Housing Act 2004 appeals against improvement notices are determined at the date of service, not the hearing date

1) Introduction

Case: Manaquel Company Ltd v London Borough of Lambeth [2026] EWCA Civ 972
Court: Court of Appeal (Civil Division) (Nugee LJ giving the lead judgment; Andrews LJ and Phillips LJ agreeing)
Appeal from: Upper Tribunal (Lands Chamber), Martin Rodger KC, Deputy Chamber President, [2025] UKUT 97 (LC)

The appellant landlord (a company freeholder of an estate of 96 flats) appealed an improvement notice served by the respondent local housing authority under the Housing Act 2004 (“the Act”). The First-tier Tribunal (“FTT”) quashed the notice in its entirety after both parties proceeded on the basis that validity fell to be assessed as at the hearing date, by which time works had been done and the authority had not reinspected.

The litigation then shifted to costs. The landlord sought costs under Rule 13(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 on the basis that the authority had acted unreasonably in defending the proceedings. The FTT refused. The Upper Tribunal dismissed an appeal against that refusal, holding (i) the FTT had adopted the wrong legal approach to the “date issue”, but (ii) it was not appropriate to set aside/remit the costs decision.

The Court of Appeal addressed two issues:

  • The “date issue”: in an appeal to the FTT against an improvement notice, is validity judged at the date of service of the notice, or at the date of the FTT hearing?
  • The “costs issue”: whether the UT erred in refusing to set aside/remit the FTT’s costs refusal, given that the substantive quashing of the notice was not appealed.

2) Summary of the Judgment

  • Date issue: dismissed. The Court held that, consistently with Hussain (Nasim) v Waltham Forest London Borough Council [2023] EWCA (Civ) 733, [2024] KB 154 (“Hussain”), the FTT’s task is to decide whether the local housing authority was wrong to serve the notice when it did. Subsequent events/works do not undermine validity for the purposes of the appeal (though statutory powers to vary/revoke exist).
  • Deference point: the Court held this did not arise on the facts; the UT had not decided any distinct “special deference” standard.
  • Costs issue: dismissed. The Court held that res judicata did not prevent the authority (in the costs appeal context) from relying on the correct legal analysis of what issues were relevant in the underlying appeal. The UT had a discretion under s.12(2)(a) Tribunals, Courts and Enforcement Act 2007 (“TCEA 2007”) to leave a flawed FTT costs decision undisturbed; no error in the exercise of that discretion was shown.

3) Analysis

3.1 Precedents Cited

(a) Hussain (Nasim) v Waltham Forest London Borough Council [2023] EWCA (Civ) 733, [2024] KB 154

Hussain concerned appeals under Schedule 5 to the Act (licensing under Parts 2 and 3). The statutory language there—appeal “by way of a re-hearing” but “may be determined having regard to matters of which the authority were unaware”—is materially identical to Schedule 1 paragraph 15(2) governing improvement notice appeals.

In Hussain, Andrews LJ (with Lewison LJ and Snowden LJ agreeing) held that the “but” clause is a limiting proviso: it permits consideration of information unknown to the authority, but does not convert the appeal into a wholly fresh merits decision as at the appeal date. Rather, the tribunal decides whether the authority’s decision was wrong at the time it was made.

In Manaquel, the Court treated Hussain as determinative of the date issue because Parliament used the same appeal formula repeatedly across Parts 1–4 of the Act. The Court rejected the submission that the same wording should bear a different meaning in Part 1 (improvement notices) than in Parts 2–3 (licensing).

(b) Statutory-interpretation authorities: Wathen-Fayed v Secretary of State for Housing, Communities and Local Government [2025] UKSC 32, [2025] 1 WLR 3693; R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28, [2023] 1 WLR 2594; R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349; R (Quintavalle) v Secretary of State for Health [2003] UKHL 13, [2003] 2 AC 687; Bloomsbury International Ltd v Department for Environment, Food and Rural Affairs [2011] UKSC 25, [2011] 1 WLR 1546

The Court accepted the rebuttable presumption (noted in Bennion and approved in Wathen-Fayed) that identical words in an Act usually have the same meaning, but held this was a particularly strong case for uniformity: the appeal formula is used deliberately and repeatedly across multiple Schedules and Parts.

Drawing on PACCAR (and the well-known statements in Spath Holme, Quintavalle and Bloomsbury), the Court emphasised that statutory purpose and scheme form the “frame of orientation”. The relevant scheme was a coherent set of local authority housing powers with a consistently defined tribunal appeal mechanism.

(c) Costs/unreasonable conduct: Willow Court Management Ltd v Mrs Ratna Alexander [2016] UKUT 290 (LC); Lea v GP Ilfracombe Management Co Ltd [2024] EWCA Civ 1241, [2025] 1 WLR 371

The costs application was under Rule 13(1)(b) of the 2013 Rules (unreasonable conduct). The leading framework remains the three-stage approach in Willow Court:

  1. Objectively, did the party act unreasonably in bringing/defending/conducting proceedings?
  2. If yes, should costs be ordered?
  3. If yes, in what amount/terms?

The UT noted that Willow Court had been approved by the Court of Appeal in Lea v GP Ilfracombe Management Co Ltd [2024] EWCA Civ 1241, [2025] 1 WLR 371.

