First-tier Tribunal Extends Management Order for 18 Months

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference

:

CHI/00HB/LAM/2019/0019

Property

:

24 [ADDRESS] [POSTCODE]

Applicant

:

[redacted]

Respondent

:

[redacted]

: [NAME_9], Company Secretary

Interested Parties : [NAME_12], [NAME_15] - [NAME_18] Tribunal appointed Manager

Proposed Manager

:

:

[NAME_21] of [COMPANY_25]

Mrs [NAME_26] [NAME_27] of [COMPANY_52] of Application

:

Application to vary and extend a management order section 24(9) of the Landlord and Tenant Act 1987

Tribunal Member(s)

:

[NAME_29] (Chair) Judge Tildesley OBE Mrs [NAME_31]

Date of Hearing : 15 December 2021 by Cloud Video Platform

Date of Decision : 26 January 2021

DECISION

2 The Decision 1. In accordance with section 24(9) Landlord and Tenant Act 1987 the Order made on 8 May 2020 is extended for 18 months from 26 January 2021 and Mrs [NAME_26] [NAME_27] of [COMPANY_52] ('the Manager') is appointed as manager of the property at 24 [ADDRESS] [POSTCODE]("the Property') in place of [NAME_21].

2. The terms of the extended Order are set out in the attached Order. Mrs [NAME_27] is directed to indicate her agreement to the Order and provide details of the professional indemnity insurance and additional fees to the Tribunal by no later than 2 February 2021. 3. [NAME_32] shall comply with direction 12 of the Order made on 8 May 2020, and direction 14 of the Order made on 26 January 2021 and is to co-operate with Mrs [NAME_27] to ensure a smooth handover. The Application 4. The Applicants apply to extend and vary the existing management order made on 8 May 2020 by substituting Mrs [NAME_26] [NAME_27] in place of [NAME_21] as Manager of the Property and by continuing the Order for a period of three years under section 24(9) of the 1987 Act.

5. The Application is opposed by the other leaseholders in the property who control the Respondent Management Company, namely, [NAME_15] and [NAME_12]; [NAME_33], and [NAME_18]. Those leaseholders have also purchased the freehold of the property. They have asked for the management order to cease and for the management of the property to revert back to the Management company.

6. References to documents in bundles supplied to the Tribunal are shown [].

7. On 8 May 2020 the Tribunal found that:-

• The Respondent agreed that the roof was in a state of disrepair. • [NAME_35], Environmental Health Officer was of the opinion that the structure of the roof was compromised and that there was evidence of water ingress to multiple parts of the first floor flat. • [COMPANY_37] and [NAME_38] supplied brief reports on the roof indicating that it was in poor condition. [NAME_38] expressed its professional opinion that the roof needed to be done as soon as possible before any more damage was done or anybody was hurt. • There was a major fire in the basement flat in 2018 which caused £33,000 in damage. • [NAME_39] confirmed that there was no fire alarm installed at the property at the time of the fire. • The Respondent agreed that a fire inspection of the property was necessary. • The Respondent did not understand the provisions in the lease regarding the collection of service charges.

3 • The “machinery” for the collection of service charges in the lease was inadequate. • The parties were not agreed on the way forward and blame each other for the current impasse.

8. The Tribunal was, therefore, satisfied on 8 May 2020 that the threshold for making a management order under section 24(2) of the 1987 Act was met. The Tribunal acknowledged that due to the prevailing circumstances posed by the Coronavirus Public Health Emergency it was not possible to determine whether a “full” management order should be made. The Tribunal however, found that there were urgent and exceptional circumstances which met the just and convenient test for the making an interim order under section 24 of the 1987 Act. The Tribunal was satisfied that [NAME_21] was suitable to be appointed as Manager. The Tribunal decided that the Order would continue until 2 December 2020, and that a hearing would be fixed on 1 December 2020 to determine whether a “full” Order should be made for a period of two years.

9. The Tribunal determined that the primary purposes of the interim management order were to arrange for a survey of the building with a view to producing a programme of repairs and maintenance over a period of time, to carry out a section 20 consultation on the proposed works to the roof and implement the necessary works and to set up a service charge account for the collection of service charges moving forward.

10. On 5 November 2020 [NAME_32] provided a progress report on the Management Order [NAME_32] concluded that

“I have made best efforts to progress all issues for the long-term best interests of all parties, despite difficult circumstances. It is clear that there is no agreement amongst the parties concerned to progress the works. Due to the notable costs involved in terms of the tender returns received, specifically for the roof and external decoration works, based on the Chartered Surveyors schedule of works, and in view of all Leaseholders’ objection, I do not propose to push forward with those works and seek the Tribunal’s view. Without scaffold access in place it is not possible for the Surveyor to carry out a full inspection of the property and therefore not possible at this stage for the Planned Maintenance Program to be produced, unless that is a desk based exercise, which I would not recommend. Due to the time of year we are now in and the shorter days and greater risk of inclement weather, I would not advise progressing decoration works. Roof works could still take place with the addition of a temporary roof structure but there is additional cost for this. The installation of the fully integrated alarm should proceed in order to fulfil Avon Fire’s formal request and the reinstatement of the Landlords electrical supply is connected to these works. In view of primarily the relations with a number of Leaseholders and the view of all that they do not wish to proceed with the works, we as a company have considered our position in regard to the management

4 of [ADDRESS] and would agree to being released from the order”.

