First-tier Tribunal Rejects Request to Replace Property Manager

OUTCOME: Refused

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FIRST-TIER TRIBUNAL [NAME] CHAMBER ([NAME]) Case Reference : LON/00AW/LVM/2023/0013 [NAME] : 21 [ADDRESS] [POSTCODE] Applicants :

[redacted] [NAME], [NAME] and [NAME] (Ground/First Floor Flat), [NAME] [NAME] (Basement Flat), [NAME] and [NAME] [NAME] (Second Floor Flat) and [COUNSEL] (Studio Flat) Representative : In person Respondents : [redacted] Manager) and [COUNSEL] (Top Floor Flat) Representative : In person Type of [NAME] : Variation of Appointment of Manager under Section 24(9) Landlord and Tenant Act 1987 Tribunal Members :

Judge P [NAME] [NAME] of hearing : 13 May 2024 Date of Decision : 30 May 2024

DECISION

2 Description of hearing

The hearing was a face-to-face hearing. Decision of the tribunal (A) The [NAME] to vary the order for the appointment of a manager is refused, and consequently the [NAME] management order continues in full force and effect. (B) The Applicants’ cost [NAME] is refused. Introduction 1. The [NAME] is a Victorian building divided into five flats, and the Applicants are the [NAME] of four of the flats. [NAME] [NAME], [NAME] and [NAME] are [NAME] of the ground/first floor flat, [NAME] [NAME] is the [NAME] of the basement flat, [NAME] and [NAME] are the [NAME] of the second floor flat, and [NAME] is the [NAME] of the studio flat.

2. In addition to being [NAME] [NAME] [NAME] and [NAME] [NAME] are three of the four joint freeholders of the [NAME].

3. Pursuant to section 24(9) of the Landlord and Tenant Act 1987 (the “Act”), the Applicants seek the variation of an [NAME] tribunal order appointing a manager over the [NAME]. Mr [NAME], Director of [COMPANY], is the present tribunal-appointed manager and is named as Respondent to the [NAME] together with [RESPONDENT]. [NAME] [NAME] is the other joint freeholder and is the [NAME] of the top floor flat. She opposes the [NAME].

4. The [NAME] order was made on 22 October 2021 and runs for five years from 5 November 2021, expiring on 4 November 2026. The Applicants seek to vary the terms of the order by replacing Mr [NAME] as manager with Mr [APPELLANT] of [COMPANY]. Summary of Applicants’ written case 5. In written submissions, the Applicants state that even though some of them were originally reluctant to have a manager they respected the tribunal's decision of 22 October 2021 and looked forward to handing over the management responsibility to Mr [NAME]. They assumed that his involvement would help to resolve in-house disagreements and that

3 they would no longer have to deal with accounts, cleaning, insurance, and other management decisions. They gave Mr [NAME] all the relevant information and documents and initially he showed interest and they believed that having a manager would turn out to be a positive solution.

6. However, Mr [NAME] did not explain to them how the system would work, for example how long it would take for them to receive accounts. Such an explanation would have saved considerable confusion, frustration and endless emails. As the months went by, the Applicants also noticed several errors and unexplained delays. For example, there was an insurance claim for a leak that had never happened (as far as they knew), the accounts were very unclear, and Mr [NAME] consistently acted reactively rather than proactively.

7. The Applicants tried to communicate their concerns by telephone and by email. Mr [NAME] replied initially, but then he seemed to lose interest quite quickly. The Applicants understand that only 2 visits were made by Mr [NAME] to the [NAME] since his appointment, and after a while they started to lose confidence in the way that he was managing the [NAME]. After a year they asked for a face-to-face meeting to help rebuild trust, and Mr [NAME] was reluctant to meet but eventually he agreed to a Zoom meeting a month and a half after their request. After that meeting (on 17 January 2023) they believed that a new, more positive phase would begin and they completed their part of the actions discussed at the Zoom meeting, but Mr [NAME] only acted on a very small number of his own action points.

