
• A chain attached to the lodge was also locked onto the base.

 

The decking

• At the front and to one side of the lodge was an area of raised wooden decking at the level of the floor of the living accommodation;
• The decking provided a terrace extending to about three metres at the front of the lodge and narrower at the side, with steps down to a gravel pathway at ground level;
• It was supported on cross frames fixed to timber posts;
• Some of the timber posts stood on the concrete base of the lodge, but only one post was actually screwed into it;
• The remaining posts were set into the ground in concrete;
• The decking fitted closely around the lodge was not actually attached to it;
• Just beyond the decking, beside the gravel path, were some shrubs and some “rather wind-swept broadleaved grasses”.
• There was a timber skirt, which hid the lodge chassis, around the bottom of the lodge and the outside edge of the decking;
• The skirt was attached to the lodge and the decking, but it had some ventilation gaps and two hatches for access to the underside of the lodge;
• The underside of the lodge contained a foul drainage connection;
• On one side of the lodge stood a timber framed wooden cabin containing the electricity supply, meter and water pipes;
• A slightly larger cabin stood on the other side of the lodge. It contained gardening implements and furniture;
• Both cabins had been decorated to match the lodge and the decking;
• Both cabins stood on their own bases and were screwed or nailed onto the side of the lodge.

The skirting and utilities

The lease

The premises demised were “the Plot and the Parking Space”;

The lessee covenanted:

• To pay the rent and the service charge;
• To keep the lodge in good condition, and, if the occasion required, to replace the entire lodge with an identical structure;
• To maintain the mobility of the lodge, and
• To maintain a lodge on the plot at all times for the duration of the term.

There was an option to remove the lodge from the plot at the end of the term, provided that any damage was made good, and all service installations attached to the lodge were made safe.

The law

This, held HHJ Mole QC, was a question of fact and degree “to be decided in the context of the Landlord and Tenant Act”.

That specific direction as to context resulted in a rather frosty reception for cases where the nature of a “building” had been at issue – but in a different statutory landscape:

• In Cheshire County Council v Woodward [1962] 1 All ER 517, the Court of Appeal dealt with the meaning of “building” as it related to section 119(1) of the Town & Country Planning Act 1947;
• In Smith v Customs & Excise Commissioners (1990) VAT Decision 5579, the structures at issue were mobile homes set on brick foundations, but the issue was whether VAT was deductible.

HHJ Mole QC reserved a warmer tone for Elitestone v Morris [1997] 1 WLR 687 (HL), in which the House of Lords considered whether a wooden bungalow was a chattel or part and parcel of the land.

Lord Lloyd adopted “the three-fold classification set out in Woodfall, Landlord and Tenant (looseleaf ed.), vol. 1, para. 13.131:

““An object which is brought onto land may be classified under one of three broad heads. It may be (a) a chattel; (b) a fixture; or (c) part and parcel of the land itself. Objects in categories (b) and (c) are treated as being part of the land.””

Of the bungalow which was the subject of the dispute, he said: “… the photographs show very clearly what the bungalow is, and especially what it is not. It is not like a Portakabin, or mobile home. The nature of the structure is such that it could not be taken down and re-erected elsewhere. It could only be removed by a process of demolition. This, as will appear later, is a factor of great importance in the present case. If a structure can only be enjoyed in situ, and is such that it cannot be removed in whole or in sections to another site, there is at least a strong inference that the purpose of placing the structure on the original site was that it should form part of the realty at the site, and therefore cease to be a chattel”.

Reviewing the submissions in the Caddicks’ case, HHJ Mole QC repeated:

• The importance of demolition in cases such as Elitestone, and
  • The distinction between categories B and C as adopted by Lord Lloyd from Woodfall.

“Fixtures that are physically capable of being severed from the land without damage may revert to being chattels”, he said, “… but while they are fixtures they are part of the land. The terms of a lease may regulate rights to sever a chattel from the land as between the parties but such an agreement cannot prevent the chattel once it is fixed, becoming in law part of the land… The structures in Elitestone Ltd v Morris were chalets that came within category C because they had become irremovable from the land without substantial damage or destruction. But if a chattel has become a fixture within category B it is unnecessary for it to be irremovable without damage or destruction, it is still part of the land as long as it remains a fixture… The class of fixtures is wide and the cases show that a building may be a tenant’s fixture removable at the end of the term… If the lodge has become a tenant’s fixture and part of the land which is demised, it must become every bit as subject to the lease as the plot itself. That status, maintained as long as the lodge continues to be part of the land is not contradicted by the ability to remove the lodge at the end of the term, whereby it becomes a chattel again”.

