Invergarry Court Limited v Christopher Anthony Connolly & Ors

The power to appoint a manager under the Landlord and Tenant Act 1987 may be exercised only where a statutory threshold condition is satisfied and it is just and convenient to make the order. The requirement of justice and convenience is a substantive condition requiring careful evaluation, particularly because appointment is a draconian remedy. A qualified covenant against assignment does not impose an obligation on the landlord until a request for consent is made. An unreasonable refusal operates as a condition relieving the tenant from the need for consent, rather than as a breach of covenant. Nevertheless, conduct which would not establish a breach under section 24(2)(a) may constitute other circumstances under section 24(2)(b), provided the tribunal is satisfied that appointment is just and convenient.

The First-tier Tribunal (Property Chamber) appointed a manager of Invergarry Court under section 24 of the Landlord and Tenant Act 1987, following complaints concerning the landlord’s refusal to permit assignments, historic building works and service-charge administration.

The freeholder appealed. It argued that the FTT had made inadequate findings, had wrongly treated prospective conditions on assignment as a breach of covenant, and had failed to consider whether appointment was just and convenient. The respondents argued that the FTT’s findings and order sufficiently established the statutory grounds. The central issues were whether the statutory conditions for appointment had been satisfied and whether the Upper Tribunal should remake or remit the decision.

1. Appeal allowed and application remitted. The FTT’s order appointing a manager was set aside. The application was remitted to a differently constituted FTT panel for redetermination.
2. Section 24 requires both a relevant threshold condition and satisfaction that it is just and convenient to make the order. This applies whether the application relies on breach of obligation under section 24(2)(a), or on other circumstances under section 24(2)(b). Appointment is a draconian remedy because it removes contractual rights and imposes expense. The FTT had neither referred to the statutory requirement nor assessed relevant factors, including the purpose of the order, alternative remedies and the fact that the application was made by a minority of lessees against the wishes of the majority.
3. The FTT had wrongly treated the landlord’s stated conditions for any future assignment as a breach of obligation. Under the usual qualified covenant, no obligation arises before a request for consent is made. An unreasonable refusal is a condition which permits assignment without consent; it is not itself a breach of obligation: L.R. 9 Ex. 151. The statutory duties under the Landlord and Tenant Act 1988 likewise arise in response to a written request.
4. The same conduct could nevertheless have been relevant under section 24(2)(b). If the FTT considered the landlord’s conduct and conditions unreasonable, and also found appointment just and convenient, it could rely on them as other circumstances supporting a management order.
5. The Upper Tribunal could not remake the decision. The FTT had made very few findings, had not adequately addressed the service-charge allegations, and had not resolved whether the relevant statutory conditions were met. It would also be necessary to determine whether the function of granting or refusing assignment consent is a management function capable of inclusion in a management order.
6. The parties were encouraged to mediate. The landlord could not require further licences or deeds of variation as conditions of consent to future assignments, and reliance on the historic works as a reason for withholding consent would be unreasonable and potentially expose it to statutory damages.

• First-tier Tribunal (Property Chamber): on 1 November 2021 appointed a manager under section 24 of the Landlord and Tenant Act 1987.
• Upper Tribunal (Lands Chamber): appeal allowed; the FTT’s order set aside and the application remitted to a differently constituted panel.