11. On 10 November 2020 the Applicants applied to replace [NAME_32] with Mrs [NAME_26] [NAME_27] of [NAME_28] and for the Management order to continue.

12. On 11 November 2020, the Respondent agreed to the removal of [NAME_32] as manager and indicated that they would provide further submissions in relation to the Applicants’ application to replace [NAME_32] with Mrs [NAME_26] [NAME_27].

13. On 18 November 2020 the Respondent submitted a statement of case objecting to the appointment of Mrs [NAME_26] [NAME_27] and requesting that the management order ceased.

14. On 19 November 2020 the Tribunal agreed to release [NAME_32] from his appointment as manager with effect from 2 December 2020 save for directions 12 and 13c of the Order and the Right to Bring Legal Proceedings in Schedule of Functions and Services which remain in force until the accounts and charges have been resolved. [NAME_32] was not expected to perform routine management responsibilities from the 19 November 2020. The Tribunal, however, extended the management order until a decision was made on whether to replace [NAME_32] with another manager.

15. The Tribunal directed that the application to replace [NAME_32] with Mrs [NAME_27] would be heard on 15 December 2020 by means of a video hearing. The Hearing 16. At the hearing [NAME_40] was appointed spokesperson for the Applicants. [NAME_41] and [NAME_42] also attended. 17. [NAME_44] was appointed spokesperson for the Respondent. [NAME_45] and [NAME_46] also attended.

18. Mrs [NAME_26] [NAME_27], the proposed manager was present and gave evidence.

19. At the beginning of the hearing the Tribunal recorded that the Respondent had submitted further representations the day before the hearing. The Applicants had no objection to the further representations which were admitted by the Tribunal.

20. The Tribunal considered the following documents in reaching its decision • The Tribunal’s decision of 8 May 2020 • The Applicant’s Statement of Case with response to [NAME_32]’s report, Section 20 observations, complaint to [NAME_24] about [NAME_32] and various emails. • The Respondent’s Statement of Case with proposed Operating Agreement, Section 20 observations and complaint to [NAME_24] about [NAME_32]. • A report from Mrs [NAME_26] [NAME_27], the proposed manager, including, site inspection, qualifications and fee schedule, proposed Management Plan and evidence of professional indemnity insurance.

5 21. The parties were given the opportunity to cross examine each other during the hearing. The Issues 22. In respect of an application under section 24(9) of the 1987 Act the Applicants are not required to serve a fresh section 22 Notice, and the Tribunal can rely on its previous finding that the threshold criterion in section 24(2)of the 1987 Act are met for the making of the management order.

23. Although section 24(9) places no restriction on how the Tribunal should exercise its discretion, the authors of Service Charges and Management (Tanfield Chambers 4th edition) state that the Tribunal would no doubt consider whether it is just and convenient to make the Order sought.

24. The Tribunal identified the following issues relevant to its decision on whether it is just and convenient to make the order on variation • The condition of the property and its current state of disrepair. • Whether there would be a recurrence of the circumstances that led to the making of the order if the management of the property reverted to the Management Company? • Whether the parties would frustrate the management order and make it impossible for the manager to carry out her responsibilities under the order? • Whether Mrs [NAME_27] is a suitable person to be appointed as a manager? Findings of Fact 25. The Tribunal does not intend to repeat the evidence given by the parties. The Tribunal sets out below its findings of fact against the evidence heard in relation to the four issues identified. Condition of the Property 26. The property as viewed from internet images from the street is a substantial semi-detached house built around the turn of the 19th century. It is arranged on three levels; lower ground, raised ground and first floor and was converted around 1982 into three flats, one on each floor.

27. The building is constructed in solid stone with part smooth rendered elevations. The roof is pitched and believed to be tile covered . There is a full height bay to the front elevation. There is a shallow front forecourt garden which is part retained. There is no on site parking visible at the front.

28. Mrs [NAME_27] submitted a management plan as directed. The Tribunal was assisted by Mrs [NAME_27]’s inspection report, with photographs, dated 13 November 2020. Mrs [NAME_27] confirmed that this was not a survey but a general scoping inspection for her own purposes. Mrs [NAME_27] did not gain access to the whole of the property.

29. Mrs [NAME_27] highlighted several wants of repair in the report: • From the front garden windows appeared to be in fair to poor condition, and decorations were needed to the building fabric .

6 There was a health and safety issue with the basement steps. • In the Entrance Hall there were concerns over fire precautions. The front door had a lockable lock which should be replaced with a thumb turn exit lock. There was no fire signage and no emergency lighting. Electrical installations appeared to be very old. Decoration was poor and there was evidence of a previous leak. • In the loft there was daylight visible due to missing or damaged tiles. Felt was damaged and there was no insulation. There was a large amount of debris and buckets in the roof. • Other areas of note included windows in poor condition suffering from rot and evidence of severe water ingress in upper level ceilings.