8. The Applicants state that it continues to be extremely challenging to communicate with Mr [NAME], as often he is unavailable and ignores emails. Having not heard from him in the past 6 months, they emailed to find out whether he was still managing the [NAME] but did not receive a reply. Since in their view Mr [NAME] did not keep his side of the Zoom meeting agreement they have lost trust in him. He has had many opportunities to resolve issues but has not taken them. They have had to get involved in almost every step themselves, and very little has happened since his appointment. As set out in their more detailed comments in the Scott Schedule, they have had to spend an enormous amount of time chasing up issues. They have also had no reply from him to any currently outstanding questions, except for a partial response in relation to water ingress. Summary of Respondents’ written case in brief 9. Mr [NAME] notes that a significant majority of the [NAME] originally expressed no desire for either the appointment of a manager or a managing agent. He also feels that since his appointment efforts have been made to disrupt his management. In an attempt to create unity and to address the [NAME]' concerns, he initiated a series of Zoom meetings and a site meeting aimed at fostering communication and co-

4 operation among all parties. He also facilitated numerous meetings to help [NAME] to reach agreement regarding lease extensions, which demonstrates a proactive approach to resolving internal conflicts and misunderstandings. However, one [NAME] has consistently been in arrears and has only paid when threatened with legal action. Furthermore, on being pursued for service charges that individual subjected Mr [NAME] to multiple abusive emails, undermining his attempts at constructive dialogue. In addition, Mr. [NAME] incessant emails and telephone calls to Mr [NAME] (in Mr [NAME] view) crossed the boundaries of professional communication.

10. Since Mr [NAME] appointment significant strides have been made towards the [NAME]'s upkeep and safety. A planned preventative maintenance survey was executed, along with a comprehensive fire risk assessment and an asbestos survey, ensuring the building's compliance with safety regulations.

11. Mr. [NAME] has also developed a 5-year service charge forecast, detailing necessary works derived from the preventative maintenance survey. This forecast was presented in a meeting with [NAME], who expressed their agreement and satisfaction with the proposed works. In the first year following this plan, the installation of a new fire alarm system, as recommended by the fire risk assessment, was successfully completed. However, the commencement of Year 2 works, which include the decoration of communal areas and carpet replacement, has been hindered due to service charge arrears, impacting the overall progression of the works and enhancement of the [NAME].

12. While he acknowledges that not every aspect of the management has been flawless, Mr [NAME] states that he and his firm have consistently conducted themselves with professionalism and have prioritised the building's best interests. He has also responded to many – although not all – of the detailed comments contained in the Applicants’ Scott Schedule. Oral submissions at hearing Opening comments 13. The Applicants and Mr [NAME] briefly summarised some of the points made in their respective written submissions. 14. [NAME] [NAME] said that prior to Mr [NAME] appointment there were 20 years of terrible [NAME] management. At one stage there was a managing agent, but that person was sacked within a year. In an effort to improve the management of the [NAME] [NAME] [NAME] tried to involve the other freeholders/[NAME] in appointing a managing agent but this did not yield a positive result. Now that a manager was in place she did not

5 want the further upheaval of him being replaced by another manager. In her view there are not currently any big problems and Mr [NAME] should be given the time to carry out his planned programme. Building insurance 15. The Applicants said that they had asked Mr [NAME] why he had added ‘contents insurance’ to the policy, but no reply was received. Mr [NAME] said in response that whilst he accepts that did not respond immediately he did in fact reply. Mr [NAME] disagreed that Mr [NAME] had replied. [NAME] [NAME] alleged arrears of payment for electricity 16. The Applicants said that Mr [NAME] had failed to chase up payment by [NAME] [NAME] of some electricity bills. Mr [NAME] said that this was a historic issue although he was unable to explain why he had not replied. [NAME] [NAME] said that there had been no determination that she owed an amount for electricity and no bill was sent to her. Electricity bills more generally 17. [NAME] [NAME] [NAME] said that the Applicants received red electricity bills on a number of occasions during 2021 and 2022 and passed them over to Mr [NAME] together with a letter from a bailiff. Mr [NAME] said that he would look into the matter but – as she understood it – he did nothing until the meeting on 17 January 2013 when he reported that he had established that the energy company (EDF) had been billing the wrong [NAME].

