Tenant's Variation of Management Order Granted by First-tier Tribunal

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/00FN/LAM/2023/0002 Properties :

[ADDRESS] [POSTCODE] Applicants : [redacted] [NAME_4] (2) Representative : [NAME_1] Respondents : [redacted] to this decision Representative : [NAME_7] (for the leaseholder of flat 8 only) Type of application : Application by a Tenant for the variation of an order appointing a manager under Section 24(9) of the Landlord and Tenant Act 1987 Tribunal members : Judge C [NAME_9]

Date and place of hearing : 4 & 5 December 2023 Date of decision : 7 December 2023

DECISION

© CROWN COPYRIGHT 2023

2 Background 1. On 7 October 2020, this Tribunal made an order (“the Order”) appointing [NAME_11] to be the tribunal appointed manager of the Property from that date for a period of three years.

2. On 6 March 2023, the Applicants applied for a variation of the Order (“the Application”). They seek the appointment of an alternative manager, [NAME_55], the extension of the Order for a further period of time, and certain variations to the terms of the Order.

3. The period of the appointment was extended beyond its expiry date by direction of Deputy Regional Judge Barlow in directions dated 11 May 2023. She ordered that the appointment is extended until the Application is finally determined.

4. On 4 & 5 December 2023, the Tribunal conducted an oral hearing of the Application.

5. In the interests of certainly and clarity for all parties, we issue this short decision now. We will issue a set of full reasons for our decision and a varied Management Order in due course. Decisions 6. The existing Order will continue in full force and effect until midnight on 31 December 2028, with the [NAME_20] manager, [NAME_21] continuing in post until 31 December 2023.

7. From 1 January 2024, the Order is varied so as to appoint [NAME_55] as the manager in place of [NAME_11] from that date.

8. The terms of the Order will also be varied, but until the variations are produced, the terms of the existing order will apply with the substitution of [NAME_21] for [NAME_22] as the manager.

Handover 9. The new terms of the Order will include formal provisions concerning handover of responsibility from [NAME_21] to [NAME_22], but the Tribunal authorises [NAME_21] (if she wishes) to delegate her authority to [NAME_22] and to engage in informal discussions from the date of this order for the purpose of: a. agreeing arrangements for handover, and b. taking such actions as are deemed necessary to deal with a fire enforcement notice that the Tribunal understands has been served upon [NAME_21] by Leicestershire Fire and Rescue Authority;

3 c. dealing with such day to day management matters as may arise. Appeal

10. Any appeal against this decision must be made to the Upper Tribunal (Lands Chamber).

11. Prior to making such an appeal the party appealing must apply, in writing, to this Tribunal for permission to appeal within 28 days from the date that written reasons are sent to the party wishing to appeal (or, if applicable, within 28 days of any decision on a review or application to set aside) identifying the decision to which the appeal relates, stating the grounds on which that party intends to rely in the appeal, and stating the result sought by the party making the application.

12. This decision does not contain the written reasons for our decision. Time for appealing does not start to run until the issue of the written reasons.

Judge C Goodall First-tier Tribunal (Property Chamber)

4 Appendix

Respondents

[NAME_24] and [NAME_28] (Freeholder and lessees of Flat 1) [NAME_30] (Flat 2) [NAME_32] (Flat 7) [NAME_37] (Flat 8) [NAME_42] (Flat 10) [NAME_45] and [NAME_47] (Flat 11) [NAME_51] (Flat 12) [NAME_12] ([NAME_20] manager) [NAME_17] (prospective manager) [ADDRESS] (RTM) Company Limited

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Date and place of hearing : 4 & 5 December 2023 Date of decision : 21 December 2023

DECISION ON TERMS OF A MANAGEMENT ORDER AND REASONS FOR THE DECISION DATED 7 DECEMBER 2023

© CROWN COPYRIGHT 2023

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Background 1. On 7 October 2020, this Tribunal made an order (“the Order”) appointing [NAME_11] (“the [NAME_20] Manager”) to be the tribunal appointed manager of [ADDRESS] [POSTCODE] (“the Property”) from that date for a period of three years.

2. On 6 March 2023, the Applicants applied for a variation of the Order (“the Application”). They seek the appointment of an alternative manager, [NAME_55] (“the New Manager”), the extension of the Order for a further period of time, and certain variations to the terms of the Order.

3. On 7 December 2023, the Tribunal issued a decision on the Application, appointing the New Manager to be the manager of the Property in place of the [NAME_20] Manager as from 1 January 2024, and extending the period of the appointment of a manager to 31 December 2028. We also indicated that we would vary the terms of appointment, the variations to be determined in this decision.

4. The decision was made following a hearing at Nottingham Magistrates Court over two days on 4 & 5 December 2023. The hearing was attended in person by [NAME_56], the first Applicant and [NAME_57], the First Respondent. No other lessee attended. The [NAME_20] Manager and the New Manager attended the hearing on the second day (5 December), by video link and in person respectively.

5. In this document, we set out the reasons for making those two decisions and determine what the terms of the extended appointment should be. We also issue the new order itself (“the Order”) dated of even date with these reasons. The 2020 order 6. Our 2020 order and the reasons for making it are set out in the decision dated 7 October 2020 under references BIR/00FN/LAM/2020/0001 and BIR/00FN/LLC/2020/0002. We do not repeat in full what we said in that decision, but it is necessary to distil our key findings of fact to assist the parties and the New Manager in their understanding of the management challenges at the Property.

7. A short summary of the situation at the Property is required. It is a substantial stone built dwelling, constructed around the turn of the twentieth century, which has a basement and contained four (now five) self-contained flats. Abutting to it is an adjoining purpose built block of an additional six flats.

8. The Property was redeveloped in the 1980’s at which point nine new 125 year residential leases were created. Flat 3 was not let. The leases were

3 tripartite leases, by which we mean that the freeholder granted the lease to the leaseholder and a third party management company (called [ADDRESS] (Leicester) Ltd (“[NAME_58]”) was a further party which took on the obligation to manage repair and maintain the Property in return for the payment of a service charge by the lessees.

9. A lease of the common parts was granted to [NAME_58] on 14 November 1980 for a term of 125 years from 24 June 1980. The demise was of all the land shown edged green on the plan of that lease, which includes the common parts (including the walls, foundations, roof and basement), the grounds, and in particular includes the five garages at the rear of the Property (except in so far as they are included in the demise to any flat owner). [NAME_58] covenanted to repair and maintain the Property in return for payment of a service charge. The freeholder has no maintenance obligations.

10. The lease to [NAME_58], however, contains a covenant by the freeholder (clause 4(6)) to pay the service charge attributable to any flats which are unlet. This means that it was intended that the freeholder must pay the service charge attributable to Flat 3. That Flat was subsequently converted by [NAME_57] into two Flats – 3a and 3b.

11. The [NAME_59] was never registered with the Land Registry. It therefore has the status of an equitable lease only.

12. In 2000, [NAME_57] and his wife, who were then the lessees of flat 1, purchased the freehold. They then became the lessors under the [NAME_59]. We recited at some length a history of the period from that time to 2019 in the 2020 decision.