30. The Tribunal asked [NAME_44] about Mrs [NAME_27]’s inspection report. [NAME_44] accepted that the roof was in a poor state of repair but questioned Mrs [NAME_27]’s record of the poor state of internal and external decorations. [NAME_44] contended that the property was in good condition except the roof. [NAME_40] agreed with Mrs [NAME_27]’s inspection.

31. The Tribunal is satisfied with the accuracy of Mrs [NAME_27]’s inspection which corresponded with the Tribunal’s finding in May 2020 that the the property is in disrepair and has remained so since the Management Order was first made.

32. The Tribunal, therefore, finds that the property required significant work to the roof, external redecorations including making good rotten joinery, and replacement and or upgrading of fire precautions to bring the property into a reasonable state of repair. The Tribunal also identified that there were issues with the Landlord’s electricity supply and with the installation of the gas boiler in the roof space which would require attention.. What would happen if the Management Company resumed the Management of the property? 33. The Respondent produced an Operating Agreement [171-173] setting out how the Management Company would manage the property if the management was reverted to them.

34. That document outlined functional and financial arrangements to manage the building in accordance with the lease. It proposed instructing a full survey of the building by a Chartered Surveyor and obtaining three quotes for repair works. It prioritises roof repairs and sets out communication and funding arrangements for the future.

35. The Respondent stated in the supplementary bundle [3] that in order to be effective in managing works and preventing issues faced in the past that it would require the support of the Tribunal in the following three areas:

1) Direct all the Company’s Directors to sign the bank account amendment to allow two signatories in order to make financial transactions instead of the current three.

2) Direct all leaseholders to start paying the proposed service charge from the 1st of January 2021 with clear understanding that the service charge paid in 2021 will not be used for any of the

7 company’s expenses of 2021 3) Direct all leaseholders to pay their full share of any contractor, surveyor and insurance in lump sum ahead of the commissioning of each service. 36. The Tribunal asked [NAME_40] about the proposed operating agreement. [NAME_40] believed that the proposal would not work and showed a lack of understanding of the issues.

37. The Tribunal observed that [NAME_40] reported that towards the end of [NAME_32]’s appointment the leaseholders of the three flats met remotely via Zoom to explore whether they could find a way of working together [166]. To this end [NAME_47] prepared a draft document setting out what he considered to be non-contentious issues [169].

38. [NAME_44] opposed several of the points in the document, including the setting of a budget. The talks between the leaseholders broke down in acrimony.

39. When the Tribunal questioned [NAME_44] about this. [NAME_44] said she did not agree with the setting up of the budget proposed by [NAME_47] because it was not based on sound figures, they were speculative. Further if higher figures were expended [NAME_44] queried how they could be recovered. [NAME_44] pointed out that [NAME_47]’s draft document did not say how the money would be placed in the fund. 40. [NAME_44] acknowledged in questioning that the management company’s Operating Agreement was based on all parties making advance payments of service charges but there was no such power under the lease.

41. The Tribunal finds that there is insufficient evidence of the necessary agreement between the parties and the will to overcome the issue of funding to facilitate effective management by the Respondent.

42. The Tribunal considers that in order for the Respondent’s Operating Agreement to work it would either need the support of all leaseholders or the necessary powers under the lease to fund the works and achieve its objectives. Those two elements are not there which was why the Respondent requested the authority of the Tribunal to enforce the Operating Agreement. The Tribunal is not able to do this unless a Management Order is made.

43. The Tribunal concludes that if management reverts to the Respondent the property is likely to remain in disrepair and that the arguments between the parties would continue unabated. The Parties’ Attitude to the Management Order.

44. The Tribunal stated that it was not determining in this Application whether the charges imposed by [NAME_32] were reasonable and whether he performed his duties to a reasonable standard. However, it was clear to the Tribunal that the Applicants did not understand the role of the manager, that he was independent the parties, and that they should not interfere with his management.

8 45. Examples of this are: [NAME_47]’s 11 attempts to get [NAME_32] to state whether the surveyor considered the quotation for works to be reasonable [102] and [NAME_40]’s evidence at the hearing that she had made numerous enquiries of the Manager questioning his authority and had interfered in the execution of his duties by contacting the Fire Brigade and the Housing Authority..

46. At the hearing the Tribunal asked Mrs [NAME_3] why she felt that a manager cannot overrule leaseholders as she had claimed [112]. [NAME_40] apologised for her statement which she could not justify.