18. In response, Mr [NAME] agreed that there had been problems with EDF but he said that he had responded on 9 August 2022 to a concern raised by [NAME] [NAME] [NAME] on 7 August 2022 and she had thanked him on 12 August 2022. Accounts 19. The Applicants said that the accounts were unclear and that a line-by- line statement would have been useful. Mr [NAME] had promised to provide such a statement but (according to the Applicants) he did not do so. However, Mr [NAME] said that a statement had in fact been sent out and [NAME] [NAME] agreed that one had been sent out, albeit that she could not be absolutely sure.

20. Regarding the 2021/22 accounts, the accounts produced by Mr [NAME] were – in the Applicants’ view – shockingly inadequate. Mr [NAME] did then improve them but was late in delivering the improved accounts.

6 In addition, there were some discrepancies in the accounts which were raised in the January 2023 meeting but not since explained by Mr [NAME].

21. In response, Mr [NAME] said that the first set of accounts were very basic simply because the initial period was very short, although financial information was provided and an explanation of that financial information was given. He did not feel that it was worth spending money on getting a firm of accountants to produce formal accounts for this initial period. However, as the Applicants were not happy with this, he then arranged for formal accounts to be prepared but this took time.

22. As regards the discrepancies to which the Applicants had referred, Mr [NAME] had merely raised one query about a tiny sum of money which turned out to be an amount of interest. Mr [NAME] in reply maintained that there was more than one query although he accepted that maybe some issues were more presentational than substantive. 23. [NAME] [NAME] added that at that January 2023 meeting the main issue was meant to be the progressing of the internal works and that the meeting had been hijacked by people talking instead about trivial accounting issues. Mr [NAME] did not accept this. Water ingress 24. On 4 November 2022 [NAME] [NAME] wrote to Mr [NAME] about a problem with water ingress, but the response (from Mr [NAME] colleague) was not as quick as she hoped it would be. The colleague then said that a contractor would visit the [NAME], but this did not happen, although Mr [NAME] himself did attend on 21 November. Various contractors then came and went, and Mr [NAME] said that the issue related to the gutter. Mr [NAME] said that scaffolding would be needed, the Applicants suggested an alternative approach, and the problem was eventually resolved. However, the insurers were not informed for 5 weeks and they told [NAME] [NAME] [NAME] that they could not get any information from Mr [NAME] firm.

25. There was then a further water ingress issue in November 2023, this being a new leak in Mrs [NAME] kitchen. Again, according to [NAME] [NAME], the insurers could not get any information from Mr [NAME] firm, and she stated that the problem remained unresolved. Questions were raised with Mr [NAME] and eventually his colleague sent [NAME] [NAME] [NAME] a report, but the report did not in her view reflect the true position.

26. In response, Mr [NAME] said that he provided a full response in relation to the first leak on 11 November 2022, 7 days after it was reported. He then engaged in further email correspondence with [NAME] [NAME]

7 [NAME] regarding the practical issue of gaining access and a contractor (not just Mr [NAME] himself) attended on 21 November 2022. The issue was noted to the insurers, and he did not accept that the insurers were unable to get hold of him. Proposed internal decoration works 27. Mr [NAME] said that he accepted that the internal redecoration works were long overdue. He added that the Applicants had suggested a contractor who had produced a schedule of works, but Mr [NAME] had not taken this up. In response, Mr [NAME] said that this was because at that stage no funds were available to carry out the works. [NAME] [NAME] added that, now that funds were finally available, in her view the internal works needed to start as soon as possible but that everyone was getting bogged down in small issues (except for the water ingress issue, which she accepted was not a small issue). Mr [NAME] willingness to continue 28. When asked by the tribunal whether he definitely wished to continue as manager, Mr [NAME] readily acknowledged that it had not been an easy role to date but said that he did want to see it through and confirmed that there was now finally enough money to carry out the internal redecoration works as all [NAME] were up to date with payment of their service charges. Mr [NAME] comments 29. Mr [NAME] had noted from his inspection that the [NAME] was run down. He said that his firm had a big team of internal experts and that his general approach was to be more remote and to let junior colleagues deal with day-to-day issues so that he could come in just to resolve big issues. Closing submissions 30. The Applicants said that certain issues had been characterised as ‘trivial’ but that small details can be important. Ultimately, the problem was that they had lost confidence in Mr [NAME], in large part because of what was sometimes a delay in responding but sometimes a complete failure to respond to their concerns. 31. [NAME] [NAME] said that any manager would find this [NAME] difficult to manage. It would not help to replace Mr [NAME] with Mr [NAME] as in her view Mr [NAME] was doing a good job in the circumstances. In any event, Mr [NAME] did not know the details and so there would be further delay as he learnt about the [NAME]. Also, the fact that Mr [NAME] firm was bigger did not make it better.