13. Our key findings in the 2020 decision were: a. Management of the Property was effectively under the control of [NAME_57] from the time he purchased the freehold in 2000; b. [ADDRESS] (Leicester) Ltd was intended to be a lessee owned management company to which the common parts of the Property were demised, and which covenanted to repair, maintain, and manage the Property, but [NAME_57] effectively controlled that company, and he prevented lessees from playing any role in the actual management; c. From the early 2000’s, lessees were concerned that [NAME_57] was not ensuring adequate management of the Property. Matters improved for a time, but by 2011, the state of the Property and grounds was unsatisfactory and in breach of the lessee covenants in the [NAME_59]; d. Attempts by the then managing agent to rectify the problems were obstructed by [NAME_57];

4 e. At a Tribunal hearing in September 2011 (to determine whether management should be taken over by a right to manage company), [NAME_57] gave misleading evidence to that Tribunal; f. [NAME_57] was responsible for failing to ensure that [NAME_60] remained on the register of companies by failing to file accounts and annual returns (which may have been criminal actions); g. The impact of the demise of [NAME_58] and that the lease in its favour was never registered has caused detriment to the lessees; h. Management at the time of the 2020 decision was hampered by there being substantial arrears of service charges. Such payments as were made by [NAME_57] were only made after enforcement action in some way was taken against him. We found that [NAME_57] persistently delayed payment of any service charges demanded from him; i. The actions taken by [NAME_57] to arrange for arrears of service charges due from him and others to be written off by the RTM company were flagrant breaches of his duties to act in the best interests of the company to his own advantage, and to the prejudice of other lessees; j. We found that [NAME_57] could not be trusted with the running of a management company as he was unlikely to act in its best interests where they conflicted with his own.

14. Consequently, we made the management order requested appointing [NAME_21] as the manager. The 2021 directions 15. In July 2021, the [NAME_20] Manager applied to this tribunal for directions arising from non-cooperation by [NAME_57] exhibited by his continued attempts to carry out building works in the basement of the Property to create two flats.

16. On 18 August 2021, this Tribunal issued directions prohibiting further building works in the basement and requiring [NAME_57] to clear the car park of all building waste and rubble and give access to the basement to the [NAME_20] Manager for the purposes of carrying out repairs and for the preparation of a full report.

17. Those directions were endorsed with a penal notice. The progress made by the [NAME_20] Manager 18. The [NAME_20] Manager responded to the Application in writing through the following documents: a. A letter dated 18 May 2023;

5 b. A letter dated 1 December 2023.

19. The letter of 18 May 2023 informed the tribunal that, since before the [NAME_20] Manager’s appointment, the Property has been “impossible to manage effectively or at all”. She ascribes this to three reasons. Firstly, that [NAME_57] has effective control of the Property through his ownership of Flats 1 & 3, his mother’s ownership of Flat 2, and the ownership of other flats by friends and associates of [NAME_57]. Secondly, the non-payment of very large amounts of service charges, and thirdly, the on-going building works in the basement which have left the Property in a dangerous state.

20. The letter of 1 December 2023 informed the tribunal that there was £28 in the bank, creditors of in the region of £10,500, and service charge arrears of £115,195.25. The [NAME_20] Manager also produced a schedule of financial transactions from 20 January to 30 November 2023. It was apparent from the schedule that only [NAME_61], [NAME_62], and [NAME_63] had paid any service charges during the period.

21. In evidence to the tribunal at the hearing, the [NAME_20] Manager gave fuller details of the service charge arrears as follows: Flat Lessee / owner Arrears (£) 1 [NAME_26] 21,517.77 2 [NAME_29] 19,515.48 3 [NAME_26] 28,758.19 4 [NAME_3] 4,507.64 7 [NAME_35] 2,577.64 8 [NAME_40] 17,030.14 9 [NAME_6] 377.64 10 [NAME_43] 11,292.43 11 [NAME_46] 11,382.43 12 [NAME_52] 4,784.93

Total 121,744.29 22. Plainly, these sums total more than the arrears figure given in the 1 December letter and they will need to be checked by the [NAME_20] Manager when giving her records to the New Manager.

23. The [NAME_20] Manager was not able to tell the Tribunal what proportion of these arrears had accumulated prior to her appointment. The Tribunal noted that accounts prepared for 2021 by the [NAME_20] Manager showed the service charge arrears at the end of 2020 to be £36,524.55. It appears that a substantial amount of the arrears must relate to charges levied by the [NAME_20] Manager which have not been collected.

24. The [NAME_20] Manager said that she had initiated arrears letters and letters before action, as a result of which some lessees had commenced paying arrears on a payment plan, but [NAME_57], [NAME_64], and [NAME_73] had not made any payments to her at all. She was well aware that [NAME_57] considered that he had a defence to any claim for service charges, but she did not consider that any such defence was valid.

6 She had however not checked the timing of invoices to establish whether there might be a defence under section 20B of the Landlord and Tenant Act 1985.

25. We asked the [NAME_20] Manager to explain why she had never commenced legal action to recover arrears. She explained that she always felt this would be quite challenging litigation.

26. A critical issue that arose when the tribunal made the 2020 order related to the possibility of litigation to vest the [NAME_59] in a new company. The [NAME_20] Manager said she had received legal advice that indicated the prospect of a favourable outcome, but she had not pursued this option due to the reluctance of the majority of lessees to support it.

27. There had been some discussion with [NAME_57] about him granting a new lease of the common parts to a management company, but it had not been possible to come to agreement.

28. In the end though, the [NAME_20] Manager acknowledged that she had made no progress in resolving the fundamental difficulties arising from the status of the [NAME_59].

29. We were informed by the [NAME_20] Manager (only on our enquiry following the matter was raised by [NAME_56]) that a legal notice under the Regulatory Reform Order 2005 had been issued to her on 24 October 2023, requiring action by 1 January 2024, in respect of an unsafe fire escape at the rear of the Property. We directed the [NAME_20] Manager to provide a copy to the tribunal. 30. [NAME_56] asked the [NAME_20] Manager about two further issues that had arisen recently. Firstly, an owner of neighbouring property had complained that tree roots were damaging his property. Secondly, apparently a workman for someone who was using one of the garages had fallen through the roof and been injured in around the third week in November 2023. The [NAME_20] Manager indicated that she was aware of the workman having fallen through the roof but did not consider it to be a matter for her to deal with as she had not instructed the work to be undertaken. With regard to the tree roots from the adjoining property the [NAME_20] Manager was aware of various correspondence but to her knowledge no definite action had been taken by the neighbours. Inspection 31. The tribunal inspected the Property in the morning of 4 December 2023 accompanied by [NAME_57] and [NAME_56].

32. We were shocked by the state of the Property. The garages at the rear and the hard standing in front of them are littered with detritus and rubbish. The car park area is extremely uneven with previously open trenches not having been satisfactorily made good; it appears that the direction the tribunal made in 2021 concerning that area has not been complied with.