47. In his report to the Tribunal of 5 November 2020, [NAME_32] described the disagreements with leaseholders on works and complaints, including a subject access request. [NAME_32] stated that in a five- month period 1,275 emails were received in respect of [ADDRESS], most of them from the Applicants. 48. [NAME_40] responded to this point at the hearing saying that she did not accept that number but that it was inevitable that more emails would be sent, given that [NAME_32] had refused all communication except email. [NAME_40] said that [NAME_32]’s statement of weekly updates was not true. 49. [NAME_32] also reported that one leaseholder did not agree that he should hold an access key to communal areas and that this had caused difficulties in sourcing quotes and increased the need for communication. [NAME_32] stated that he had not been able to check progress on fire doors.

50. The Respondent did not see the need to pay the additional costs of a manager for a property consisting of three leaseholds, and that it should normally be managed by the leaseholders themselves.

51. The Respondent made a complaint against [NAME_32] citing, amongst other things, the failure to produce a survey as a “gross mistake”. 52. [NAME_32] reported that there was no agreement amongst the leaseholders to progress works and that without scaffold access it was not possible for a surveyor to carry out a full inspection of the property.

53. The Tribunal’s finds given the evidence of the conduct of the parties during [NAME_32]’s tenure that there is a real risk that if a new manager is appointed, she would face the same level of misunderstanding and resistance experienced by [NAME_32], and would not be able to perform her role. The suitability of Mrs [NAME_27]

54. Mrs [NAME_27] gave written and oral evidence in respect of her experience.

55. Mrs [NAME_27]’s firm, “[COMPANY_48]” (the Company )was founded by her mother, Mrs [NAME_49] [NAME_27], in 1991 and was incorporated in 2002. Mrs [NAME_27] joined the Company in 2008, and took over from her mother last year.

56. Mrs [NAME_27] said that over the years the business had grown quickly and now employed six team members to manage a portfolio of 16 block managements, 5 estate managements and over 150 residential lets within the Bristol, South Gloucestershire, and Gloucestershire areas.

57. Mrs [NAME_27] stated that the Company specialised in smaller sites like [ADDRESS], where there were often ongoing disputes between

9 resident owners, directors, leaseholders and sometimes freeholders. The Company manages several sites local to [ADDRESS] which were of a similar type. According to Mrs [NAME_27], the Company’s portfolio was split 50:50 between leasehold management and letting.

58. Mrs [NAME_27] said that the Company worked quite differently to larger “corporate” block management agents. The Company treated each client as an individual and understood that the concepts of long residential leasehold could be both confusing and frustrating for the average lay person.

59. Mrs [NAME_27] stated she had been working 11 years in the industry. Mrs [NAME_27] was a Fellow of The Association of Residential Letting Agents (ARLA) and was completing the Institute of Residential Property Managent (IRPM) foundation course. Mrs [NAME_27] has a level four NVQ in mixed letting. Mrs [NAME_27] believed that she had developed considerable people skills in the course of her career and that her ability to explain difficult and complex issues would be of considerable benefit in the management of this property.

60. Mrs [NAME_27] had not acted as a Tribunal appointed manager before. Mrs [NAME_27] had researched the position of Tribunal appointed manager and spoken to colleagues about it. Mrs [NAME_27] was aware of the status and relevance of the RICS code.

61. Mrs [NAME_27] said her charges would be £1,800.00 per annum with fees for additional services. Mrs [NAME_27]’s stated that the Company had professional indemnity insurance to the value of £1 million and that there was a note on the policy which covered the work of a Tribunal appointed manager.

62. Mrs [NAME_27]’ style of management would be to set expectations early and create a group newsletter to disseminate information without being weighed down by enquiries. Mrs [NAME_27] confirmed that the ARLA code of conduct was akin to the RICS code and that she was obliged, for example, to have Clients Money Protection arrangements.

63. Mrs [NAME_27] said that her first task if she was appointed would be to encourage channels of healthy communication and educate all parties on their obligations as both a leaseholder and/or director/freeholder/shareholder, helping them understand that within the leasehold structure they might wear legally separate “hats”, a fact which she believed was often overlooked or disregarded in smaller developments, leading to trouble similar to the case of [ADDRESS].

64. In preparation for the hearing she took time to inspect the property on 13 November 2020 and produced a report with photographs together with a management plan.

65. Mrs [NAME_27] identified in her management plan that steps were required urgently to protect the building fabric and, in the absence of agreement between the relevant parties, it was vital that a pro-active manager be appointed.

10 66. Mrs [NAME_27] understood that the Tribunal asked the previous manager to organise a survey of the building which was not done. Instead a surveyor was asked to write a schedule of works to include replacing the roof with a new roof covering of clay tiles and re-painting the exterior of the building. According to Mrs [NAME_27], the leaseholders were not supplied with a surveyor’s report although it could be inferred from the schedule of works that the work quoted for was confirmed as necessary by the surveyor and in need of urgent attention. Mrs [NAME_27] stated that if the Tribunal considers the schedule of works fulfilled the function of a survey, then there would be no need for the further expense of another surveyor.

67. Mrs [NAME_27] added that she had seen communications from builders who said that the schedule of works was over specified leading to tender inflation. Mrs [NAME_27] was of the view that a new independent surveyor should be asked to carry out a proper survey and then draw up a simple contract, based upon the results of that survey. The contract should be appropriate for a domestic building of this size. Mrs [NAME_27] said she had seen recent quotations for a new roof, new lead flashings and re-decoration which were in the region of £24,000 which is what she would have expected for a property of this size and type in the Bristol area.