8 32. There was also some ultimately inconclusive discussion about a fire escape issue. Relevant statutory provisions 33. Landlord and Tenant Act 1987 Section 24 (9) The appropriate tribunal may, on the [NAME] of any person interested, vary … an order made under this section … .

(9A) The tribunal shall not vary … an order under subsection (9) on the [NAME] of any relevant person unless it is satisfied – (a) that the variation … of the order will not result in a recurrence of the circumstances which led to the order being made, and (b) that it is just and convenient in all the circumstances of the case to vary … the order. Tribunal’s analysis 34. Under section 24(9A) of the Act, the tribunal should not vary an [NAME] order for the appointment of a manager unless satisfied (a) that the variation will not result in a recurrence of the circumstances which led to the order being made, and (b) that it is just and convenient in all the circumstances of the case to vary the order.

35. Focusing first on limb (a) of section 24(9A), this limb does not involve an assessment of whether Mr [NAME] would be an improvement on Mr [NAME]; rather the issue here is whether appointing Mr [NAME] would lead to a recurrence of the original problems which caused the previous tribunal to order the appointment of a manager. As Mr [NAME] has experience of being a tribunal-appointed manager and came across as competent and knowledgeable on [NAME] management issues, we are satisfied that appointing him in place of Mr [NAME] would not lead to a recurrence of the original problems.

36. However, we need to be satisfied in relation to both limbs. Limb (b) of section 24(9A) involves an assessment of whether it would be just and convenient in all the circumstances of the case to replace Mr [NAME] with Mr [NAME], and this is a less straightforward question.

37. On the one hand, there have undoubtedly been problems under Mr [NAME] tenure as manager. He has not communicated as well as one would have hoped with those of the [NAME] who have applied for him to be substituted. Some of this poor communication seems to have resulted from his frustration with the manner in which some of the

9 Applicants have engaged with him, some from (in his view) the trivial nature of some of the issues repeatedly raised with him, and some from what he regards as unreasonably high expectations in the context of a manager/[NAME] relationship.

38. However, to some extent he has created his own problems; it is incumbent on him to try to act professionally and it should have come as no surprise to him that as a tribunal-appointed manager he might struggle to be universally popular. In addition, if he had responded more quickly to some of the Applicants’ concerns that might have generated some goodwill and made it less likely that they would follow- up with frequent (and sometimes rude) reminders that he had not addressed their questions or not done so to their satisfaction. Furthermore, some issues – notably the EDF issue – should have been dealt with more quickly by him and the result communicated more effectively to [NAME].

39. On the other hand, having been given the opportunity at the hearing to present their best examples of failings on the part of Mr [NAME], in relation to many of those examples the Applicants have not in our view demonstrated that the issue was either major or clear-cut. The point regarding contents insurance was not a particularly compelling one, and in relation to their concerns about the initial accounts we found Mr [NAME] position to be reasonable. In addition, the complaints about accounting irregularities as raised at the January 2023 meeting do not seem to have been significant enough to have warranted the level of annoyance expressed by the Applicants. Furthermore, whilst we accept that this may have been borne out of genuine frustration, the nature and length of some of their complaints were disproportionate and counter-productive at times. Mr [NAME] will have been managing various other blocks at the relevant times, and it was simply not realistic to expect him to provide full and prompt answers at all times to complaints made in this manner, even though we accept in principle that he could and should have communicated better.