7 33. Due to the sloping profile of the site, the basement is at ground level at the rear. A new door and a new window have been fashioned as part of the building works that [NAME_57] had commenced to the basement. The lintels did not appear satisfactory. Drainage pipes (including what appears to be a soil pipe) have been damaged. There is a void outside one of the doors that appears to carry a risk of falling. It is evident that there is water ingress on the roof. Gutters have failed causing vegetation to be growing down the walls. Household rubbish has been fly-tipped at the left hand entrance. Window frames are in extremely poor state. An airbrick has been cemented over. The soffits and fascia’s are in a poor state of repair.

34. Internally, there is little evidence of a cleaning regime. A number of communal lights do not work. The emergency lights to the stairs and landings of the newer extension incorporate a general lighting system operated by PIR sensors. Although at the time of our inspection the emergency lights appeared to be operating the ordinary lighting bulbs in all the fittings required replacement. In the original part of the house communal lights were on, twenty-four hours a day as the sensors or time clocks were not working. The New Manager 35. The proposed New Manager is [NAME_55]. She holds the qualifications of MRIPM and is an Associate of the Royal Institution of Chartered Surveyors. She works for a residential management company called [NAME_65], in which she is a director and in which she has a small shareholding. Its parent company is [COMPANY_67]. [NAME_66] has two subsidiaries which also carry out residential management.

36. The New Manager has reasonably extensive experience as a tribunal appointed manager. She listed seven properties where she had been or is still the manager since 2018. There were some appointments occurring before that date. It is clear to the tribunal that she has worked on appointments that have presented challenges, and on a number of her appointments, she has either been re-appointed, or has continued to manage the buildings following the termination of her initial tribunal appointment. This indicates she has a track record of successful appointments.

37. The New Manager made the tribunal aware of one appointment that had been particularly challenging and which she did not regard as a success. In that case, a lessee had applied to the tribunal to discharge her from her appointment. Although the FTT had refused to do so, the lessee had appealed to the Upper Tribunal. That tribunal had levelled some criticism of the New Manager. 38. [NAME_65] are based in London. However, the New Manager lives locally to Leicester so is in a good geographical location to be able to visit the Property and supervise works. She works with a colleague who would become involved in assisting the appointment.

8 39. We were satisfied that the New Manager had a good relationship with suitably experienced solicitors and counsel, and satisfactory professional indemnity insurance is in place. Confirmation that the insurance covers her for 1987 Act appointments is awaited. There is a satisfactory complaints procedure in place.

40. The New Manager provided a draft action plan. It contained the following elements: a. Within the first month, update reports or recommission them; b. Work on creating constructive working relationships with stakeholders; c. Ensure conformity with all health and safety requirements; d. Ensure adequate insurance is in place; e. Deal promptly with routine enquiries and administration; f. Undertake works to ensure the building is up to the required standard.

41. Proposed fees for the New Manager’s firm are £400.00 plus VAT per flat per year, with additional fees for non-standard work. In order to ensure the New Manager had adequate funds to commence management, it was proposed by the Applicants that she be authorised to demand immediately upon appointment a sum of £5,000.00 from each flat owner with [NAME_57] to pay £10,000.00 because Flat 3 had been converted into two flats. It is not clear whether the demand for this immediate proposed payment is in addition to any reasonable service charge for 2024, or merely to be an on account payment, to be set off against any properly demanded service charges for 2024. The Respondents positions 42. [NAME_57] attended the hearing and had the opportunity to make submissions and to put questions to the proposed New Manager.

43. He had been given the opportunity to provide a written response in directions issued by the tribunal on 11 May 2023. He provided a letter dated 28 May 2023 in response in which he opposed the Application. He felt it was not fair for the Applicants to dictate who should be the manager. That ought to be decided collectively by all Flat owners. He requested time in that letter for a suitable alternative manager to be appointed as agreed by a majority of the Flat owners. This approach was clarified by [NAME_57] at the hearing. He felt strongly that the majority of the Flat owners should be able to determine the manager. He made the same representations on behalf of his mother, the lessee of Flat 2. He had not arranged for any alternative managers to be available for appointment by the Tribunal.

9 44. [NAME_68] provided a written response on 30 May 2023. She writes in what appears to us to be an exasperated tone, saying she considers that she has been caught up in a chronic and toxic dispute between [NAME_56] and [NAME_57]. She considers that [NAME_56] accused her falsely of not paying her ground rent. She says that she has had no communication with [NAME_57] for the last two years and that is not expected to change. She considers that the [NAME_20] Manager should complete her term, all lessees should pay their service charge arrears to a common level, and an independent right to manage company should take over the care and running of the Property. She rejects the proposal to appoint the New Manager. She has no interest in pursuing any litigation over the common parts.

45. In an email dated 31 May 2023, [NAME_69] of [NAME_7], wrote to the tribunal to say he was instructed by [NAME_74], [NAME_71] (Flat 7 – understood by the Tribunal also to be known as [NAME_62]), and by [NAME_73] (Flat 8), who all opposed the Application. [NAME_69] had previously advised [NAME_57], but he was not instructed by him in relation to the Application. 46. [NAME_69] later wrote to the tribunal to say that [NAME_74] and [NAME_71] considered the costs of opposing the Application to be disproportionate, and accordingly, they did not intend to make representations or attend the hearing. However, [NAME_69] continued to be instructed by [NAME_73]. 47. [NAME_69] provided a statement which he signed on behalf of [NAME_75]. [NAME_75]’s analysis of the [NAME_20] situation was that the Application was a step in the battle of personalities between [NAME_56] and [NAME_57], and he was essentially being asked to fund the costs of that battle. He disputes that he has any service charge arrears and refers to alleged failures to comply with the “obvious statutory hurdles, such as the 18 month rule”. No proceedings have been issued, which he regards as acceptance by the [NAME_20] Manager that she does not truly believe the arrears are due. He says that he has paid all demands that the [NAME_20] Manager has made. [NAME_75] is of the view that if the New Manager decides to pursue historic service charge arrears, further money would be entirely wasted on the costs of pursuing these, which would be “profoundly unfair” on the lessees. 48. [NAME_75] also objects to the taking of any action by the New Manager to seek a vesting order to vest the [NAME_59] in a new company on the basis that any such vested lease would not bind [NAME_57] as it was not registered. Pursuit of a vesting order would therefore serve no purpose.

49. In summary, [NAME_75] suggests that the [NAME_20] Manager should complete the task she took on, that no further action be taken to pursue historic service charge arrears, that it is pointless to seek a vesting order, and the appointment of a new manager now will just waste costs as she will have to start from square one.

10 50. There is a further objection from [NAME_75] to the inclusion of any penal notice attached to any order requiring payment of historic arrears as that would deprive him of a right to a fair trial to determine whether he actually owes any arrears.