68. Mrs [NAME_27] considered the existing fire alarm system in the building very old which required replacing. However in the first instance Mrs [NAME_27] would consult with an expert on whether the current system could be brought up to standard.

69. The Tribunal noted that The Plan envisaged a timetable which prioritises the roof and fire precaution work. It sets out arrangements for funding via service charge and a special levy for initial work. The work to the roof, exterior and fire alarm provision would start by the third month.

70. Mrs [NAME_27] confirmed that, from her site inspection, she considered that the decoration works were principally to soffits weather boards and some walls. Mrs [NAME_27] had not seen the rear areas but identified some front gutters and downpipes which needed replacement or servicing. She confirmed that some window frames were in a poor repair. Mrs [NAME_27], however, on reflection identified that there was a question over whether windows were the responsibility of the freeholder. Mrs [NAME_27] noted that the lease was silent.

71. Mrs [NAME_27] said she would concentrate on fire safety as a priority. Mrs [NAME_27] also stated that she might change locks on electricity cupboards and investigate the common electricity supply. On balance Mrs [NAME_27] considers it might be best to get a specialist advisor to deal with this. Decorations were poor and some scaffolding outside would be needed. The roof was a priority and it was surprising there had not been more damage.

72. Mrs [NAME_27] considered the location of the boiler in the roof space was unusual and that this would require further investigation.

73. Mrs [NAME_27] had not been able to inspect the lower ground floor although had tried to make contact with [NAME_44] .

74. Mrs [NAME_27] confirmed that she had not spoken to [NAME_32], because she believed that his opinion may confuse the picture and be

11 unhelpful.

75. Questioned by Mrs [NAME_3], Mrs [NAME_27] answered that one of the biggest problems with small developments was leaseholders who owned the freehold but did not understand the leasehold relationship. Mrs [NAME_27] said she overcomes this by highlighting the implications of actions and educating the people involved. Mrs [NAME_27] acknowledged that the management of this property would not be straightforward but with Tribunal directions and support the matter could be satisfactorily dealt with.

76. Questioned by Mrs [NAME_17] about the inspection Mrs [NAME_27] stated that the inspection was principally to protect her from liability issues. The purpose was to reference the property and take photographs. It was not a formal visit and not a survey but she gained helpful information about the property.

77. When asked how she would overcome the cooperation issue the large volume of emails and disputes over access Mrs [NAME_27] replied that a Tribunal appointed manner had ultimate control of the building, standing in the shoes the landlord. What a Tribunal management appointed manager says goes. So, for example, if a key is withheld then the manager is entitled to change the lock. She added that she hoped this would not be necessary.

78. When asked about the challenge of dealing with a Section 20 matter Mrs [NAME_27] said that it may be appropriate sometimes to apply for dispensation from the Tribunal which could impose conditions, creating a fair balance. Mrs [NAME_27] said that there was a choice between starting a new section 20 process or applying for a dispensation and on balance Mrs [NAME_27] would in this case apply for dispensation so as to avoid the cost of another section 20 exercise.

79. In questioning Mrs [NAME_27] confirmed that the Company had a direct relationship with some of the builders who had tendered for the works. Mrs [NAME_27] believed she could contact them to see whether their quotations could be tailored to a more appropriate specification for the property.

80. On the subject of the timescale Mrs [NAME_27] was asked why she needed more than six months to complete repair works and why it was necessary for the appointment to be three years. Mrs [NAME_27] considered that there may be ongoing problems which need to be corrected and would need sufficient time.

81. Mrs [NAME_27] confirmed that, subject to GDPR regulations it was possible to set up a system of notifying parties by group emails which would overcome some of the communication issued faced by Mr C.

82. Mrs [NAME_27] was asked about her understanding of the nature of a Tribunal appointed manager. Mrs [NAME_27] said that the person would be in the shoes of the landlord reporting direct to the Tribunal and that it was a personal appointment.

83. The Tribunal’s finds that Mrs [NAME_27] is relatively inexperienced in the management of leasehold properties. The Tribunal, however, was impressed with her grasp of the issues facing the property and the parties involved.

12 84. The Tribunal concluded that Mrs [NAME_27] would be a suitable person to appoint as manager having regard to her • proposed strategies for dealing with urgent work; • understanding of the role and powers of a manager; and • response to questions on communication, interference and consultation.

85. The Tribunal asked [NAME_44] whether having heard the evidence she had changed her mind about the appointment of [NAME_50]. [NAME_44] answered that she had not had a chance to discuss the matter with the other leaseholders, but her confidence levels have not increased. Asked the same question, [NAME_46] said it was difficult to comment.

86. The Tribunal also asked if the Respondent wished to propose another manager. [NAME_44] confirmed that the Respondent had been involved in discussions with prospective candidates but that she had received no positive responses so far. The Tribunal is not confident that it was done with any sense of conviction.