40. The Applicants’ point regarding [NAME] [NAME] electricity bills seems misplaced, albeit that this is an instant in which we accept that Mr [NAME] should have communicated better. The points made by the Applicants regarding Mr [NAME] need to engage with their suggested contractor indicate a slight misunderstanding of the section 20 consultation process given that there were insufficient funds to carry out the works at the relevant time. In relation to the water ingress issue, whilst it is common ground that water ingress can be a serious and urgent issue the basic facts as to how quickly and effectively Mr [NAME] team responded are disputed, and in our view the competing analyses of [NAME] [NAME] and Mr [NAME] on this issue are both plausible.

41. In addition, and as commented on by the tribunal at the hearing, none of the Applicants gave a witness statement and therefore their evidence

10 could not be properly tested by cross-examination.

Accordingly, significantly less weight can be attached to their factual evidence than would otherwise have been the case.

42. As regards Mr [NAME] himself, whilst in principle he seems experienced and competent, we do not have any sufficiently persuasive reason to believe that he would do a better job. First of all, it is likely that there would be a delay whilst he became familiar with the [NAME], the problems and the personalities. Secondly, his arrival would not necessarily stop there being two factions at loggerheads with one another. Thirdly, no manager is perfect, and Mr [NAME] might just make different mistakes, or he might be popular during an initial honeymoon period and then become less popular as soon as he told [NAME] things that they did not want to hear.

43. It should also be noted that [NAME] [NAME] has full confidence in Mr [NAME]. That does not make her right in any objective sense, but there was no evidence before us of any favouritism on [NAME]’s part and [NAME]’s good opinion does at least mean that someone with a stake in the good management of the [NAME] believes that Mr [NAME] is doing a good job.

44. We acknowledge that there have been problems under the current manager, but one thing on which all parties seem to agree is that the internal redecoration works should not be delayed any longer than necessary. Now that Mr [NAME] finally has the funds to proceed, everyone has an incentive to act reasonably in order to reduce friction and to allow him to get on with his job, and there is therefore a logic in sticking with the same manager at this stage.

45. We would, though, stress that it is now incumbent on everyone to act reasonably, and all parties (including Mr [NAME]) should have learnt some lessons through having gone through this somewhat bruising process. Mr [NAME] needs to acknowledge that he has communicated poorly at times, and he needs to find a way to keep [NAME] better informed. The [NAME] for their part need to avoid raising trivial issues and they need to have some trust in Mr [NAME] capabilities. [NAME] also need to communicate as succinctly and as politely as reasonably possible with Mr [NAME] and with each other, and they need to pay their service charges promptly in the absence of any fundamental reason to justify not doing so. It may well be appropriate for an early meeting to be arranged and for all parties to offer confidence-building steps or concessions at that meeting so as to generate a more constructive approach to the management of the [NAME].

46. In conclusion, therefore, we do not consider that it would be just and convenient in all the circumstances of the case to replace Mr [NAME] with Mr [NAME]. Consequently, the [NAME] is refused.

11 Cost applications 47. The Applicants have applied for an order that the [NAME] manager reimburse to them the cost of their [NAME] fee (£100) and hearing fee (£200).

48. Under paragraph 13(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME] Chamber) Rules 2013 “The Tribunal may make an order requiring a party to reimburse to any other party the whole or part of the amount of any fee paid by the other party …”. In the present case the Applicants’ main [NAME] has failed and we do not consider that it would be appropriate to require the [NAME] manager to reimburse these fees in such circumstances in the absence of any compelling other reason to do so. Consequently, this [NAME] is also refused.

Name: Judge P Korn Date: 30 May 2024

RIGHTS OF APPEAL

A. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) a written [NAME] for permission must be made to the First-tier Tribunal at the regional office dealing with the case.

B. 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].

C. If the [NAME] is not made within the 28 day time limit, such [NAME] must include a request for extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at such reason and decide whether to allow the [NAME] for permission to appeal to proceed despite not being within the time limit.

D. The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the [NAME] and the case number), state the grounds of appeal, and state the result the party [NAME] the [NAME] is seeking.