First-tier Tribunals and Freeholders

Lucy Frazer Excerpts

Tuesday 24th July 2018 Commons Chamber

[The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)]

I congratulate the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) on securing today’s debate on a subject that is clearly very important to his constituents, as it is to other Members in the House. I thank the other hon. Members present for their valuable contributions, particularly the hon. Member for Strangford (Jim Shannon). I was very interested to hear in the last debate that it was his 44th speech in this Session. I am pleased that he has remained for the final debate before the recess.

It might be useful for me to explain a little bit more about the first-tier tribunal and the matters it deals with. The chamber was created in 2013 following the transfer of the functions of three tribunals—the agricultural land tribunal, the adjudicator for the Land Registry, and the residential property tribunal—into the first-tier tribunal. The residential property jurisdiction deals with a number of matters relating to landlord and tenant law, including leasehold enfranchisement and lease extensions, liability to pay service charges, variations of leases, and the acquisition of the right to manage. It is an expert jurisdiction. The tribunal panels include valuers and, as the hon. Member for Poplar and Limehouse said, lay people with experience of landlord and tenant matters.

I turn to the specific question of the powers of the first-tier tribunal to appoint a manager under section 24 of the Landlord and Tenant Act 1987, and how they are enforced. Section 24 allows the first-tier tribunal to appoint a manager to carry out obligations contained within a management order that is issued by the first-tier tribunal. Although the tribunal makes the appointment, it is often the case that leaseholders apply for a manager to be appointed because the landlord has in some way breached the management obligations that it owes to them. In most cases, before the leaseholders make such an application, they must serve a notice on the landlord specifying in broad terms the landlord’s alleged breaches and what the landlord must do to remedy them. If the landlord does not take remedial action within a reasonable period, the leaseholders may then apply to the first-tier tribunal for the appointment of a manager.

Usually, the party applying nominates the individual manager they wish to have appointed, who is then required to prepare a management plan setting out his or her experience and explaining how he or she will manage the property. The first-tier tribunal has wide powers to decide on the matters to be included in a management order under section 24, which will typically deal with initial transfer of information, documentation, money and other items necessary for the manager to be able to perform his duties properly. It will also cover which management matters were transferred to the manager, such as maintenance, repairs, and collection of service and other charges from the leaseholders.

It might be helpful to explain the manager’s status in this type of arrangement. The manager is not a managing agent, nor is he employed or directed by the landlord or the leaseholders, including those who apply for his appointment. The Court of Appeal has stated that the appointed manager carries out the functions required by the tribunal, and he or she carries out those functions in his or her own right as a tribunal-appointed official. He is not appointed as the manager of the landlord or to carry out the landlord’s wider obligations under the lease, unless specified in the management order. In an appeal to the upper tribunal, His Honour Judge Huskinson said that if there is criticism of the conduct of the appointed manager and complaints are brought before the tribunal, those criticisms must and will be examined with care, because they are made against the manager as a tribunal-appointed officer.

To be clear, the manager is appointed by the first-tier tribunal to carry out the duties required by the order appointing him. He is answerable to the tribunal, not to the leaseholders or to the landlord.

[Bob Stewart]

So who do people who have a complaint about the way that the management is functioning—leaseholders, in particular—go to if the manager is not answerable to them? Do they have to go to the tribunal again, or what?

[Lucy Frazer]

As the manager is a court-appointed officer, people can complain directly to the tribunal about his actions. The manager is a court-appointed officer answerable to the court, and any issues in relation to his conduct would be brought before the tribunal.

The hon. Member for Poplar and Limehouse asked about the support and protection available to managers who are carrying out their duties in what can be very difficult circumstances. As I said, the obligations are set out in full in the management order. It is for the first-tier tribunal to decide how the order is to operate and how the manager is to fulfil his obligations.

If a landlord is being so obstructive that the terms of the management order cannot be fulfilled, the manager can apply to the first-tier tribunal for further directions, and an order under section 24(4) can be made. Such an application can include a request that a penal notice be attached to the management order, and if a penal notice is attached and the landlord disregards it, the manager can apply to the county court for permission to enforce the management order. Enforcement of any provision of a section 24 management order, monetary or otherwise, is a matter for the county court, not the tribunal. That includes enforcement of penal notices that can attach to such orders.

The hon. Gentleman raised an important point about the inequality in some cases in relation to parties in the property chamber. He was right to say, as my hon. Friend the Member for Beckenham (Bob Stewart) was, that certain features of the tribunal are designed to make it less formal and more accessible than the courts. Where one side has retained legal representation, tribunal members are trained not to permit attempts at oppressive behaviour by legal representatives and will help unrepresentative parties to frame questions where necessary.

The hon. Member for Poplar and Limehouse made some interesting points about inequality in respect of costs. Parties should meet their own costs of litigating in the tribunal system, even when they are successful in their own claim. There are powers, however, for costs to be awarded where there is unreasonable behaviour. The tribunal has powers under its rules if applications are being brought oppressively by those with a stronger bargaining position and stronger powers. It can strike out proceedings that are frivolous, vexatious or abusive under rule 9(d), or if there is no reasonable prospect of an application succeeding under rule 9(e), but I acknowledge that he made interesting points in relation to costs.

The hon. Gentleman mentioned quite rightly that the MHCLG is looking at a wide variety of matters in the area of leaseholds. We are always looking to improve our processes. On 2 July my right hon. Friend the Secretary of State for Housing, Communities and Local Government announced that the Government would issue a call for evidence this autumn, to better understand the experience of people using the courts and tribunals services in property cases, including considering the case for a specialist housing court. My Department is also discussing with MHCLG officials what further work is necessary to speed up the appeals process for housing disputes across the courts and tribunals.

The hon. Gentleman asked to meet, and I would be very happy to meet him, to continue to discuss this important matter. I thank him again for securing the debate. It is right that we look at how we can continue to protect people and their property rights.

Question put and agreed to.