Consideration

87. The Tribunal is required to decide whether to extend and vary the existing management order made on 8 May 2020 by substituting Mrs [NAME_26] [NAME_27] in place of [NAME_21] as Manager of the Property and by continuing the Order for a specified period of time 88. The Tribunal must first establish whether it is just and convenient to extend the appointment of manager.

89. The Tribunal found as fact that the property was in state of disrepair and that the disrepair would continue if the management of the property reverted to the Respondent as landlord. The combination of these two sets of facts would as a general rule justify an extension of the existing order.

90. The circumstances of this case, however, depart from the general rule. The Applicants who require the protection of the management order have no understanding of the role of a Tribunal appointed manager, and there was persuasive evidence that they had frustrated the operation of the management order so far. The other leaseholders also did not support the appointment of a manager.

91. The issue for the Tribunal is that although the condition of the property justifies the appointment of an independent manager, the attitudes of the parties are such that the manager may not get the co- operation required from them which carried the risk that the Tribunal Order would be brought into disrepute.

92. The Tribunal considers that resolution of this dilemma depended upon the suitability of Mrs [NAME_27] for the appointment. The Tribunal was impressed with Mrs [NAME_27]’s understanding of the role of a Tribunal appointed manager and her grasp of the issues facing the property which overcame doubts about her inexperience with such a

13 role. The Tribunal finds that Mrs [NAME_27] had a focussed plan for dealing with the disrepair and effective strategies for meeting disruptive conduct by the leaseholders. The Tribunal decides that Mrs [NAME_27] is suitable to be appointed.

93. The Tribunal concludes on balance that it was just and convenient to extend the order and appoint Mrs [NAME_27] in place of [NAME_32] as manager. The Tribunal decides that the disrepair, particularly the roof, and the fire precaution issues required the intervention of an independent manager. The Tribunal determines that Mrs [NAME_27] has the necessary competence and approach to the task to perform the role of the manager despite the evidence of lack of co-operation and understanding of her position.

94. The Tribunal considers that the length of the appointment should be 18 months rather than three years because of the nature of the property with only three flats and the works required.

95. The Tribunal notes that Mrs [NAME_27]’s Management Plan envisages commencing the prioritised works by the third month. The appointment of a manager is a measure of last resort. It should be used sparingly and only when necessary. The principal works and establishment of good management should take a shorter period than three years.

96. The Tribunal determines that 18 months is a sufficient time to carry out the main tasks. The parties may apply to have this extended at the appropriate time. Decision 97. In accordance with section 24(9) Landlord and Tenant Act 1987 the Order made on 8 May 2020 is extended for 18 months from 26 January 2021 and Mrs [NAME_26] [NAME_27] of [COMPANY_52] ('the Manager') is appointed as manager of the property at 24 [ADDRESS] [POSTCODE]("the Property') in place of [NAME_21].

14 RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application to the First-tier Tribunal at the Regional office which has been dealing with the case by email at [EMAIL]

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28- day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.

15

The Statutory Provisions

The relevant provisions in respect of this application are found in section 24(9) of the Landlord and Tenant Act 1987 which read as follows

24 (9) [The appropriate Tribunal] may on the application of any person interested, vary or discharge (whether conditionally or unconditionally) an order made under this section; and if the order has been protected by an entry under the Land Charges Act 1972 or the [Land Registration Act 2002], [the Tribunal] may by order direct that the entry shall be cancelled.

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference

:

CHI/00HB/LAM/2019/0019

Property

:

24 [ADDRESS] [POSTCODE]

Applicant

:

[redacted]

Respondent

:

[redacted]

: [NAME_9], Company Secretary

Proposed Manager

:

:

[NAME_21] of [COMPANY_25]

Mrs [NAME_26] [NAME_27] of [COMPANY_52] of Application

:

Tribunal Member(s)

:

[NAME_29] (Chair) Judge Tildesley OBE Mrs [NAME_31]

Date of Hearing : 15 December 2021 by Cloud Video Platform

Date of Decision : 26 January 2021

2

MANAGEMENT ORDER FINAL

INTERPRETATION

IN THIS ORDER

“The Property” means the flats and other premises known as 24 [ADDRESS] [POSTCODE] under title number AV7406 and shall include the building, outhouses, gardens, amenity space, drives, pathways landscaped areas, flower beds passages, bin-stores, common parts, storage rooms basements, electricity and power rooms; and all other parts of the property.

“The Freeholder” shall mean the person who is named as proprietor of the freehold under Title Number AV7406 or their successors in title

“The Landlord” shall mean [COMPANY_7] or their successors in title to the reversion immediately expectant upon the Leases.

“The Tenants" shall mean the proprietors for the time being of the Leases whether as lessee or under-lessee and "Tenant” shall be construed accordingly.

“The Leases" shall mean all leases and/or underleases of flats in the Property

“The Manager” means Mrs [NAME_26] [NAME_27] of [COMPANY_52], [NAME_51], [ADDRESS], Almondsbury, Bristol. [POSTCODE].