51. Shortly before the hearing, [NAME_69] informed the tribunal that he and his client would not attend the hearing. Law 52. Appointment of a manager under the Act is governed by sections 21 to 24. The procedure when an application is made for the appointment of a manager of a property for the first time is that, following the service of a preliminary notice, the applicant may apply to the Tribunal. The applicant must establish that one of the fault based grounds for making the order set out in section 24 is established. If so, the Tribunal may appoint a manager to carry out in relation to the premises such functions in connection with the management of the premises or such functions of a receiver, or both, as the tribunal thinks fit. The Tribunal may include in the order provision with respect to such matters relating to the exercise of the managers functions and such incidental matters as the Tribunal thinks fit.

53. The Tribunal may also provide in the order for rights and liabilities arising under contracts to which the manager is not a party to become the rights and liabilities of the manager and allowing the manager to prosecute claims in respect of causes of action accruing before or after the date of the appointment (section 24(5) of the Act).

54. On the application of any person interested, the tribunal may vary or discharge the order (section 24(9)).

55. On a variation application, there is no requirement for the tribunal to satisfy itself again that grounds for the making or an order as set out in section 24 are made out at the time of the application to vary the order (Orchard Court Resident’s Assoc v St Anthony’s Homes Ltd [2003] EWCA Civ 1049).

56. The Tribunal has a wide-ranging power to make orders relating to the functions of management of premises which it thinks fit. It is not constrained by the terms of the leases, and indeed, its discretion can be appropriately exercised in order to deal (at least on an interlocutory basis) with defective leases. Orders must be proportionate, but it is legitimate for a Tribunal to make orders designed to meet the lessees’ legitimate expectations that the premises are properly managed (see paragraphs 14 – 16 of the 2020 Decision and Maunder Taylor v Blaquiere [2002] EWCA Civ 1633, Sennadine Properties Limited v Heelis [2015] UKUT 55 (LC), and [COMPANY_76] v [NAME_77], 2015 WL 7259170).

11 The Draft Management Order 57. As the Applicants’ representative, [NAME_56] provided the Tribunal with a draft order (“the Draft Order”). He did not request the New Manager’s appointment on the same terms as the terms under which the [NAME_20] Manager was appointed.

58. The Draft Order was based on that attached to the First-tier Tribunal (Property Chamber) Practice Statement dated July 2023. As such, the Tribunal was entirely happy to adopt that precedent in principle. 59. [NAME_56]’s draft contained a number of specific clauses as follows: a. In paragraph 5 of the Draft Order, [NAME_56] had included 16 clauses reciting extracts from the 2020 Decision and other documents designed to identify the management issues at the Property. The extracts are from his perspective, and most of these sub-clauses are critical of [NAME_57]; b. Paragraph 6 of the Draft Order contained ten specific powers that [NAME_56] wishes the Tribunal to confer upon the New Manager. Most of these powers are drafted in such a way as to effectively oblige the manager to resolve specific issues in the way that [NAME_56] considers they should be resolved; c. The Draft Order required that the New Manager be empowered to change the terms of the flat leases to reduce their proportion of service charges payable from one tenth to one eleventh. In their leases, the nine lessees each pay one tenth of the service charge. The unlet Flat 3, it is obvious to the Tribunal, was to bear the final tenth had it been let, as provided for in clause 4(6) of the [NAME_59]. As [NAME_57] has subdivided flat 3, [NAME_56] took the view that [NAME_57] should have to pay an extra portion of the service charge for the additional flat. The Draft Order therefore suggests that the New Manager be empowered to collect 2/11ths for flat 3 (as well as his contribution for flat 1) from [NAME_57]; d. The flat leases contain a ground rent payment to the freeholder of £75.00 per year at present. The Draft Order required that that sum be paid to the New Manager; e. The Draft Order included a right for the New Manager to make an immediate demand of £5,000.00 from each lessee (including [NAME_57] in respect of flat 1), and £10.000.00 from [NAME_57] for flat 3, as it had been converted into two flats; f. The Draft Order included rights for the New Manager to make monetary demands from certain lessees for works to comply with their own covenants to keep their flats in good repair, and to make demands for improvement works that do not appear to be within the repairing obligations contained in the leases. Specifically, [NAME_56] wished the New Manager to be able to require lessees to pay

12 the costs of installing vehicle charging points, the re-routing of television and data cables, and new equipment associated with a new entrance door intercom and access system. g. [NAME_56] wished the Tribunal to endorse a penal notice, in the order made by the Tribunal: i. [NAME_57], requiring him to accept greater controls upon his actions in relation to the basement than have already been imposed by virtue of the 2021 Directions, and requiring him to pay all demands made by the New Manager within 28 days of the demands; ii. [NAME_57], [NAME_64], [NAME_62], [NAME_73], [NAME_68], [NAME_74], and [NAME_61], requiring them to pay all demands from the New Manager within 28 days of the demands, and to immediately provide a copy of any subtenancy granted in respect of their flats. Discussion Continuation of the appointment of a tribunal appointed manager.

60. As will have emerged from the section in this decision about our inspection, it is as clear as day that the Property requires active and forceful management to begin to resolve the major issues over its condition and the legal structure of its leases. There are serious health and safety issues at play.

61. It is also entirely evident that the lessees are collectively unable to work together to select and appoint a unanimously agreed manager. A majority appointed manager would not command the respect of the minority and the personality clashes which have blighted the Property for over 10 years would be likely to continue. In our view, it is essential that the Tribunal, which is independent of all parties, should confirm the continuation of a tribunal appointed manager. Who should the manager be? 62. Quite apart from the fact that the [NAME_20] Manager does not wish to continue in office anyway, our view is that she cannot do so as she has not demonstrated the capacity and tenacity required to take on this difficult role. We need not dwell on this, but it will suffice to say that a substantial proportion of the service charge arrears are her own demands, and yet no action has been taken to recover them from the lessees. It is a basic function of any manager to recover, whether by persuasion or enforcement, the demands that he or she issues, and the lack of funds has resulted in a deterioration of the Property during her appointment rather than any improvement. We accept that the lack of funds has also prevented her from taking the legal action she might have

13 wished and note the large sum outstanding to her legal adviser in unpaid fees.

63. We regret that we have to say that the [NAME_20] Manager cannot remain in post. This is the answer to [NAME_68]’s suggestion that the [NAME_20] Manager remain in post. We cannot endorse that approach for the reasons above. 64. [NAME_57]’s view was that the choice of manager should go back to the lessees who should simply elect a candidate by a majority. In our view, that would be disastrous. The position would return to the position pre 2020, and we have explained in paragraph 60 above why we consider that is not a tenable position.

65. In reality, there is only one candidate, namely the New Manager. She is willing to act, clearly has experience, and so far as we could tell in our discussion with her, has sufficient robustness to act fairly between the parties.

66. She was honest with us about the problems she had on one appointment, which we are required to consider, where she came in for some criticism from the Upper Tribunal. We have read the Upper Tribunal decision in that case and have taken into account the UT’s criticism. However, we note that the UT was content for the New Manager to continue in place in that case even though it was for a limited purpose, and it also acknowledged the New Managers experience as a tribunal appointed manager.

