Service Charges: Don't be disappointed  

There are various statutory remedies and measures available to leaseholders who find themselves in situations in which their entitlements are compromised.

One such measure is that of the First-tier Tribunal’s (FTT) right to appoint a new manager pursuant to Section 24 of the Landlord & Tenant Act 1987 (“the Act”). Not to be confused with the Right to Manage, this contrasting provision is designed to rectify managerial dysfunctions by enabling a new manager (the “Appointed Manager”) to acquire all the managerial responsibilities over the premises throughout a particular number of years and in so doing, it can employ the appropriate changes to address those concerns.

The Act enables one or more leaseholders to make an application to the FTT, putting forward their proposed choice of manager. Provided that the FTT deems it “just and convenient” to do so, that the proposed manager is suitably qualified for the particular situation and purpose, and so long as a preliminary notice is provided for, the FTT will grant the appointment order detailing the arrangement.

The wording of the order is of the utmost importance to the Appointed Manager as this will precisely set out the remit and scope of its authority. If the Appointed Manager finds that it is unable to carry out a required function due to it not being expressed in the order, this can be remedied by the making of an application to vary the order under Section 24(9) of the Act. This is also the appropriate method if applying to extend the time period of an appointment.

The expiration date of the order should be closely examined and monitored. The significance of this is highlighted in the Upper Tribunal case of Eaglesham Properties Limited v John Jeffrey.

In this case an interim management order was made for an initial 12-month appointment and provided that the parties could return to the tribunal “after the expiry of a year” to ask for a further order. The applicants here mistakenly believed that there would be a hearing automatically listed after the 12 months had elapsed. They then applied under Section 24(9) of the Act for a variation to extend this period.

It was held by the Upper Tribunal that there was no such jurisdiction for the tribunal to vary an order that had already elapsed and that any appointment would thereafter necessitate a new order, not a mere variation to an order. As a consequence the application failed and control had reverted to the freeholder.

This serves as a useful reminder that the wording of the order should be closely examined and if an extension is intended, to ensure that the application is made in good time prior to expiry.