“The Functions” means any functions in connection with the management of the Property including any obligations and powers of the landlord under the Leases.

IT IS ORDERED that 1. In accordance with section 24(1) and (9) Landlord and Tenant Act 1987, Mrs [NAME_26] [NAME_27] of [COMPANY_52] [NAME_51], [ADDRESS], Almondsbury, Bristol. [POSTCODE].

2. The Order shall continue until 25 July 2022. If a party wishes to extend the Order s/he should apply three months before the end of the Order.

3. The primary purposes of the management order are to carry out the repair and replacement of the roof, to undertake any necessary maintenance to the exterior of the property and to upgrade the fire

3 precautions. The Manager must apply her discretion informed by her expertise on whether a survey of the property is necessary and whether to apply for dispensation of consultation requirements. The Manager is accountable for the exercise of her discretion and powers under this Order.

4. The Manager shall manage the Property in accordance with a. the directions and schedule of functions and services attached to this Order; b. save where modified by this Order, the respective obligations of the Landlord and the Lease whereby the Property is demised by the Landlord and in particular with regard to repair, decoration, provision of services and insurance of the Property; and c. the duties of a Manager set out in the RICS Service Charge Residential Management Code (“ the RICS Code”) (3rd Edition) or such other replacement code published by the Royal Institution of Chartered Surveyors and approved by the Secretary of State pursuant to section 87 Leasehold Reform Housing and Urban Development act 1993. d. The provisions of sections 18 to 30 of the Landlord and Tenant Act 1985.

5. The Manager shall register the Order against the Landlord’s registered title as a restriction under the Land Registration Act 2002 or any subsequent Act. The wording of the restriction shall be: “No disposition of the registered estate (other than a charge) by the proprietor of the registered estate, or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be completed by registration without a certificate signed by the applicant for registration [or their conveyancer] that the provisions of paragraph 10 of the Order of the Tribunal dated 26 January 2021 have been complied with.”

DIRECTIONS 6. From the date this Order comes into effect, no other party including the freeholder shall be entitled to exercise a management function in respect of the Property where the same is the responsibility of the Manager under this Order. 7. Where there is a conflict between the provisions of the Management Order and the lease, the provisions of the Management Order take precedence.

4 8. That the Landlord, Freeholder and Tenants shall give all reasonable assistance and co-operation to the Manager in pursuance of her functions, rights, duties and powers under this Order, and shall not interfere or attempt to interfere with the exercise of any of her said rights, duties or powers by due process of law. For the avoidance of doubt this shall not prevent the Landlord or Tenants from bringing legal proceedings (or any other due process of law) should the Manager act unlawfully and/or negligently and/or contrary to the powers and duties set out in this Order.

9. That the Landlord, Freeholder and Tenant allow the Manager and her employees and agents access to all parts of the Property in order that the Manager might conveniently perform her functions and duties and exercise her powers under this Management Order.

10. On any disposition [other than a charge] of the freehold estate in the property registered under title no Title Number AV7406 the freeholder will procure from the disponee of the property, a direct covenant with the Manager, that the disponee will (a) comply with the terms of this order and (b) on any future disposition (other than a charge) procure a direct covenant in the same terms from its disponee.

11. The Manager shall act fairly and impartially in her dealings to all parties concerned in respect of the Property.

12. The Manager shall in the performance of her functions under this Order exercise the reasonable skill, care and diligence to be expected of a manager experienced in carrying out work of a similar scope and complexity to that required for the performance of the said functions.

13. From the date of the appointment and throughout the appointment the Manager shall ensure that she has appropriate professional indemnity cover in the sum of at least £1 million and shall provide copies of the certificate of liability insurance to the Tribunal and upon request being made by any Tenant of all or part of the Property, and the Landlord. The Certificate should specifically state that it applies to the duties of a Tribunal Appointed Manager.

14. That no later than two weeks after the date of this Order the Landlord and the previous Manager [NAME_32] shall provide all necessary information to and arrange with the Manager an orderly transfer of responsibilities. No later than this date, the Landlord and or [NAME_32] shall provide to the Manager details insurance of the Property.

15. The Manager shall be entitled to remuneration, which for the avoidance of doubt shall be recoverable as part of the service charges of leases of the property in accordance with the Schedule of Functions and Services

5 attached.

16. At the expiry of 6 months from the date of this Order the Manager shall prepare and submit a brief written report for the Tribunal on the progress of the management of the Property up to that date providing a copy to the Tenants of the Property and the Landlord and the Freeholder at the same time.

17. Within 56 days of the conclusion of the Management Order the Manager shall prepare final closing accounts. The Manager shall also serve copies of the accounts on the Landlord, and Tenants who may raise queries on them within 14 days. The Manager shall answer such queries within a further 14 days. Thereafter the Manager shall reimburse any unexpended monies to the paying parties, or, if it be the case any new Tribunal appointed manager or, in the case of dispute, as decided by the Tribunal upon application by any interested party. The Manager shall supply a copy of the Final Accounts to the Tribunal.