67. We therefore appointed the New Manager as the manager of the Property as from 1 January 2024 in the Decision. How long should the appointment be for? 68. At present, we see no prospect of an early quick fix to the management issues at the Property. Lessees collectively (including [NAME_56]) now seem to operate on the basis that payment of service charges is voluntary, and they need to understand that (subject of course to the statutory controls over the amount of service charge that is payable), no improvement in the condition of the Property or resolution of the dire legal quagmire that the lease structure has created will be reached without it being paid for by the lessees and the freeholder together.

69. So, the length of the appointment will be determined by how quickly the lessees pay their service charges, and then how quickly the New Manager can progress the management challenges.

70. With the prospect of a challenging process to collect service charge arrears (or new demands), and then identification of crucial maintenance works (including selection of contractors and consultation), it is clear to us that three years at a minimum would be required to return the Property to a reasonable and functioning state.

14 71. But that is only one part of the challenge ahead. We do not think, from the responses we have read from the Respondents, that there is a sufficient understanding of the peril that they face as a result of [NAME_58] having been struck off the register of companies, and from the non-registration of the legal title to the areas demised in the [NAME_59] to [NAME_58]. The combined consequence of these two events is that there is no legal entity in existence with the contractual responsibility to the lessees to repair and maintain the Property. And, aside from the powers that this Tribunal has under the 1987 Act to authorise a manager to collect service charges, there may be no legal entity that has a right to demand service charges.

72. When the leases of the flats were granted, lessees had a reasonable expectation that the Property would be maintained using the mechanisms set out in the leases, which included the interpolation of a tenant owned management company responsible for keeping the Property in good order. The continued existence of [NAME_60] was a requirement of this structure. But the structure has collapsed.

73. Consequently, that issue cries out to be resolved one way or the other, and we see no prospect of lessees being able to have their reasonable expectation of proper management of the Property met, without the continued existence of a tribunal appointed manager (with the powers that the Tribunal can give that manager) until it is.

74. For that reason, we have decided that the appropriate term for this appointment at this time is five years. On what terms should the New Manager be appointed? 75. It is not appropriate, in our view, for the terms of the Management Order to be clearly slanted in favour or against one group of lessees at the Property. Nor is it appropriate for the order itself to prescribe the actions the New Manager must take unless it is clear and obvious that those actions are required and supported by the New Manager.

76. We are therefore not able to agree the terms of paragraphs 5 and 6 of the Draft Order requested by [NAME_56]. At the hearing, the New Manager had not been appointed, and she had only paid one visit to the Property. She had not had a chance to obtain objective reports or talk to all the lessees and [NAME_57]. She needs to be allowed the space to review her management tasks objectively and without undue pressure from [NAME_56]. She may eventually reach the same conclusions as he has about what has to be done, but if she does, and she is not able to persuade all parties to agree with her actions, she should at that point seek Directions and stronger powers, if she feels she needs to.

77. It is not appropriate to threaten some parties with contempt proceedings for failure to pay a bill. That goes substantially further even than the powers of the courts in seeking to enforce debts. [NAME_83] point on this clause to the effect that a penal notice to pay a debt denies the debtor a right to a fair trial is a strong point.

15 78. The New Manager herself expressed a preference for not being required to collect ground rents. Whilst she needs all the money she can get to carry out repairs, there is a balance to be struck here, and we do not regard it as essential to deprive [NAME_57] of the proprietary right to that income.

79. We do not consider that [NAME_56]’s proposal to charge [NAME_57] additional sums arising from his conversion of flat 3 into two flats is appropriate. It effectively amounts to a lease variation and whilst it may be possible to so order, it is contentious and unwise to oblige the New Manager to venture into that territory, certainly at this time. The footprint of flat 3 has not changed.

80. It is also not appropriate to include an expectation that the New Manager will facilitate and arrange improvements to the Property that go beyond the reasonable operation of the lease structures as originally drafted.

81. In consequence of the above points, to a large extent we have not permitted most of the contentious content of the Draft Order requested by [NAME_56]. Our wish is for the terms of the order to be even-handed, with the New Manager having adequate powers to address the management issues we have included in the order. She has the right to seek further directions if she needs the Tribunal’s further assistance.

82. It is obvious that the New Manager needs funds immediately. The payments envisaged by the Draft Order are, we consider, reasonable at this point. But, firstly, and consistently with our approach set out in paragraph 79 above, the sum due for flat 3 should be the same as the sum for all other flats, and secondly, the sums payable should be regarded as being on account of service charges, for they will need to be explained and justified in due course. So, paragraph 30 of the Order should be regarded as accelerated payments of justifiable service charges rather than additional payments over and above what can be justified as service charges. It would be unsurprising to us if the New Manager used funds demanded to collect service charge arrears, as if these were all paid, the finances would be in place to make a substantial difference to the Property, and to make a start on resolving the management challenges set out in paragraph 7 of the Order.

83. We have taken the view that the lease structure is defective. Recital number (3) in the [NAME_59] provides: “So as to ensure the effective maintenance and management of certain common parts (being the demised premises as hereinafter defined) of the Building which will not be included in any leases of the said Flats and the provision of certain services to and for the Lessees for the time being of the said Flats the Management Company has been incorporated under the Companies Acts 1958 – 1967 with the objects (inter alia) of taking from the Lessors a Lease of the demise premises and undertaking certain obligations and the provision of certain services”.

16 84. This recital properly describes the good reason for the existence and operation of [NAME_58]. It was granted a lease of the structure and grounds of the Property, which it was to keep in repair in return for the payment of service charges. Without it being in existence and operating, the ownership of the structure and grounds reverts to [NAME_57], but without any obligation upon him to carry out any maintenance or repair and without any right for him to collect any contribution towards the costs of so doing. Conversely, the lessees have no obligation to pay any service charges to him.

85. This is a very serious management challenge. We have given thought to how we can assist the New Manager to resolve this problem. Our first action is to order that the New Manager’s powers should be at least the same powers that [NAME_58] would have had in the event that it were still in existence and its lease were registered (see clause 8 in the Order). It seems quite clear to us, purely from the drafting of the flat leases and the [NAME_59], that this was the legal basis upon which the Property was to be managed, and it must have been the original lessees’ legitimate expectation that that structure existed and worked.

86. Quite how this issue is to be resolved, we do not know, and it is not appropriate for us to determine within these proceedings, but until it is, what was obviously originally intended should be put into effect on at least an interim basis. It is undoubtedly a management challenge that the New Manager cannot ignore, but she will need to assess the position with some care (and no doubt will need to review the legal advice received by the [NAME_20] Manager).

87. We have not included a power in the Order permitting the New Manager to apply for a vesting order under section 1017 of the Companies act 2006 even though such a power was granted in the 2020 Order. We have however included resolving the issue within paragraph 7, and we have specifically included the possibility of applying for directions concerning a vesting order within paragraph 15. Our view is that if and when the New Manager has determined the most appropriate route forward, this issue will require a specific direction from the Tribunal, not least so that all parties will have the opportunity at that point to address the issue and its resolution in the light of a more defined plan than currently exists.

88. The second action we take is to enhance the New Manager’s rights to apply for Directions in relation to the basement and the garages (see paragraph 15(e) in the Order).

