[2024] UKUT 423 (LC)

Statements of case were filed by the respondent, as applicant, and by the appellant as respondent in the FTT; witness statements were filed and skeleton arguments exchanged prior to the hearing. At the hearing the FTT heard evidence including from the proposed manager.

In its decision the FTT set out the factual background and a summary of the difficulties that had arisen between the parties. At paragraph 16 the FTT said:

“The allegations of poor management include a failure to produce accounts relating to the Service Charge, deducting the Service Charge from the lettings income without any explanation, failing to carry out adequate maintenance that has resulted in water ingress, a rat infestation, lifts that have been out of order for some time and unauthorised people entering the property.”

In paragraphs 22 to 25 the FTT recorded an application by Ms Sinclair (the applicant before the FTT, the respondent to the appeal) to adduce further evidence: a refusal by Sheffield City Council to grant an HMO licence (that is, a licence to operate a house in multiple occupation, or HMO, under the Housing Act 2004) in respect of one of the flats on the basis that the appellant was not a “fit and proper person” to manage the HMO. The City Council said that the appellant was not a fit and proper person because he had committed a number of offences; and that the same refusal was going to be issued in respect of all the flats managed by him or by his company. Five offences were listed, apparently all in respect of failure to comply with management regulations including fire safety precautions. The appellant had been prosecuted for four of the offences and had either pleaded guilty or had not appeared, and had been fined (and in one case ordered to pay a victim surcharge). For the other offence, in respect of 145 breaches of regulations, civil penalties had been imposed by the City Council. The new evidence was admitted, on the basis that had not been available at an earlier date.

The FTT was told that the appellant was appealing the civil penalties. Both parties have drawn my attention to the FTT’s decision in that appeal made on 25 September 2024; but this is an appeal by way of review and the decision of 25 September 2024 post-dates the decision now appealed and so is not relevant to the appeal.

The FTT then set out the relevant statutory provisions, and at paragraphs 26 to 49 summarised the evidence and the parties’ arguments, including Mr Ata’s challenge to the validity of the notice.

Under the heading “Reasons” the FTT at paragraphs 58 and following identified four issues for determination:

Under the third issue, the validity of the notice, the FTT considered first whether a proper ground was stated in the notice. It decided that ground 2 had been properly stated, that what the applicant complained of was indeed breaches by the appellant of its obligations as landlord, and that breaches of the landlord’s obligations to repair and maintain the property fell within ground 2. Second the FTT considered, and rejected, the argument that the notice was invalid because it did not give a reasonable time for remediation.

The fourth issue was the core of the FTT’s determination, under which it had to assess whether the allegations were proved and whether it was just and convenient to appoint a manager. The FTT said that the appellant did not deny the failure of the lift and the heating system, nor the rat infestation or the water ingress. It noted that the appellant blamed the tenants for failure to pay service charges and that “the parties have reached an impasse”. It noted the appellant’s convictions and said that they were relevant. It said that there was a lack of transparency in the service charges, and a lack of detail in the invoices rendered by “Fix1st”, the appellant’s own company which he uses for work on the property. It noted the absence of any evidence from the appellant that the property was insured. It concluded at paragraph 73:

“In taking into account all these matters and in making its determination regarding the appointment of a manager, the Tribunal finds the requirements of s 24(2)(a)(i) are met and it is “just and convenient” to make an appointment under s 24(2)(b).”

I have no doubt that the FTT meant to say “24(2)(a)(iii)” rather than 24(2)(b). The fact that the requirements of section 24(2)(a)(i) are found to have been met is insufficient for a management order to be made; the ground is as we have noted bipartite, so that the FTT also has to find that it is “just and convenient” under section 24(2)(a)(iii). That is clearly what it was doing; the FTT in its refusal of permission to appeal stated that the one ground it found to have been satisfied was section 24(2)(a). It is not plausible to suppose that by paragraph 73 the FTT meant to say that one limb only of section 24(2)(a) was satisfied and to introduce a new idea, ground 24(2)(b), without elucidation. Its focus was on the breaches of covenant relating to repair and maintenance, and those facts together with the appellant’s convictions and his failures to provide information made it just and convenient to make an order pursuant to section 24(2)(a).

The FTT then went on to consider the manager proposed by the tenants, Mr Harvey Mills, a director of Cloud Student Homes (see paragraph 9 above), and appointed him for a period of three years. That appointment has not yet taken effect because the FTT gave permission to appeal, and stayed its decision pending appeal. Permission was granted on three grounds.

The first was that “the gateway ground upon which the Tribunal relied was not particularised in the preliminary notice.”

The second was said by the FTT in its summary of the grounds for appeal to be that “the Tribunal did not allow a reasonable time for the breach to be remedied”, but that it is not what the appellant said, and there is no requirement in the statute that the FTT allow time for remediation; the FTT put it correctly at paragraph 16 in its decision granting permission: “The second ground of the appeal is that the preliminary notice did not allow sufficient time for the Appellant to remedy the breach, only giving 14 days commencing on 23rd December 2022”.

The third ground was that “it was not appropriate to appoint Harvey Mills as the manager due to a potential conflict of interest.”

The FTT added that whilst the first ground was a point of law, so far as the second and third grounds were concerned “permission to appeal is given upon the submissions the Decision was inadequately reasoned.”

It is important to note that there is no challenge to the FTT’s reasoning under what it described as the fourth issue, namely whether the allegations had been proved and whether it was just and convenient to appoint the manager; permission was not even sought to appeal the FTT’s assessment that the ground under section 24(2)(a) was made out. The challenge is solely to the validity of the section 22 notice and to the choice of manager.