(d) Upper Tribunal discretion after an error of law: s.12 TCEA 2007

The UT found the FTT’s costs reasoning legally flawed but relied on s.12(2)(a) TCEA 2007: even where an error of law is found, the UT “may (but need not) set aside” the FTT’s decision. The Court of Appeal accepted that the UT’s “enough is enough” proportionality assessment was within the proper scope of that discretion.

3.2 Legal Reasoning

(A) The “date issue”: why service-date validity governs improvement notice appeals

The critical provision for improvement notice appeals is Schedule 1 paragraph 15(2) of the Act: the appeal “is to be by way of a re-hearing” but “may be determined having regard to matters of which the authority were unaware”.

The Court’s reasoning was essentially structural and linguistic:

  • Uniform drafting across the Act: materially identical wording appears for appeals across enforcement (Part 1), licensing (Parts 2–3) and other controls (Part 4). That repeated choice strongly indicates a single meaning.
  • The function of the proviso: consistent with Hussain, the “but” clause expands the evidential base (allowing matters unknown to the authority) without shifting the temporal focus to the appeal date.
  • Resulting task of the FTT: the tribunal decides whether the authority was wrong to serve the notice it did, when it did; later works cannot retrospectively invalidate an otherwise lawful notice.

The Court acknowledged that an “up-to-date” approach might have practical attractions (e.g., works done after service), but held that those policy arguments cannot displace what Parliament enacted—particularly given the coherent scheme of revocation/variation powers within the Act.

(B) The “deference” point did not arise

Although the appellant argued the UT had required “special deference” to local authorities, the Court held the UT did not in fact decide such a point. The UT corrected the legal relevance of post-service developments; it did not purport to set a distinct “standard of review” beyond the statutory appellate task identified in Hussain.

(C) The costs issue: why res judicata did not freeze the parties into the wrong “date” approach

The appellant’s core submission was that, because the authority did not appeal the FTT’s substantive decision quashing the notice (made under the parties’ shared but mistaken date approach), the authority could not later rely on the correct date approach when costs were reconsidered.

The Court rejected this on the basis of issue definition:

  • What is final by res judicata: the authority could not dispute that the notice remained quashed (the substantive result stood).
  • What was not determined: the FTT’s substantive decision did not decide whether the authority acted unreasonably for Rule 13 purposes. That is a distinct question with its own evaluative criteria.
  • Practical litigation logic: the authority could not appeal the costs refusal (it had won on costs). If the appellant appealed, the authority should not be barred from defending the costs outcome using correct legal relevance analysis, even if the date point was first raised by the UT rather than pleaded by the authority.

Accordingly, it was legitimate for the UT, when assessing whether to set aside/remit, to recognise that much of the original “unreasonable conduct” case evaporated once the legally correct temporal focus was applied.

3.3 Impact

(1) Substantive tribunal practice under the Housing Act 2004

The decision cements a cross-Part rule: where the Act uses the “re-hearing … but” formulation, the tribunal generally assesses whether the authority’s decision was wrong at the time it was made, not as at the hearing date. For improvement notices, this materially affects:

  • the relevance of post-notice remedial works;
  • whether a local authority “must” reinspect for the appeal;
  • the framing of evidence and expert inspection material (historic vs current condition).

Post-service changes remain relevant via other routes (notably statutory variation/revocation powers), but not as a mechanism to prove that a properly-issued notice was invalid ab initio.

(2) Costs in the Property Chamber: proportionality and finality

The case reinforces two linked propositions:

  • Rule 13 is exceptional: costs-shifting is not routine in these tribunals; applications should not become “satellite litigation”.
  • UT discretion to stop the spiral: even after identifying legal flaws, the UT may leave an FTT costs outcome undisturbed where remittal would be disproportionate and the prospects of a different outcome are limited (s.12(2)(a) TCEA 2007).

4) Complex Concepts Simplified

  • “Appeal by way of a re-hearing”: the tribunal reconsiders the matter on evidence, and may disagree with the authority; it is not confined to traditional judicial review grounds.
  • “But may be determined having regard to matters of which the authority were unaware”: the tribunal can consider information the authority did not know, yet still decides whether the authority’s decision was wrong at the time it was made (per Hussain and applied here).
  • The “date issue”: whether the relevant facts are fixed at the date of the authority’s decision (service of notice) or update to the hearing date. This case confirms the former for improvement notice appeals.
  • Rule 13(1)(b) “unreasonable conduct” costs: costs are not awarded because a party loses; they require objectively unreasonable behaviour in bringing/defending/conducting the case.
  • Res judicata: once a decision is final, parties cannot re-litigate what was decided. Here, it prevented re-opening that the notice was quashed, but did not prevent correct analysis of legal relevance when evaluating “unreasonable conduct”.
  • s.12 TCEA 2007 discretion: even after finding an error of law, the UT does not have to set aside the decision; it may leave it standing where that best serves fairness and proportionality.

5) Conclusion

Manaquel Company Ltd v London Borough of Lambeth [2026] EWCA Civ 972 confirms that appeals to the FTT against improvement notices under the Housing Act 2004 are determined by asking whether the local housing authority was wrong to serve the notice at the time of service. The Court treated Hussain as controlling because Parliament adopted a uniform appellate formula across multiple Parts and Schedules of the Act.

On costs, the Court held that the UT was entitled to conclude that, once the correct legal framework was applied, the appellant’s “unreasonable conduct” case was significantly weakened; res judicata did not require the parties to assess costs through the lens of a shared but mistaken legal approach. The UT’s decision not to set aside/remit—invoking proportionality and finality under s.12 TCEA 2007—was upheld.