89. Our third component is in paragraph 5 of the Order, which clarifies that our original direction dated 18 August 2021 preventing [NAME_57] from carrying out works in the basement continues in full force and effect throughout the period of the New Manager’s appointment. It also clarifies that she has the right to enforce those directions through contempt proceedings if she needs to.

90. We have in mind that the New Manager may take the view that the cost of putting right any defective building works, reinstatement works, and

17 works to make the basement and the Property safe in the light of [NAME_57]’s building works should not be borne by all lessees. If she takes that view, she should apply for a further direction to the effect that [NAME_57] must bear a larger part, or even the whole of those costs.

91. We mention two other practical issues that the New Manager will need to resolve and on which we offer our views. The first is insurance. The New Manager must insure the Property (see paragraph 48 of the Order). We imagine that the Property is currently insured by the [NAME_20] Manager, though we have no information to confirm. We point out that the obligation to insure under the leases rests with [NAME_57] (see clause 5(6) of the flat leases), with [NAME_58] being obliged to ensure that this is done (see clause 6(c)), and to collect the premium (Fifth Schedule paragraph 1(1)). As [NAME_58] no longer exists, it is arguable that [NAME_57] remains responsible for insuring but with no mechanism to collect any share of the premium. For the time being, requiring the New Manager to insure resolves the question of how insurance is guaranteed, but this issue will need to be resolved in due course.

92. The second additional issue relates to the way in which the [NAME_20] Manager should complete her period of management in a proper manner. Our view is that she should arrange for accounts for the years she has been manager to be prepared (2022 and 2023 – accounts for 2021 have already been produced). She should arrange to discharge the debts she has incurred during her management. She is entitled to be paid all properly incurred fees for the period of her management. Our view is that the [NAME_20] Manager should invoice the New Manager for all outstanding fees and costs to complete her appointment, who should then collect those sums from the service charge payers in the proportions they currently bear under this order. If any party disagrees, they should seek directions from the Tribunal.

93. Having considered the above points carefully, we make the order as set out in the terms of the Order dated of even date herewith. Appeal

94. Any appeal against this decision must be made to the Upper Tribunal (Lands Chamber). Prior to making such an appeal the party appealing must apply, in writing, to this Tribunal for permission to appeal within 28 days of the date of issue of this decision (or, if applicable, within 28 days of any decision on a review or application to set aside) identifying the decision to which the appeal relates, stating the grounds on which that party intends to rely in the appeal, and stating the result sought by the party making the application.

Judge C Goodall First-tier Tribunal (Property Chamber)

18

Appendix

Respondents

Respondents with an interest in the Property

(1) [NAME_24] and [NAME_28] (Freeholder and lessees of Flat 1)

(2) [NAME_30] (Flat 2)

(3) [NAME_32] (Flat 7)

(4) [NAME_37] (Flat 8)

(5) [NAME_42] (Flat 10)

(6) [NAME_45] and [NAME_47] (Flat 11)

(7) [NAME_51] (Flat 12)

Managers

(8) [NAME_12] ([NAME_20] manager)

(9) [NAME_17] (prospective manager)

Other Respondents

(10) [ADDRESS] (RTM) Company Limited

BIR/ooFN/LAM/2023/0002 - 1 -

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : BIR/00FN/LAM/2023/0002 Property : [ADDRESS] [POSTCODE] Applicants : [redacted] [NAME_4] (2) Representative : [NAME_1] Respondents : [redacted] to this decision Representative : [NAME_7] (for the leaseholder of flat 8 only) The [NAME_20] Manager : [NAME_11] The New Manager :

[NAME_55]

Tribunal Members : Judge C [NAME_9] Date of Order : 21 December 2023

MANAGEMENT ORDER

© CROWN COPYRIGHT 2023

BIR/ooFN/LAM/2023/0002 - 2 -

INTERPRETATION

1. In this Order: “The Property” means the flats and other premises known as [ADDRESS] [POSTCODE] and as registered at HM Land Registry under title number(s) LT13402 and LT14834 comprising all of the land and buildings included in the freehold title(s) referred to above; including all of the common parts of the property; such as garden areas, amenity space, drives, pathways, landscaped areas, flower beds garages, storage rooms, basements, electricity and power rooms. “The Landlord” means [NAME_23] [NAME_25] [NAME_78] or their successor in title to the reversion immediately expectant upon the Leases. “The Tenants" means the proprietors for the time being of the Residential Leases whether as lessee or under-lessee and "Tenant” shall be construed accordingly. “The Residential Leases" means all leases of flats in the Property “The [NAME_59]” means the management lease dated 14 November 1980 and made between First State Properties Ltd (1) and [ADDRESS] (Leicester) Ltd (2). “The Existing Order” means an order dated 7 October 2020 by the Tribunal appointing the [NAME_20] Manager to be the manager of the Property “The [NAME_20] Manager” means [NAME_12] “The New Manager” means [NAME_17] of [COMPANY_79] of 200 [ADDRESS] [POSTCODE]. “The Tribunal” means the First-tier Tribunal (Property Chamber).

ORDER

2. In accordance with Section 24(9) of the Landlord and Tenant Act 1987 (“the Act”) the Existing Order is varied by substituting the Existing Manager with the New Manager with effect from 1 January 2024.

3. The term of the Existing Order is extended until 31 December 2028.

4. The provisions of the Existing Order are, as from 1 January 2024, substituted with the provisions appearing in this Order.

5. For the avoidance of doubt, the Directions (supported by penal notice) made by the Tribunal on 18 August 2021 requiring [NAME_57] to cease all further building works in the basement of the Property, to clear the car park of building waste and rubble, and to grant access to the basement to the [NAME_20] Manager

BIR/ooFN/LAM/2023/0002 - 3 - continue in full force and effect and the right to enforce those Directions shall pass to the New Manager from the commencement of her appointment.

6. For the avoidance of further doubt this Order supplements but does not displace covenants under the Leases and the Landlord and Tenants remain bound by them. Where there is a conflict between the provisions of the Order and the Leases, the provisions of the Order take precedence.

7. The purpose of this Management Order is to provide for the management of the Property which includes taking steps to resolve the following management problems and disputed legal issues as identified by the Tribunal being:

a. Recovery of unpaid service charges; b. Ensuring compliance with all statutory health and safety obligations that apply to the Property; c. Carrying out the maintenance obligations imposed upon the lessee in the [NAME_59]; d. Seeking a resolution to the adverse legal impact upon all parties of the lessee of the [NAME_59] having been struck off the register of companies, and the [NAME_59] not having been registered with HM Land Registry upon its grant; e. Seeking a resolution to the dispute about ownership and rights to develop the basement in the Property and ownership of the basement and the garages.

