Most of us are familiar with selling an item to a vendor and coming back and buying it back with a higher grade. The same thing occurs with the party chest at Soldier's Peak. Just place the items in that you wish to upgrade, leave and go to camp, then come back until you get the desired grade armor/weapon. I've upgraded Cailan's Armor to Tier 7, along with Bloodline War Axe. Be patient and they will shift so long as the item is programmed to have a variable tier.