Dwellings-not-a-building

HHJ Mole QC’s next observations toss certainty into the Cornish wind:

• It was a question of fact and degree as to whether a structure was a “building”;
• The starting point was the ordinary and natural meaning of the word.

He then recovered his composure, and gave more practical guidance, landing firmly onside with Lord Lloyd in Elitestone:

“It is … useful to consider the concept of a “building” in the context of the 1985 Act. The draughtsman did not leave the word dwelling as it stands but added the requirement that it must also be a building, plainly intending to exclude a class of “dwellings-not-a-building”. Examples that come to mind are a boat, a tent, a cave or a caravan. Of course all those examples can become or be incorporated into a building (eg Peggotty’s house in David Copperfield). I find the most persuasive test of the difference to be that of Lord Lloyd in Elitestone; namely whether the structure has become something that can only be enjoyed where it is and cannot be removed elsewhere without a process of demolition”.

Demolition

There had been some argument between the parties as to whether the lodge could be removed from the site without demolition of a gateway, road or landscaping on the site.

This, to HHJ Mole QC’s mind, was not relevant: it is to the item said to be a building that the need for demolition must apply. If a car were bricked into the corner of a barn, the demolition of the brickwork would not be relevant to the question of whether the car was a building: the car could, once the brickwork had been demolished, be removed without itself being demolished.

Not a building

Here are the nine factors which persuaded HHJ Mole QC that the lodge was not a building:

• There had been no significant change to the lodge since it came onto the plot in 2005;
• The wheels had been removed but the axles remained;
• The weight of the lodge was borne by the chassis, which rested on timber blocks or screwjacks, which allowed the lodge to sit level on the concrete base;
• The concrete base was solid, and the lodge was not sinking into it;
• The lodge was held in place by chains. That was a requirement of the British Standard 3632:2005, and in HHJ Mole QC’s words did not “make the lodge a building any more than a boat’s moorings make it a building…”
• The connection to water pipes, electricity supply and sewage pipes was the only was in which the lodge was directly attached to the ground beneath it. Those utilities could be disconnected reasonably cheaply and easily, in the same way that an ordinary caravan or motorhome could be;
• The cabins and skirting attached to the lodge on two sides could be easily removed;
• It was agreed that the decking was not attached to the lodge;
• The lodge was composed of two sections, and there may be some minor damage if they were to be separated. Redecoration would inevitably needed.

HHJ Mole QC also listed the factors which were irrelevant to his decision. I include them because they complete the picture:

• The most likely way to remove the lodge would be to dismantle the decking at the front and to pull the lodge out on its wheels. In an observation which rather suggests that he is not a gardener, HHJ Mole QC said: “I can see that such a method of removal would do no good to the planting in front of the lodge but I do not think that matters much”;
• The destruction of the decking and the planting did not form part of the “process of demolition” that Lord Lloyd had in mind in Elitestone;
• In any event, it appeared that, with the skillful use of a crane, it may well be possible to lift the lodge out without causing damage to either decking or flowerbeds.

No help from the lease

This is one of those relatively rare decisions where the lease played second fiddle. The lessee covenanted to preserve the mobility of the lodge, but also to keep a lodge on the plot. Two points arose from those covenants:

• If the lodge became a fixture – and immobile – the landlord would potentially have a claim for damages and an injunction arising from that breach of covenant;
• There was no reason why the lodge could not retain its mobility and indeed be removed from the plot, provided that it was replaced by an acceptable alternative.

Observations

Oh, the joy of finding a literary reference in this decision! HHJ Mole QC is a man after my own heart, even if David Copperfield is not among the novels that I would take to my desert island.

On a more serious note, this decision raises some sizeable questions. How does a purchaser find out the history of the flat s/he is planning to buy? How does s/he find out whether there have been relevant decisions about other flats in the block that may affect the legitimacy of a dispute about his/her flat in the future? Do those decisions affect the value of the flat?

LEASE, the leasehold advisory service, has a good library of LVT and FTT decisions, but I think that it is fair to say that it does not contain all of them. Upper Tribunal decisions can be found online, but the decision which posed an insuperable obstacle to the Caddicks was a decision at LVT level.

HM Land Registry does not, so far as I have experienced it, register LVT/FTT decisions either.

It remains to be seen whether standard pre-contract enquiries will now change to ask for more detail about the service charge history of a property. To my mind, the protection of the Landlord and Tenant Act 1985 is worth having, and it strikes me that a property which does not enjoy that benefit is less appealing than one which does.

Beware the lease with (invisible) baggage.

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