8. To address the issues and problems identified in the previous paragraph the New Manager is empowered to manage the Property as if the [NAME_59] was in full force and effect and was binding upon the [NAME_20] freeholder and the Respondents and so to exercise the powers and rights vested in the lessee of that Lease (including for the avoidance of doubt the power to demand service charges from the Landlord in respect of Flat 3 under clause 4(6) of the [NAME_59]) until a determination of its legal effect is obtained;

9. The New Manager shall manage the Property in accordance with: a. the terms of this Order and the Directions set out below; b. the respective obligations of the Landlord and the Tenants under the Residential Leases whereby the Property is demised by the Landlord (save where modified by this Order); c. the duties of a manager set out in the Service Charge Residential Management Code (“the Code”) (3rd Edition) or such other replacement code published by the Royal Institution of Chartered Surveyors (“[NAME_80]”) and approved by the Secretary of State pursuant to section 87 Leasehold Reform Housing and Urban Development Act 1993 (whether the New Manager is a Member of the [NAME_80] or not; and d. the provisions of sections 18 to 30 of the Landlord and Tenant Act 1985.

10. From the date this Order comes into effect, no other party shall be entitled to exercise a management function in respect of the Property where the same is

BIR/ooFN/LAM/2023/0002 - 4 - the responsibility of the New Manager under this Order.

11. The tribunal requires the New Manager to act fairly and impartially in the performance of her functions under this Order and with the skill, care and diligence to be reasonably 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.

12. The Tribunal may, upon receipt of information or notification of change of circumstances, issue directions to the parties, or any other interested person, concerning the operation of the Order, both during its term, and after its expiry.

13. The New Manager or any other interested person may apply to vary or discharge this Order pursuant to the provisions of section 24(9) of the Act.

14. Any application to extend or renew this Order must be made before the end date, preferably at least three months before that date, and supported by a brief report of the management of the Property during the period of the appointment. Where an application for an extension or renewal is made prior to the end date, then the New Manager’s appointment will continue until that application has been finally determined.

15. The New Manager is appointed to take all decisions about the management of the Property necessary to achieve the aims and purpose of this Order. If the New Manager is unable to decide what course to take, she may apply to the Tribunal for further directions, in accordance with section 24(4) of the Landlord and Tenant Act 1987. Circumstances in which a request for such directions may be appropriate include, but are not limited to: a. a serious or persistent failure by any party to comply with an obligation imposed by this Order; b. circumstances where there are insufficient sums held by the New Manager to discharge her obligations under this Order and/or for the parties to pay the New Manager’s remuneration; and c. where the New Manager is in doubt as to the proper construction and meaning of this Order; and d. the possibility of litigation to apply for a vesting order under section 1017 of the Companies Act 2006 (or such other applications as might be permitted by the Tribunal) in respect of the [NAME_59]. e. Any action contemplated by the New Manager to carry out works in the basement of the Property the cost of which the New Manager considers should be borne by the freeholder.

Contracts

16. Rights and liabilities arising under contracts, including any contract of insurance and/or any contract for the provision of any services to the Property, to which the New Manager is not a party, but which are relevant to the management of the Property, shall upon the date of appointment become rights and liabilities of the New Manager, save that:

a. the Landlord shall indemnify the New Manager for any liabilities

BIR/ooFN/LAM/2023/0002 - 5 - arising before commencement of this Order; and b. the New Manager has the right to decide, in her absolute discretion, the contracts in respect of which she will assume such rights and liabilities, with such decision to be communicated in writing to the relevant parties within 56 days from the date this order.

17. The New Manager may place, supervise and administer contracts and check demands for payment of goods, services and equipment supplied for the benefit of the Property.

Licences to assign, approvals, pre-contract enquiries and lease extensions:

18. The New Manager shall be responsible for carrying out those functions in the Residential Leases and in the [NAME_59] (on the assumption contained in paragraph 8 above) concerning approvals and permissions, including those for sub-lettings, assignments, alterations and improvements that the Leases provide should be carried out by the Landlord.

19. The New Manager shall be responsible for responding to pre-contract enquiries regarding the sale of a residential flat at the Property.

Legal Proceedings

20. The New Manager may bring or defend any court or tribunal proceedings relating to management of the Property (whether contractual or tortious) and, subject to the approval of the Tribunal, may continue to bring or defend proceedings relating to the appointment, after the end of their appointment.

21. Such entitlement includes bringing proceedings in respect of arrears of service charge attributable to any of the Residential Flats in the Property, including, where appropriate, proceedings before this tribunal under section 27A of the Landlord and Tenant Act 1985 and in respect of administration charges under schedule 11 of the Commonhold and Leasehold Reform Act 2002 or under section 168(4) of that Act or before the courts and shall further include any appeal against any decision made in any such proceedings.

22. The New Manager may instruct solicitors, counsel, and other professionals in seeking to bring or defend legal proceedings and is entitled to be reimbursed from the service charge account in respect of costs, disbursements or VAT reasonably incurred in doing so during, or after, this appointment. If costs paid from the service charge are subsequently recovered from another party, those costs must be refunded to the service charge account.

Remuneration

23. The Lessees and the freeholder in respect of Flat 3 are each responsible for payment of one tenth of the New Manager’s fees which are to be payable under the provisions of this Order, but which may be collected under the service charge mechanisms of their Leases or by the authority of this Order.

BIR/ooFN/LAM/2023/0002 - 6 -

24. The sums payable are:

a. an annual fee of £400 per unit for performing the duties as set out in paragraph 3.4 of the [NAME_80] (so far as applicable); and as contained in the Schedule to this Order. b. additional fees for the duties as set out in paragraph 3.5 of the [NAME_80] (so far as applicable); and as contained in the Schedule to this Order. c. VAT on the above fees.

Ground Rent and Service charge

25. The New Manager shall not collect the ground rents payable under the Residential Leases.

26. The New Manager shall collect all service charges and insurance premium contributions payable under the Residential Leases, in accordance with the terms and mechanisms in the Residential Leases and the [NAME_59] (which shall be deemed to be in full force and effect and enforceable by the New Manager until such time as its proper status is determined).

27. Whether or not the terms of any Lease so provides, the New Manager shall have the authority to:

a. demand payments in advance and balancing payments at the end of the accounting year; b. establish a reserve fund to meet the Landlord’s obligations under the Leases; c. allocate credits of service charge due to Lessees at the end of the accounting year to the reserve fund; d. collect arrears of service charge, administration charges, legal costs and insurance that have accrued before her appointment (including, but not limited to, the reasonable and properly incurred costs fees and expenses of the [NAME_20] Manager is so far as those costs are demanded from the New Manager by the [NAME_20] Manager);

28. The New Manager may set, demand and collect a reasonable service charge to be paid by the Landlord (as if he were a lessee), in respect of any unused premises in part of the Property retained by the Landlord, or let on terms which do not require the payment of a service charge.

29. The New Manager may collect all commercial rents being charged by the Landlord for use or occupation of the garage premises comprised in title number LT14834 or for rent being charged by the Landlord for the use of residents parking spaces; and to set off the income against any service charge arrears or other monies that are owed by the Landlord.

30. To ensure that the New Manager has adequate funds to manage the Property, she may immediately demand and collect the sum of five thousand pounds (£5,000.00) from the lessee of each Residential Lease in their capacity as lessees and five thousand pounds (£5,000.00) from the Landlord in his capacity as owner of Flat 3. The sum demanded by the New Manager shall be payable

BIR/ooFN/LAM/2023/0002 - 7 - within 28 days. Payments made under this clause shall be treated as on account payments of service charges properly demanded and so shall be set off against future demands.

