Right to manage and appointment of a manager: how do they interact?

Bentham v Lindsay Court (St Annes) RTM Co Ltd [2021] UKUT 4 (LC) Judge Cooke The Landlord and Tenant Act 1987 (Pt.2), provides a scheme whereby the First-Tier Tribunal (Property Chamber) can appoint an independent manager in place of the freeholder or other manager, where that existing manager has engaged in one of a specified list of management failings (e.g. demanded unreasonable service charges) (s.24(2)). Once an order is made, the FTT may, on the application of any interested party, vary the order in such manner as it sees fit; such a variation does not require proof of any further default by the freeholder or other manager (s.24(9); Orchard Court Residents Association Ltd v St Anthony’s Homes Ltd [2003] EWCA Civ 1049). By Part 2, Chapter 1, Commonhold and Leasehold Reform Act 2002, qualifying long leaseholders of flats are entitled to establish and join a “Right to Manage company” (“RTM company”) through which - if sufficient leaseholders join the company - they may take over management of their building. Unlike the 1987 Act, there is no requirement to prove any fault on the part of the landlord or other manager. Once an RTM company begins to manage the premises, any other manager (whether a freeholder, third party manager under a lease or a manager appointed under the 1987 Act) must cease to act in respect of the premises: ss.96, 97, 2002 Act. Lindsay Court was a development of 16 blocks of flats. In 2014, Mr Bentham was appointed as manager under s.24, 1987 Act. In 2020, the leaseholders of one of the blocks formed an RTM company acquired the right to manage that block. Prior to the acquisition of the RTM, Mr Bentham had been in the process of preparing a major works scheme across all 16 blocks. He considered that the effect of the RTM process was that he was not entitled to manage that block and that this development would have an adverse impact on the planned major works. He applied for an order under s.24(9), 1987 Act, varying the management order so that, with effect from 23 January 2021, the management of the property would revert to him under the terms of the management order (as varied). The FTT dismissed his application but granted permission to appeal. The Upper Tribunal dismissed an appeal. The power to vary a management order under s.24(9) could not be used to oust the right to manage company. The only way to remove the company and restore management to Mr Bentham was for a fresh application to be made under s.24(2). Justin Bates appeared for the s.24, LTA 1987 manager. The judgment can be found here.