Reduction: Further clarification as to the extent of the First-tier Tribunal Housing and Property Chamber's jurisdiction

A recent decision of the Inner House of the Court of Session considered the extent of the jurisdiction of the First-tier Tribunal, Housing and Property Chamber (FtT). The decision acts as a reminder that the jurisdiction of the FtT is wide and unrestricted provided that the application arises from a tenancy or other occupancy agreement over which the FtT has jurisdiction.

While the decision of the Inner House related to the functions and jurisdiction of the sheriff which were transferred to the FtT in terms of the Housing (Scotland) Act 2014, it is nevertheless important to briefly consider the context of the dispute.

Case overview

The action related to an assured tenancy. It had an extensive history, having commenced in the FtT as an application for payment orders in respect of rent arrears and damages for cleaning and repairs following the termination of the tenancy and making its way through the appeal process.

That original application was opposed by the tenant who had engaged solicitors to act on their behalf, citing that the tenant had lacked capacity to enter the tenancy agreement in the first place and that the tenancy agreement was, therefore, void. It was also maintained that the sums simply were not due.

The basis of the defence evolved and by the time of the case management discussion, the tenant was no longer relying on the defence of incapacity, having put forward arguments around facility and circumvention. At this stage, the question arose as whether or not the FtT had jurisdiction to reduce the tenancy agreement either on the basis of a relevant application or ope exceptionis, i.e. as part of the defence. The FtT concluded that it did not have jurisdiction to reduce the tenancy agreement on the basis that (i) such an action did not arise from the tenancy agreement and (ii) in any event there had been no application seeking reduction of the tenancy agreement to be determined by the FtT. It did not consider the submissions around reduction ope exceptionis.

On appeal to the Upper Tribunal (UT) the tenant maintained that (i) the FtT had jurisdiction to grant reduction of an assured tenancy; (ii) a submission lodged on behalf of the tenant sought reduction and was tantamount to being an application; (iii) that the application was made in terms of the relevant rules; and (iv) if the application was not sound, that the tenancy could otherwise be reduced ope exceptionis, which was within the jurisdiction of the FtT.

The UT dismissed the appeal. The UT did not accept that an application could be made in the form of submissions and, therefore, determined that the FtT could not have determined the question of reduction in the absence of a relative application. As the UT determined that there was not a valid application in relation to reduction of the tenancy agreement, it could not determine that question. The UT formed the view that the FtT did not have the same power as a sheriff to grant reduction ope exceptionis.

The matter was then appealed to the Inner House. There were three questions for the Inner House: (i) was the FtT wrong to conclude that it did not have jurisdiction to reduce an assured tenancy?; (ii) was the FtT wrong to decide that the submissions were not an application?; and (iii) was the FtT wrong in deciding that the submissions came too late? Those questions were answered thus:

Was the FtT wrong to decide that the submissions were not an application?

Rule 70 of the FtT procedure rules 2017 states:

“70. Application for civil proceedings in relation to an assured tenancy under the 1988 Act

Where a person makes any other application to the First-tier Tribunal by virtue of section 16 (First-tier Tribunal’s jurisdiction in relation to regulated and assured tenancies etc) of the 2014 Act, the application must—

(a) state—

(i) the name and address of the person;

(ii) the name and address of any other party; and

(iii) the reason for making the application;

(b) be accompanied by—

(i) evidence to support the application; and

(ii) a copy of any relevant document; and

(c) be signed and dated by the person.

…”

Following a short analysis of that rule and with particular reference to the fact that the submissions were not described as an application, the Inner House concluded that the UT and the FtT were correct in deciding that the submissions were not an application.

Was the FtT wrong to conclude that it did not have jurisdiction to reduce an assured tenancy?

It followed that in the absence of an application seeking reduction, the court would not determine whether or not an action for reduction of the tenancy agreement as an action “arising from” that agreement, and therefore this element of the action remains undecided.

The court then turned to the question of the FtT’s jurisdiction to consider a defence seeking reduction ope exceptionis. The court considered that the transfer of function and jurisdiction from the Sheriff Court to the FtT was not a transfer intended to make it more difficult for the tenant to defend himself. In other words, any defence that may have been available to a tenant when the Sheriff Courts had jurisdiction can be applied in responding to an application to the FtT. This defence is, therefore, available in the FtT. The Court concluded that the power to grant reduction ope exceptionis, provided that it related to the specified tenancy and occupancy agreements over which the FtT has jurisdiction, had been transferred from the sheriff to the FtT on its inception.

Was the FtT wrong in deciding that the submissions came too late?

Finally, as regards the timing of the submissions the Court took the view that the FtT ought to have considered them as an amendment to the defence as originally lodged, and the failure to do so was a material error.

The appeal was, therefore, allowed and the case remitted to the FtT for reconsideration.

Comment

By virtue of the Courts Reform (Scotland) Act 2014, sheriff courts were empowered to grant decree of reduction (other than reduction of a decree of any court). In the same year, by virtue of the Housing (Scotland) Act 2014, the functions and jurisdiction of the sheriff in relation to actions arising out of residential tenancies and occupancy agreements were transferred to the FtT. The only function or jurisdiction retained by the sheriff related to criminal prosecution or penalties relative to such matters.

While the Inner House has elected not to answer the question as whether or not the FtT has jurisdiction to reduce a tenancy agreement, it may be inferred, in view of this recent decision, that an application to the FtT for reduction may fall within its functions and jurisdiction. Certainly, if the FtT has the power to grant reduction ope exceptionis in actions arising from a specified tenancy or occupancy agreement, it does not appear a significant departure to say that the FtT also has the power to consider a valid application seeking reduction of such an agreement.

A final note: I regularly find myself advising of the import of ensuring that all documentation relative to a residential tenancy is correct and follows the letter of the law. As is clear from this decision, that applies also to the documents lodged with the FtT. If you are making an application, as in this case, to vary or amend the position, it is imperative that it is clear what the document purports to be. Call a spade a spade to avoid that unnecessary argument which may, as happened here, fail.