First-tier Tribunal Rejects Application for Penal Notice on Management Order

OUTCOME: Refused

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00AY/LAM/2024/0502 Property : 25 The Pavement, London [POSTCODE] Applicant : [redacted] manager Representative : N/A Respondent: [redacted] Representative : [NAME] (former Director) Tribunal member : Judge Vance Date of Decision : 10 March 2026

DECISION

1. By [NAME] dated 10 November 2025, the Manager, Mr [NAME] applied for the Management Order (“MO”) made by the Tribunal on 12 February 2025, in respect of 25 The Pavement, London [POSTCODE] (“the Property”), to be varied so as to attach a penal notice to the MO. Since the [NAME] was made the parties have exchanged witness statements and the Tribunal has been copied into multiple emails in which Mr [NAME] and Mr [NAME] have described their respective grievances with each other’s conduct.

2. On 8 March 2026, Mr [NAME] lodged a witness statement seeking that provisions in the MO regarding collection of commercial rent be varied. Despite the [NAME] not being made on the appropriate Tribunal form, I

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was prepared to consider it at the hearing today as agreement was reached by the parties as to an amended form of wording. I address this below.

3. The [NAME] was considered at a hearing today, 10 March 2026. Present was Mr [NAME] and Mr [NAME].

4. The following facts do not appear to be in dispute:

(a) on 2 September 2025, the [COMPANY], [RESPONDENT] and [COMPANY], was dissolved by way of compulsory striking off at [NAME], following the failure to file company accounts. Notwithstanding this, the Respondent entered into a lease of the ground floor commercial unit at the Property on 30 September 2025 with [COMPANY]. A rent deposit of £17,250 was paid and the first quarter’s rent was paid to [NAME], the solicitors for the [COMPANY];

(b) [RESPONDENT] then commenced paying rent directly to Mr [NAME] from 11 November 2025;

(c) after Mr [RESPONDENT] became aware that the [COMPANY] was dissolved there were a series of email exchanges between October 2025 and January 2026 between him, Mr [NAME], [NAME], solicitors [NAME], and [COMPANY] in which Mr [NAME] sought to clarify what efforts were being made to restore the [COMPANY] to the [NAME].

(d) in an email dated 2 November 2025, [NAME] emailed Mr [NAME] stating that the company had been successfully restored to the companies register and that this should be reflected at [NAME] in 6-8 weeks. That statement as incorrect. As at the date of this decision, the [COMPANY] has still not been restored to the register. At today’s hearing Mr [NAME] explanation for his misstatement on 2 November was that he has been misled by incorrect information received from his accountant;

(e) in an email dated 5 January 2026, [COMPANY] informed Mr [COUNSEL] that they had been instructed by Mr [COUNSEL] to pursue restoration of the [COMPANY] to the [NAME]. In a letter dated 9 March 2026 [NAME] stated that the [NAME] sent to [NAME] had been rejected because of a typographical error in one of the documents and that documents were resubmitted on 2 March 2026.

5. At the hearing before me today, [NAME] argued that a penal notice was needed because the absence of a freeholder was causing problems both for the two residential [NAME] at the Property who were, for example, unable to

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sell their flat, and for his management of the building. He described what he considered to be a “cloud of obfuscation” regarding the status of the [COMPANY] between October 2025 and January 2026, which he said had caused anxiety amongst the [NAME] and considerable pressure on him. He was concerned that there was still no sign of any company accounts for the Respondent and that Mr [RESPONDENT] seemed to be disinterested in his role as a Tribunal-appointed manager. He considered a penal notice was needed in order to remind Mr [NAME] of the importance of complying with both the terms of the MO and its spirit.

6. Mr [RESPONDENT] explained that the [COMPANY] only acquired the freehold of the Property at the end of February 2024. Prior to that it had been registered with a different company. It appears from the decision of the Tribunal dated 12 February 2025 that the previous freeholder was [COMPANY], of whom Mr [NAME] was a director. Mr [NAME] informed me at the hearing that the failure to file company accounts, and which led to the Respondent being struck off, was due to an error made by his accountant, on whom he had relied. In his submission, it would not be appropriate to attach a penal notice to the MO in circumstances where the striking off was not due to his error and where he has complied with the terms of the MO.

Decision

7. This Tribunal does not routinely attach penal notices to its Management Orders. Such an order carries potentially very serious consequences if breached. Non-compliance may lead to the person in breach being held to be in contempt of the Tribunal which made the Order and can result in a fine or the seizure of assets. The use of penal notices should, in my opinion, be reserved for situations where there is demonstrable evidence of non-compliance with the terms of a MO or where there are good grounds to believe that a person will not comply with the terms of a MO without the potential sanction accorded by a penal notice.

