A Matter of Jurisdiction: JB Leitch Success in Management Order Case in the Upper Tribunal

This week, JB Leitch has been successful in a case concerning the jurisdiction of the First-tier Tribunal in appointing Managers, in a case where a Management Order wasn’t at an end – a scenario where there are limited legal precedents.

Background:

This Appeal questioned whether the First-tier Tribunal (FTT) had jurisdiction to consider an application to vary a management order which was lodged before the expiry of the order but considered by the FTT after the expiry of the order.

To provide further context, in July 2024 the FTT considered that it did not have jurisdiction to “breathe new life” into a management order which had already expired by the time the application was considered. It therefore struck out the application which was made jointly by a tribunal appointed manager, and the representative of the residential leaseholders who had procured his appointment in 2021.

With the permission of the FTT, our clients (the appellants), appealed the FTT’s decision.

Relevant Statutory Provisions:

The FTT is given power to appoint a manager to act in relation to premises which contain two or more flats by section 24, Landlord and Tenant Act 1987 (the 1987 Act). 

Three features of these statutory provisions were noted. First, under section 24(1), the FTT has power to appoint a manager on an interlocutory or final basis; an “interlocutory” appointment means an appointment made on a temporary basis before a final decision in the proceedings has been made. Secondly, the FTT has power under section 24(9) to vary or discharge a management order; no limit is placed on the sort of variation which may be made. Thirdly, by section 24(9A), the FTT must be satisfied that it is “just and convenient in all the circumstances of the case” before it can exercise its power to vary a management order.

The Appeal:

The Appeal pointed out that the application to vary the management order had been made before the end of the manager’s appointment and had included a request for an interim extension of the appointment while the application was being fully considered. In those circumstances the FTT should have accepted that it had jurisdiction to determine the application – adding that that the only jurisdictional restrictions on an application to vary an order made under section 24, 1987 Act, were that the application must be made by a “person interested”, as required by section 24(9), and that it must be made while the order remained operative. In this case both those requirements were satisfied.

The Decision:

On Behalf of our clients, we submitted that the only relevant date was the date of the application, not the date on which it was considered by the FTT.

We pointed out that, under the Civil Procedure Rules (which do not apply in tribunals) a different approach is taken to applications to extend time for compliance with court orders if the application has been made in time (i.e. before the date originally appointed for taking the required step) or out of time (after that date).

The decision concluded that the FTT was wrong to consider that it lacked jurisdiction to vary the management order by prolonging the period of the manager’s appointment, adding that in conclusion, it could not consider that the expiry of the original term, while the application was under consideration, deprived the FTT of power to make the proposed variation.

Specific Points for Consideration:

1. Reference was made to the functions contained within the management order that remain functions of the manager until such time as completed - i.e. the requirements following the end of the management order for example to the report on the progress and outcome of management and to request directions for the disposal of unexpended funds (if necessary) are still required so the order has not come to an end.
2. The decision sets out that the application does not seek for the FTT to “breathe new life” into the management order as the order is not at an end due to the need to deal with any end of management directions, although some of the functions within the management order may have come to an end.
3. It is acknowledged that the management of the building reverted to the respondent when the period of the manager’s appointment came to an end. But when it reverted the application to extend the period of appointment had already been made and was awaiting determination. It is irrelevant as to when the FTT got around to dealing with the application.
4. Notably, the Judge also states that it would be surprising if the jurisdiction of the FTT to consider an application depended on its own administrative procedures.
5. It is also noted that there could be a period where management is problematic due to the expiry of functions within a management order and the landlord attempting to maintain and regain management. The judge confirms that the FTT can be “nimble when the need arises” and it has the power to make interlocutory orders to extend the order whilst the matter is determined. The decision continues to confirm that the discretion of the FTT is wide in that it can make an order to vary or discharge the order if it is just and convenient and that such order will not result in the issues that led to the making of the original order.
6. Of importance is that the FTT will have discretion to determine how the matters should be dealt with in the intervening period of expiry of the functions within the management order to the making of a decision on the application. This is important as it will deal with the issues of remuneration and the service charges incurred and the management fees.