Landlord and tenant – Right to manage – Appointment of manager – First-tier Tribunal (FTT) deciding that first respondent RTM company entitled to acquire right to manage part of development – Appellants seeking variation of FTT’s previous order appointing first appellant manager to ensure his continued management of that part of development – FTT deciding no jurisdiction to vary order – Appellants appealing – Whether manager appointed by tribunal entitled to apply for order preventing RTM company from exercising right to manage – Appeal dismissed
In 2014, the First-tier Tribunal appointed the first appellant as manager of Lindsay Court, New Road, Lytham Street, St Annes, Lancashire, a development comprising 96 flats in 16 blocks, on the application of the second appellant freeholder under the Landlord and Tenant Act 1987.
In July 2020, the FTT decided that the first respondent company was entitled to acquire the right to manage block 1 of the development under the Commonhold and Leasehold Reform Act 2002 as a company formed by qualifying leaseholders. It was due to acquire that right on 22 January 2021. Pursuant to section 97(2) of the 2002 Act, the first appellant’s right to manage block 1 would end on that date unless an agreement was reached with the first respondent. No agreement was reached.
The appellants applied under section 24(9) of the 1987 Act for a variation of the order appointing the first appellant as manager to ensure that he continued to manage block 1 despite the first respondent’s acquisition of the right to manage. The FTT decided that it did not have jurisdiction to vary the order in that way as an application could not be made under section 24(9) for an order which removed the right to manage premises from an RTM company until it had acquired management of the premises.
The appellants appealed. Block 1 comprised six flats and the long leaseholders were the other respondents to the appeal.
Held: The appeal was dismissed.
(1) The 1987 Act scheme enabled a tribunal to appoint a manager when, for example, the landlord was in breach of its obligations to the tenants. By contrast, the 2002 Act enabled an RTM company to acquire the right to manage on a no-fault basis, when the correct procedures had been followed, without any requirement to show that anything had gone wrong or that any obligation had been broken.
When an RTM company acquired the right to manage, those who formerly had the right to manage the premises, including a manager appointed under the 1987 Act, lost it. The acquisition of the right to manage by an RTM company broadly speaking put paid to management by a tribunal-appointed manager, although the order made under the 1987 Act did not come to an end and the manager would retain any functions that the RTM company did not have. Conversely, such a manager might be appointed to take over from an RTM company. RTM companies were not always successful, and the FTT might appoint a manager to take over from it. Paragraph 8 of schedule 7 to the 2002 Act made amendments to the 1987 Act so as to adapt it to the case where responsibility for management of the premises rested with an RTM company.
(2) The court agreed with the appellants that there was no reason that an order could not be varied with prospective effect; however, their argument assumed that it was possible by varying a management order to bring a third party within its scope. As a matter of ordinary language and procedure, that assumption did not appear to be correct; where an order had been made, following a hearing or a statutory procedure, it was difficult to see how the addition of a new individual as the person against whom the order was made could generally be achieved. Even if described as a variation, such an order would be a fresh order made against a person who was not bound by the original order. The manager was not the person against whom a management order was made. He was not protected by the notice provisions and other procedural requirements in sections 21 to 23 of the 1987 Act, and was not the party whose rights were being taken away by the statutory scheme and against whom section 24(2) had to be satisfied. However described, an order depriving a third party of management powers over the property, where that person was not bound by the initial appointment of the manager, was a new order.
(3) The specific procedural and substantive requirements of the 1987 Act had to be satisfied before a person could be deprived of their right and responsibility to manage their own property. To take away an RTM company’s right to manage when those requirements had not been met ran contrary to the policy of the 1987 Act. It was also contrary to the policy of the 2002 Act that an RTM company’s acquisition of the right to manage followed automatically from its meeting the procedural requirements. It was not open to a freeholder to protest that the RTM company’s acquisition of the right to manage was inconvenient or would disrupt an established programme of repair work. If parliament had intended that the provision in the 1987 Act for the establishment of a coherent scheme of management should be able to take precedence over an RTM company’s automatic acquisition of rights, it would have made express provision. The statutory scheme pointed in the opposite direction. The right to manage could only be terminated following a new application to appoint a manager. That would require service of a preliminary notice and proof of one of the statutory grounds for appointing a new manager.
The 2002 Act stated clearly when the RTM company’s powers could be brought to an end by an order under the 1987 Act, namely on the fault-based ground of the 1987 Act, when a manager was appointed after the RTM company had acquired the right to manage. Accordingly, on 22 January 2021 the first respondent would acquire the right to manage the premises. If the freeholder or the tenants found that they could, in the future, make a case under section 24(2) of the 1987 Act, they would be able to apply for the appointment of a manager to take over from the first respondent, but that could not be achieved by variation of the existing order.
Justin Bates (instructed by Scott Cohen Solicitors) appeared for the appellants; Brynmor Adams (instructed by WHN Solicitors Ltd) appeared for the respondents.
Eileen O’Grady, barrister
