Varying a management order to oust a RTM company

A right to manage (RTM) company has acquired the right to manage a block of flats in accordance with chapter 1 of part 2 to the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). Under section 24(9) of the Landlord and Tenant Act 1987 (the 1987 Act), can a tribunal-appointed manager apply to the First-tier Tribunal (FTT) for an order preventing the RTM company from exercising that right? This was the jurisdictional question that arose in Benthan and another v Lindsay Court (St Annes) RTM Company Ltd and another [2021] UKUT 4 (LC). The second appellant was the freeholder of Lindsay Court, St Annes, Lancashire (the development). The development consisted of 16 blocks. The long lessees of block 1 were the second respondents. The development had been poorly maintained by a former RTM company over the years. Part II of the 1987 Act provided a mechanism for the FTT to appoint a manager to take over responsibility for managing premises if the existing manager or freeholder failed to do so for one or more of the reasons specified in section 24(2) of the 1987 Act. In 2014, the FTT appointed David Benthan to take over management of the development. Pursuant to section 24(9) of the 1987 Act, Benthan applied to the FTT to vary the order appointing him as manager. In accordance with that section, he was not required to establish that any of the reasons set out in section 24(2) of the 1987 Act applied. Benthan sought to extend his term to enable him to oversee major works that were scheduled to be carried out to the development. Before his application came before the FTT, the first respondent made a successful claim to acquire the right to manage block 1 pursuant to chapter 1 of part 2 of the 2002 Act. The first respondent was due to commence management of block 1 on 22 January 2021. Pursuant to section 97(2) of the 2002 Act, Benthan’s right to manage block 1 would end on that date unless an agreement was reached with the first respondent. No such agreement was reached. Benthan and the freeholder made a further application to the FTT under section 24(9) of the 1987 Act. On this occasion they requested that the FTT vary the management order to allow Benthan to continue to manage block 1 beyond 22 January 2021. The application was dismissed on jurisdictional grounds. Specifically, it held that an application could not be made under section 24(9) for an order which removed the right to manage premises from a RTM company until it had acquired management of the premises. To achieve their aim, Benthan and the freeholder would need to make a fresh application under section 24(2) of the 1987 Act. The Upper Tribunal (Lands Chamber) (UT) agreed. The UT found that both the substantive and procedural requirements of the 1987 Act had to be met before the first respondent could be deprived of its right to manage. To permit otherwise would run contrary to the policy aims behind both statues. If a RTM company met the necessary procedural requirements, its acquisition of the right to manage flowed automatically regardless of any inconvenience caused to another party. The appellants had also argued that the second limb of section 105(4) of the 2002 Act was sufficiently broad to enable the management order to be varied in the manner sought. The UT rejected this argument. It found that although paragraph 8(7) of schedule 7 of the 2002 Act and the second limb of section 105(4) conferred a power to make an order that the RTM company’s right to manage ceased, it was to enable a tribunal on an application made under the 1987 Act simply to bring the RTM company’s right to an end so that the landlord could reclaim responsibility for management. Again, that could only be done when the procedural and substantive requirements set out in sections 21 to 24 of the 1987 Act were met. Elizabeth Dwomoh is a barrister at Lamb Chambers