Landlord and tenant – Appointment of manager – Discharge – Appellant leaseholders applying to discharge manager on grounds of partiality – Truthfulness of manager’s evidence called into question – First-tier Tribunal (FTT) dismissing application – Appellants appealing – Whether fresh evidence allowed – Whether FTT applying inappropriate test when considering application – Appeal allowed – Application redetermined
The appellants were the leaseholders of the top-floor flat in a Victorian house divided into three flats, let on long leases. The second and third respondents were the leaseholders of the other flats. The fourth respondent was a company through which the leaseholders jointly owned the freehold.
Water had been entering the building at roof level and penetrating the second respondent’s first-floor flat. The fourth respondent was responsible for repairs to the roof. The surface of the terrace was within the demise of the appellants’ flat and accessible through a large dormer door and window from their flat.
The location of the defect and the extent of the parties’ respective repairing obligations were in doubt. The appellants maintained that it was for the fourth respondent freeholder to carry out the repair works. The second respondent considered that sole liability lay with the appellants.
The second respondent applied to the First-tier Tribunal (FTT) for the appointment of a manager under Part 2 of the Landlord and Tenant Act 1987. The first respondent was appointed for a term of three years in February 2019.
In October 2021, the FTT dismissed an application by the appellants to discharge the first respondent’s appointment and allow management of the building to return to the fourth respondent.
The appellants appealed, contending that, on the basis of fresh evidence, which they applied to be admitted, it was apparent that the FTT had: been given materially inaccurate evidence by the manager and been misled; applied an inappropriate test when considering whether the manager should be discharged; and failed to give sufficient reasons for its decision.
Held: The appeal was allowed and the application redetermined.
(1) Under CPR 52.11(2)(b), the factors relevant to the exercise of the discretion to admit new evidence were: (i) the evidence could not have been obtained for use at the original hearing with reasonable diligence; (ii) if the evidence had been given, it would probably have had an important influence on the result of the case; and (iii) the evidence was apparently credible. The Civil Procedure Rules did not apply in tribunals, but the Court of Appeal had indicated that those conditions should continue to apply to the admission of new evidence in appeals to the Upper Tribunal: Ladd v Marshall [1954] 1 WLR 1489, Terluk v Berezovsky [2011] EWCA Civ 1534 and Point West GR Ltd v Bassi [2020] EWCA Civ 795; [2020] PLSCS 126 considered.
In the present case, the tribunal was satisfied that all three conditions were satisfied for the introduction of the fresh evidence in order to deal with the appeal fairly and justly.
(2) A decision that the manager had acted impartially and appropriately in her dealings with the leaseholders was an evaluative decision. It involved assessing the situation, weighing up competing factors and determining whether a particular standard of performance had been achieved. In such a case, an appellate tribunal should be very slow to substitute its own view for that of the tribunal of first instance.
On a challenge to an evaluative decision of a first instance judge, the appeal court did not carry out a balancing task afresh but had to ask whether the decision of the judge was wrong because of some identifiable flaw in the judge’s treatment of the question to be decided, such as a gap in logic, a lack of consistency or a failure to take account of some material factor which undermined the cogency of the conclusion. There was no relevant difference between that approach and the proper approach to an appeal against the exercise of a discretion. In either case, it was necessary to begin by identifying the extent to which the fresh evidence undermined the factual basis of the FTT’s decision: Prescott v Potamianos [2019] EWCA Civ 932 considered.
The impression given to the FTT by the first respondent in her evidence was inconsistent with the facts as she knew them to be. Whether the FTT’s decision to dismiss the application was treated as an exercise of discretion or an evaluative decision that the manager’s performance was satisfactory, it was arrived at without knowledge of the true facts, which were more than capable of supporting the opposite conclusion. Accordingly, it had to be set aside.
(3) The FTT had not applied an inappropriate test or given too much weight to the consequences of the proposed discharge for the future management of the building. The unattractive prospect of a return to self-management was clearly a relevant consideration whatever the status of the person making the application to discharge. The FTT had also based its decision on its assessment that the manager was doing her best in a difficult situation and the course she had taken had not been shown to be wrong. On the basis of the information it received, and which it had no reason to doubt, there was no material error in the way the FTT approached the application.
(4) The standard which section 24(2) of the 1987 Act required the FTT to apply when considering whether to appoint a manager was whether it was “just and convenient” to do so. It was not necessary for the section 24(2) threshold conditions themselves to be satisfied when an application was made to vary or discharge a management order under section 29(3). Any tribunal which addressed such an application by asking whether it was just and convenient to vary or discharge an existing order would not misdirect itself: Orchard Court Residents’ Association v St Anthony’s Homes Ltd [2003] EWCA Civ 1049; [2003] 2 EGLR 28 considered.
(5) The tribunal was satisfied that it had sufficient material to enable it to make a decision on the application to discharge the manager without remitting it to the FTT under section 12(2)(b) of the Tribunals, Courts and Enforcement Act 2007.
The tribunal had sufficient confidence that the manager would discharge her remaining responsibilities in a professional manner to allow her to remain in post rather than sending the parties back to the starting line with nothing having been achieved. The application to discharge the management order would be dismissed.
David Warner (instructed by Direct Access) appeared for the appellants; the first respondent appeared in person; Jonathan Ross (of Forsters LLP) appeared for the second respondent.
Eileen O’Grady, barrister
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