8. I have considered the Tribunal’s overriding objective to deal with cases fairly and justly, but do not consider the attachment of a penal notice to be warranted in this case. I understand why the [NAME] are concerned that their freeholder has been struck off the [NAME] and that some five months after that happened, it remains struck off. As Mr [NAME] stated that has potentially serious implications for [NAME], including a likely inability to sell their flats until the situation is resolved. It was Mr [NAME] responsibility as a director of the company to ensure the accounts were filed regardless of any error made by his accountants and he clearly failed to discharge that responsibility.

9. I also accept that the trail of emails included in the hearing bundle prepared by Mr [NAME] indicates that Mr [NAME] has not been clear and forthcoming in his responses to enquiries made of him by Mr [RESPONDENT]

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regarding restoration of the [COMPANY]. He incorrectly said in November 2024 that the Company had been restored, when this was not correct. If his misstatement was based on incorrect information received from his accountant, it is unimpressive that he made such a positive assertion without checking the accuracy of it before [NAME] it. A responsible company director would, in my view, have done so. Furthermore, having made that error, the documents before me do not indicate that [NAME] made any substantial effort to keep Mr [NAME] abreast with developments regarding the attempt at restoration. On the contrary, they indicate that it was left to Mr [NAME] to ascertain the position, culminating in the responses received from [COMPANY] in January 2026.

10. Under paragraph 36 of the Management Order the Respondent was required to give all reasonable assistance and co-operation to the Manager in pursuance of his functions under the MO. As a director of the [COMPANY] that obligation extended to Mr [RESPONDENT]. I find that [NAME] has been not complied with that obligation. His communications with Mr [NAME] have been unhelpful and un- cooperative. Despite that, I am not satisfied that the imposition of a penal notice is a reasonable step for me to take at this point in time. The commercial rent is now being paid to Mr [NAME] and the only asserted breach of the MO is non-compliance with the general obligation to assist and co-operate contained in paragraph 36. It would appear that the Respondent should be reinstated shortly.

11. If Mr [RESPONDENT] considered Mr [NAME] was frustrating his ability to properly manage the Property what he should have done, in my view, was to apply to the Tribunal for directions from the Tribunal or a variation of the terms of the MO. If there was then continued non- compliance an [NAME] for a penal notice or a referral to the Upper Tribunal for enforcement of this Tribunal’s directions or Order may have been merited. In my view this is a premature [NAME], albeit that I accept Mr [NAME] has breached the terms of the MO. It is therefore refused. However, Mr [NAME] is entitled to apply to this Tribunal for directions or a variation of the MO, including [NAME] a renewed [NAME] for a penal notice, in the event that he believes there has been further non-compliance with the Respondent regarding the terms of the MO.

Variation of the MO

12. On the [NAME] of Mr [NAME], and with the consent of both parties I amend paragraph 24 of the MO, so as to replace the word “annually” with “quarterly”. It was Mr [RESPONDENT] position that the Respondent’s cashflow was being adversely affected by net rent being passed to him annually. Mr [NAME] was sympathetic and consented to the variation. An amended MO will be issued to the parties.

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Concluding Remarks

13. After the hearing had concluded, at 12.58 on 10 March 2026, Mr [NAME] sent an email to Mr [NAME] marked “Without prejudice”. Mr [NAME] then forwarded that email to the Tribunal for my attention. Despite being described as “without prejudice” the email clearly does not attract any without prejudice privilege because it is in no way an attempt to settle a dispute. Instead, Mr [NAME] said that in light of my findings and comments at the hearing Mr [NAME] should resign his managerial appointment. He suggests that Mr [NAME] has launched a personal vendetta against him.

14. This touches on an issue Mr [NAME] raised at the hearing, namely, his concern with Mr [NAME] suggestions in email correspondence with him that he has behaved unprofessionally. I repeat what I said at the hearing. I have responsibility for case managing this [NAME] and I see the correspondence forwarded to me by the case officer. I have seen nothing in that correspondence (which has been lengthy) that suggests that Mr [NAME] has behaved in any way improperly or inappropriately. On the contrary, he appears to me to be acting diligently and professionally in fulfilling his role as a Tribunal-appointed manager. Although I have refused this [NAME] for a penal notice, it was an [NAME] he was entitled to make and given what I consider to be Mr [NAME] non-compliance with his obligations under paragraph 36 it is understandable why he chose to pursue it. I urge Mr [NAME] to adopt a co-operative approach to Mr [NAME] managerial appointment in future. If that does not occur, there are enforcement options available to Mr [NAME].

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28 day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to

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allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).