[2024] UKUT 423 (LC)

The third ground of appeal is that Mr Mills should not have been appointed as manager because of potential conflicts of interest between his role as the FTT’s appointee, owing duties to the FTT, and his role as director of the letting agent, Cloud Student Homes, now engaged by 63 of the lessees.

The appellant’s Statement of Case in the FTT made this point, saying that Mr Mills was “not an independent third party, rather he is an agent of the leaseholders. His appointment as manager of the Block could give rise to a conflict of interests”. In his witness statement the appellant said nothing about a conflict of interest, but explained that he was unhappy about Mr Mills’ appointment because of the involvement of Cloud Student Homes in the dispute between himself and the tenants. Ms Gray’s skeleton argument before the FTT said the same as the Statement of Case about a conflict of interest, again without elucidation. That being the case, I have to disagree with Ms Gray’s statement at the hearing that the conflict was “front and centre” of the appellant’s case in the FTT; on the contrary, it was a brief and unexplained suggestion. Had much reliance been placed on it, more would have been said.

The FTT noted at its paragraph 52 that “The Respondent asserted that this appointment would create a conflict of interest”. At paragraph 56 it said:

“When questioned about any conflict of interest, Mr Mills advised that he did not foresee any issues. R Verduyn, counsel, proposed that should Mr Mills be appointed a provision could be made within the management order for Mr Mills to resign as the lettings manager of a flat within the property where any conflict arose.”

In its conclusion the FTT did not address the suggested conflict directly, but said at paragraph 74 that it “considered the significant criticisms of his proposed appointment by the Respondent” and went onto say why it considered the Mr Mills was a suitable appointee by reference to his experience and competence.

Ms Gray pointed to the FTT’s Practice Statement: Appointment of Managers under Section 24 of the Landlord and Tenant Act 1987 (January 2022) where paragraph 6 states:

“Before appointing a person as a Manager, the Tribunal will need to be satisfied that the Manager would have no conflict of interest in taking up appointment. The Manager must also seek to avoid conflict of interest in the placing of contracts and discharging their other duties during their appointment. A conflict will occur if the dealings would be regarded by the average consumer as conflicting with the Manager’s obligations under the order. If in doubt the Manager should seek directions from the Tribunal.”

Accordingly, she argued, the potential conflict was an important issue for the FTT. She suggested that conflict might arise if an assured shorthold tenant used his flat in a way that breached the terms of the long lease, or if works were required that made it difficult for the long lessees to sub-let the flats. It may be that the FTT thought that no conflict existed or that conflict could be resolved, but its decision does not say what it thought.

Mr Verduyn pointed out that no examples of potential conflict were given to the FTT; there was simply an assertion that there was a potential conflict with no explanation as to how that might arise. Accordingly, he said, the appellant cannot complain if the FTT dismissed the point out of hand; there was nothing for the FTT to express a view on. In any event, to have the same manager for the building and the sub-lettings is a common arrangement, and indeed the appellant himself has been in both roles.

In my judgement it is clear from the FTT’s paragraphs 52, 56 and 74 that it was aware of the suggestion that there might be a conflict of interest and did not think there was one. In the absence of elucidation of the argument by the appellant before the FTT he cannot complain about the absence of detailed consideration by the FTT. Again he is picking up a point that was not developed at first instance; in the absence of any explanation by way of example it is difficult to see that the FTT could have said much about it save to acknowledge the appellant’s criticisms of the appointment and move on. The suggested potential conflict was not on any reckoning a reason not to appoint Mr Mills as a manager; had the FTT thought there was anything in the point it would have commented on the suggestion that the Management Order might contain provision for Mr Mills to detach himself from the management of a flat if a conflict arose, but clearly the FTT did not think that even that was necessary.

There is no substance in this ground of appeal and it fails as did grounds 1 and 2.