Keeping a case on-piste: Lessons from Invergarry Court Ltd v Connolly & Ors  UKUT 209 (LC)
A skiing analogy in an article written in August may seem inapposite. But, after a spate of heatwaves, you can’t blame someone for looking forward to cooler temperatures.
The analogy is also a good one when it comes to the recent Upper Tribunal (Lands Chamber) Judgment in Invergarry Court Ltd v Connolly & Ors  UKUT 209 (LC). In that case, the First-tier Tribunal (‘FTT’) went ‘off-piste’ and failed to properly address the relevant statutory test for the appointment of a manager under the Landlord and Tenant Act 1987 (‘the 1987 Act’). As a result, the Upper Tribunal allowed the appeal, set-aside the FTT’s Decision, and remitted the matter for a rehearing.
But what can be done to ensure Judges come to the right answers first time around (whether or not a party actually wins or loses), such that the wasted time and costs involved in appeals and rehearings are avoided?
Invergarry Court is a block of 9 flats. As is not uncommon, disputes arose around how the block was managed.
In particular, the lessee who acted as de-facto manager of the block on behalf of the freeholder stated that two flats were in breach of various covenants following works that had been carried out in 2003-2005. As a result, he said that no consent would be given to proposed assignments of those flats unless and until his conditions were met. That position was maintained for many years (including at the trial before the FTT i.e. almost two decades later), a position which the applicant lessees considered unreasonable (and the leases contained a provision that consent to assignment could not be unreasonably withheld).
Concerns were also raised with how the service charge funds were managed and the provision of information relating to those service charge monies.
Accordingly, three lessees served a notice under s.22 of the 1987 Act listing their grievances and, in due course, applied to the FTT for the appointment of a manager.
The Decision of the FTT
At the trial of the matter, the FTT heard evidence and submissions from both sides. A few weeks later they handed down their Decision, which ran to some 14 paragraphs and determined that a Management Order should be made. The FTT’s reasoning was confined to 5 of those paragraphs.
That reasoning was not entirely clear. The FTT stated that ‘the breaches’ alleged by the lessees had been proven on the balance of probabilities; they preferred ‘the evidence’ of the lessees to that of the de-facto manager; the de-facto manager had ignored/ been unaware of the RICS code and the leases when it came to the question of service charges (but no further details were given); and the de-facto manager had acted unreasonably/ unreasonably refused consent when making clear that any assignment would be subject to unsubstantiated conditions relating to works carried out years ago.
Notably, although the lessees’ s.22 notice and application had referred to the ‘just and convenient’ requirement for the appointment of a manager, the FTT’s Decision did not address this at all. When reproducing the list of matters relied on by the lessees, the FTT had even (inexplicably) removed this item from the list.
The Judgment of the Upper Tribunal
The freeholder appealed, arguing that the FTT had erred when finding that they had breached their obligations by unreasonably refusing consent to assign (no request in writing had been made) such that the only identifiable basis for the Management Order in the Decision, s.24(2)(a) of the 1987 Act, was unsustainable.
The Upper Tribunal (Martin Rodger QC) allowed the appeal. Had the FTT considered that the freeholder had breached a covenant by unreasonably withholding consent, they were wrong to do so – the provision requiring consent not be unreasonably withheld acted as a condition, breach of which relieved the lessee of the need to obtain consent; it did not amount to an obligation itself. Prospective indications of the approach to requests would not engage the covenant (or condition) at all.
The behaviour of the de-facto manager (acting as he did on behalf of the freeholder) could, however, have amounted to ‘other circumstances’ under s.24(2)(b) of the 1987 Act to justify the appointment of a manager – he had been unreasonably raising breaches which, even if established, were statute barred pursuant to the Limitation Act 1980. But the FTT did not address this element of the 1987 Act. Nor did they address why they preferred all of the lessees’ evidence and dismissed that of the de-facto manager. Furthermore, and crucially, they had not addressed why it was just and convenient to make the Management Order. This was fundamental to the statutory regime and had to be satisfied, particularly given the serious consequences of appointing a statutory manager.
The case was thus remitted to be heard by a differently constituted FTT – there was material to support the making of a Management Order but findings of fact first had to be made. The FTT would also have to consider the scope of the Management Order and whether the manager could be granted the power to approve (or refuse) requests to assign leases.
Various points can be taken from the Judgment of the Upper Tribunal, including how covenants limiting assignment operate and the manner in which managers are appointed under the 1987 Act.
But the Judgment also serves as a particular reminder of what can go wrong when a Court/ Tribunal/ Judge does not apply their mind to the correct test, make the necessary findings on the evidence, or address the law sufficiently.
It would not be surprising if parties feel at the mercy of the decision maker in that regard. After all, notwithstanding pleadings, evidence and submissions, they are not the ones who write the Judgment. What can they do to keep the case on-piste and avoid unnecessary appeals? Some ideas would include: (1) make sure the decision maker is aware of the law (whether it be derived from statute or authorities) that they have to apply; (2) draw attention to the specific parts of any test that need to be satisfied; (3) identify the conflicting evidence and submissions, and encourage specific findings to be made where necessary; and (4) check that the decision maker is following the arguments made.
There will always be cases in which mistakes are made, but by helping the decision maker identify and focus on the issues they must determine, hopefully there will only be a smattering of such cases rather than an avalanche.
Edward Blakeney, instructed by Bruce Maunder-Taylor, acted for the Respondent on appeal. A full copy of the Judgment can be found here.
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