Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point

Factual and Procedural Background

This appeal concerns the recoverability by way of service charge of costs incurred before 28 June 2022, the date when a specific provision (schedule 8, paragraph 9) of the Building Safety Act came into force. The Upper Tribunal held that such costs were not recoverable and granted the landlord permission to appeal. The Respondents are the leaseholders of the building involved, and the Secretary of State has permission to intervene. The appeal raises questions regarding the retrospective application of the legislation and the applicability of the Human Rights Act 1998 in interpreting that legislation.

Legal Issues Presented

1. Whether schedule 8, paragraph 9 of the Building Safety Act applies retrospectively to costs incurred before 28 June 2022.
2. If paragraph 9 does have retrospective effect, whether the court should interpret the Act under section 3 of the Human Rights Act 1998 to avoid unlawful interference with the landlord's possessions contrary to Article 1 of Protocol 1 to the European Convention on Human Rights.
3. Whether the Secretary of State should be permitted to adduce evidence relating to the legitimacy and proportionality of paragraph 9’s aim in the context of the Human Rights Act argument.
4. Procedural considerations regarding the admissibility of new points and evidence on appeal.
5. The appropriate timetable for the hearing of this appeal and its coordination with a related appeal.

Arguments of the Parties

Appellant's Arguments

• Paragraph 9 of schedule 8 of the Building Safety Act does not have retrospective effect on costs incurred before it came into force.
• The common law presumption against retrospectivity and the wording and purpose of the legislation support this interpretation.
• If paragraph 9 would otherwise apply retrospectively, the court should invoke section 3 of the Human Rights Act 1998 to interpret the Act compatibly with Convention rights, specifically to avoid unlawful interference with possessions under Article 1 of Protocol 1.

Respondents' Arguments

• The Secretary of State objects to the Human Rights Act argument being raised at this stage, contending it was not presented below or in the permission to appeal application.
• Argues that allowing the new point would require further evidence on the legitimacy and proportionality of paragraph 9, which is not currently before the court.
• Maintains that the court should decide the appeal applying conventional principles of statutory interpretation and disregard section 3 of the Human Rights Act in this context.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
URS Corporation Ltd v BDW Trading Ltd [2023] EWCA Civ 772	Retrospective effect of section 135 of the Building Safety Act	Referenced as a related case where retrospective effect was upheld; Supreme Court appeal pending.
Wilson v First County Trust Ltd (No 2) [2003] UKHL 40; [2004] 1 AC 816	Statutory interpretation compatible with Convention rights; proportionality and legitimacy tests	Guided the court’s approach to interpreting legislation compatibly with human rights and evaluating proportionality.
R (Kaitey) v Secretary of State for the Home Department [2022] QB 695	Framework for applying section 3 of the Human Rights Act in statutory interpretation	Provided an 8-stage process for addressing compatibility issues, which the court adopted and expanded.
Notting Hill Finance Ltd v Sheikh [2019] 4 WLR 146	Principles governing the admission of new points and evidence on appeal	Used to analyze whether the new Human Rights argument should be permitted at this stage.
Dalston Projects Ltd v Secretary of State for Transport [2024] 1 WLR 3327	Appeal court’s role in conducting its own proportionality assessment under Convention rights	Supported the view that appeal courts do not defer to first instance courts in proportionality assessments.
Abortion Services (Safe Access Zones) (Northern Ireland) Bill [2023] AC 505	Nature of proportionality assessment under Convention rights	Confirmed that proportionality is not a conventional fact-finding exercise.
Ladd v Marshall [1954] EWCA Civ 1	Criteria for admitting new evidence on appeal	Referenced regarding the general reluctance to admit new evidence not before the lower court.
Poplar Housing Association v Donoghue [2002] QB 48	Flexibility of appellate procedure in Human Rights Act cases	Supported allowing the adduction of further evidence and submissions on Human Rights issues on appeal.
Lawrence v Fen Tigers (No 2) [2015] AC 106	Supreme Court’s approach to Human Rights compatibility issues	Example of raising Convention rights issues at appellate level with evidence allowed.
Ghaidan v Godin-Mendoza [2004] 2 AC 557	Interpretation of legislation compatibly with Convention rights	Used as precedent for courts forming their own evaluation in the absence of evidence.
Bulale v Secretary of State for the Home Department [2009] QB 536	Raising new points related to Convention rights for the first time on appeal	Supported the view that new Human Rights points may be raised at appellate stage.
Young v Bristol Aeroplane Co Ltd [1944] KB 718	Binding precedent and exceptions thereto	Discussed the binding nature of Court of Appeal decisions and limited exceptions.
Ho v Adelekun [2020] Costs LR 317	Clarification on what constitutes a per incuriam decision	Confirmed that a decision is not per incuriam merely because of different or better arguments.
R (Ariyo) v Richmond LBC [2024] EWCA Civ 960	Spectrum of new points on appeal	Referenced to explain the nature of the new Human Rights argument in this appeal.

Court's Reasoning and Analysis

The court began by outlining the legal framework for addressing the Human Rights Act argument, setting out an eight-stage process starting with conventional statutory interpretation and proceeding to assess compatibility with Convention rights if necessary. The court acknowledged the procedural objection that the Human Rights argument was not raised below and the challenges of admitting new evidence on appeal, but emphasized the mandatory nature of section 3 of the Human Rights Act, requiring legislation to be interpreted compatibly with Convention rights where possible.

The court considered relevant principles governing the admission of new points and evidence, noting that while appellate courts are cautious about new points requiring further evidence, they retain flexibility especially where proportionality and compatibility with human rights are concerned. The court observed that proportionality assessments under Convention rights are not typical fact-finding exercises and that appeal courts carry out their own assessments without deferring to lower courts.

In evaluating the procedural context, the court found that the Human Rights argument, although new, was closely related to the underlying point about retrospectivity and thus should be permitted. The Secretary of State was granted the opportunity to adduce evidence on compatibility if she wished, but the court could proceed with its own evaluation in the absence of such evidence.

The court also addressed the issue of precedent, noting that a decision of the Court of Appeal is binding unless decided per incuriam or falling within recognized exceptions, and that the Upper Tribunal expected this court to provide a definitive ruling subject to any Supreme Court appeal.

Finally, the court considered the timetable for the appeal, agreeing that the Secretary of State should have sufficient time (six weeks) to prepare evidence and that the appeal should be heard by the end of the Hilary term 2025. The court decided that this appeal would be heard sequentially with a related appeal, emphasizing the urgency due to the potential safety risks for residents living in the affected buildings.

Holding and Implications

The court held that the landlord is entitled to advance the argument based on section 3 of the Human Rights Act 1998 to interpret the Building Safety Act compatibly with Convention rights. The Secretary of State is permitted, but not required, to adduce evidence on the question of compatibility. The appeal is to be listed for hearing by the end of the Hilary term 2025 and will be heard sequentially with a related appeal.

Implications: This decision allows the Human Rights Act argument to be fully considered on appeal, potentially affecting the interpretation of retrospective application of legislation in this context. However, no substantive ruling on the merits of the Human Rights argument was made at this stage. The ruling does not establish new legal precedent beyond permitting the argument and setting procedural directions. The decision also underscores the court’s recognition of the importance of timely resolution given the safety concerns for residents.