18. The Manager may apply to the First-Tier Tribunal for further directions, in accordance with section 24(4), Landlord and Tenant Act 1987. Such directions may include, but are not limited to:

e. Any failure by any party to comply with an obligation imposed by this Order; f. For directions generally; g. Directions in the event that there are insufficient sums held by him to discharge his obligations under this Order and/or to pay his remuneration.

SCHEDULE OF FUNCTIONS AND SERVICES Insurance 1. Maintain appropriate building insurance for the Property.

2. Ensure that the Manager’s interest is noted on the insurance policy Service charge 3. Prepare an estimated service charge budget for the period up to 25 July 2021 and thereafter by no later than 25 June 2021 for a 12 month period until 25 July 2022 and make provision for payment in advance, 4. Administer the service charge and prepare and distribute appropriate service charge accounts to the Tenants.

5. Demand and collect service charges due from the Tenants under the leases. The Manager shall have the authority to demand payments in advance including periodic demands in advance to meet the estimated costs of planned works and to collect arrears of service charge and insurance that have accrued after her appointment.

6 6. The Manager will finalise his first estimate of the service charge for the period up to 25 July 2021 within 28 days of the date of the Management order, and send it with the demand for payment on account which will be payable 14 days after issue.

7. The contributions payable by the Tenants to the service charge and insurance shall be in accordance with proportions set down in their respective leases.

8. The Manager is entitled to recover through the service charge the cost of any surveyors, architects, solicitors, counsels and other professional persons or firms fees incurred by him whilst carrying out his functions under the Order.

9. Place, supervise and administer contracts and check demands for payments of goods services and equipment supplied for the benefit of the Property from the service charge budget. Administration Charges 10. The Manager may recover administration charges from individual Tenants for her costs incurred in collecting service charges and insurance which includes the costs of reminder letters, transfer of files to solicitors and letters before action. The Manager should publish the costs of her charges for debt recovery and the timetable allowed for each course of action. Such charges will be subject to legal requirements as set out in schedule 11 of the Commonhold and Leasehold Reform Act 2002. The Manager will not act as the Company Secretary to [COMPANY_7] as such duties are outside the scope of this Order Accounts 11. Maintain efficient records and books of account, which are open to inspection by the Landlord and the Tenants. Upon request, produce for inspection, receipts or other evidence of expenditure.

12. Maintain on trust an interest-bearing account at such bank or building society, as the Manager shall from time to time decide, into which, service charge contributions, shall be paid.

13. All monies collected will be accounted for in accordance with the RICS Code. Repair and Maintenance 14. Deal with routine repair and maintenance issues and instruct contractors to attend and rectify problems.

15. In addition to undertaking and arranging day-to-day maintenance and repairs, to arrange and supervise major works which are required to be carried out to the Property including preparing a specification of works and obtaining competitive tenders.

16. To liaise with the relevant statutory bodies responsible for buildings.

7 17. To ensure that the Landlord, and the Tenants are consulted on any proposed works to the Property and to give proper regard to their views. Copies of programmes of planned and major works should be sent to the Landlord and Tenants.

18. The Manager has the power to incur expenditure in respect of the provision of all necessary health and safety equipment and in complying with all regulatory and statutory requirements. Right to Bring Legal Proceedings

19. The Manager shall be entitled to bring proceedings in any court or tribunal in respect of any causes of action (whether contractual or tortious) accruing after the date of his appointment.

20. Such entitlement shall include but shall not be limited to bringing proceedings in respect of any arrears of service charge attributable to any of the Flats in the property and for which these proceedings shall include any application under Part 7 or Part 8 of the Civil Procedure Rules for judgment in the County Court or High Court including a charging Order or any application made to the First-tier Tribunal under section 27A of the Landlord and Tenant Act 1985 or section 168(4) and schedule 11 of the Commonhold and Leasehold Reform Act 2002 and shall further include any appeal against any decision made in any such proceedings.

21. The Manager shall be entitled to be reimbursed from the service charge account any costs, disbursements or VAT for taking proceedings including any fees payable to solicitors, accountant, counsel or expert on a full indemnity basis. If any of those costs are recovered direct from the defaulting Tenant or Landlord those costs should be refunded to the service charge account.

22. The Manager has the right to instruct solicitors and counsel and other professionals for the taking of legal proceedings.

Fees 23. The Manager’s fee for the above-mentioned management services will be a basic fee of £1,800 per annum paid monthly in advance. The basic fee will include those services for the Annual Fee at paragraph 3.4 of the RICS Code 24. Fees for additional services will be in accordance with the fees set out in the appendix to the Order. The Manager will provide an appendix setting out these additional fees within 14 days.

25. VAT to be payable on all the fees quoted above where appropriate at the rate prevailing on the date of invoicing. The Tribunal notes that at the moment no VAT is payable on management fees

8

Complaints procedure 26. The Manager shall operate a complaints procedure in accordance with or substantially similar to the requirements of the Royal Institution of Chartered Surveyors.