31. The New Manager is entitled to recover by authority of this Order and / or through the service charge the reasonable cost and fees of any surveyors, architects, solicitors, counsel, and other professional persons or firms, incurred by them whilst carrying out their functions under the Order. Administration Charges

32. The New Manager may recover administration charges from individual lessees and the Landlord for their costs incurred in collecting service charges and insurance which includes the costs of reminder letters, the transfer of files to solicitors and letters before action. Such charges will be subject to legal requirements as set out in schedule 11 of the Commonhold and Leasehold Reform Act 2002. The details of the fees charged are set out in the Appendix. Disputes

33. In the event of a dispute regarding the payability of any sum payable under this Order by the Lessees, additional to those under the Leases (including as to the remuneration payable to the N e w Manager and litigation costs incurred by the New Manager), a Lessee, or the New Manager, may apply to the tribunal seeking a determination under section 27A of the Landlord and Tenant Act 1985 as to whether the sum in dispute is payable and, if so, in what amount.

34. In the event of a dispute regarding the payability of any sum payable under this Order by the Landlord, other than a payment under a Lease, the New Manager or the Landlord may apply to the tribunal seeking a determination as to whether the sum in dispute is payable and, if so, in what amount.

35. In the event of dispute regarding the conduct of the management of the property by the New Manager, any person interested may apply to the Tribunal to vary or discharge the order in accordance with section 24(9) of the Landlord and Tenant Act 1987.

36. In the event of a dispute regarding the reimbursement of unexpended monies at the end of the New Manager’s appointment, she, a Tenant, or the Landlord may apply to the Tribunal for a determination as to what monies, if any, are payable, to whom, and in what amount. DIRECTIONS TO THE LANDLORD 37. The Landlord must comply with the terms of this Order.

38. On any disposition (other than a charge) of the Landlord’s estate in the Property, the Landlord will procure from the person to whom the Property is to be conveyed, a direct covenant with the New Manager, that the said person 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 the person to whom the Property is to be conveyed.

39. The Landlord shall give all reasonable assistance and co-operation to the New Manager in pursuance of their functions, rights, duties and powers under this Order, and shall not interfere or attempt to interfere with the exercise of any of

BIR/ooFN/LAM/2023/0002 - 8 - the New Manager’s said rights, duties or powers except by due process of law.

40. The Landlord is to allow the New Manager and her employees and agents access to all parts of the Property and must provide keys, passwords, passcodes, and any other documents or information necessary for the practical management of the Property in order that the New Manager might efficiently perform her functions and duties and exercise her powers under this Order. DIRECTIONS TO THE [NAME_20] MANAGER 41. Within 14 days from the date of this Order the [NAME_20] Manager must provide all necessary information to the New Manager to provide for an orderly transfer of responsibilities, and is to include the transfer of: a. all reports, accounts, books, papers and computer records, minutes, correspondence, emails and other documents as are relevant to the management of the Property, including all H&S reports, fire risk assessments, asbestos management plans, section 20 consultation notices and responses complete with estimates, specification of works; copies of keys; passwords or codes; and b. all records and books of account, including receipts or other evidence as are relevant to service charge income and expenditure, including a complete record of all unpaid service charges and all documentation associated with recovery of arrears or debt collection; and c. all funds relating to the Property including uncommitted service charges and any monies standing to the credit of a reserve or sinking fund are to be transferred to the account as set up by the New Manager within 5 days of the date of this Order; and d. all records of legal advice and email correspondence in connection with disputed issues with the Lessees or the Landlord; and 42. The [NAME_20] Manager must complete the obligations she has in her terms of appointment to manage the Property (including preparation of accounts for the period of her management and discharge of any liabilities she has incurred) to the end of her appointment. She is entitled to demand payment of her outstanding reasonably incurred fees and expenses from the New Manager when they are calculated (whether before or after the termination of her appointment).

DIRECTIONS TO THE NEW MANAGER 43. The New Manager must adhere to the terms of the Order above. Entry of a Form L restriction in the Register of the Landlord’s Registered Estate 44. To protect the direction in paragraph 38 for procurement by the Landlord, of a direct covenant with the New Manager, the New Manager must apply for the entry of the following restriction in the register of the Landlord’s estate under title no(s) LT13402 and LT14834. “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

BIR/ooFN/LAM/2023/0002 - 9 - for registration [or their conveyancer] that the provisions of paragraph 37 of an Order of the Tribunal dated the [New Manager to insert] have been complied with”. Registration 45. The New Manager must make an application to HM Land Registry for entry of the restriction referred to above, within 14 days of the date of this Order.

46. A copy of the Order should accompany the application (unless it is submitted by a solicitor able to make the necessary declaration at Box 8(c) of the RX1 application form). The application should confirm that:

 this is an Order made under the Landlord and Tenant Act 1987, Part II (Appointment of Managers by a Tribunal) and that pursuant to section 24(8) of the 1987 Act, the Land Registration Act 2002 shall apply in relation to an Order made under this section as they apply in relation to an order appointing a receiver or sequestrator of land.  Consequently, pursuant to Rule 93(s) of the Land Registration Rules2003, the Manager is a person regarded as having sufficient interest to apply for a restriction in standard Form L or N. Conflicts of interest 47. The New Manager must be astute to avoid any Conflict of Interest between their duties and obligations under this Order, and their contractual dealings. Where in doubt, the New Manager should apply to the Tribunal for directions. Complaints 48. The New Manager must operate a complaints procedure in accordance with, or substantially similar to, the requirements of the Royal Institution of Chartered Surveyors. Insurance 49. The New Manager must maintain appropriate building insurance for the Property and ensure that the New Manager’s interest is noted on the insurance policy.

50. From the date of appointment, and throughout the appointment, the New Manager must ensure that she has appropriate professional indemnity insurance cover in the sum of at least £2 million and shall provide copies of the certificate of liability insurance to the Tribunal, and upon request, to any lessee or the Landlord. The Certificate should specifically state that it applies to the duties of a Tribunal appointed Manager. Accounts 51. The New Manager must: a. Prepare and submit to the Lessees and the Landlord an annual statement of account detailing all monies receivable, received and expended. The accounts are to be certified by an external auditor, if required under the Leases.

BIR/ooFN/LAM/2023/0002 - 10 - b. maintain efficient records and books of account and to produce these for inspection, to include receipts or other evidence of expenditure, upon request by a Lessee under section 22 of the Landlord and Tenant Act 1985. c. maintain on trust in an interest-bearing account at such bank or building society, as the New Manager shall from time to time decide, into which service charge contributions, insurance premiums, and all other monies arising under the Leases and the New Managers demands shall be paid; and d. hold all monies collected in accordance with the provisions of the Code. Repairs and maintenance 52. The New Manager must: a. Within 90 days of this Order draw up a management plan and planned maintenance programme to address the management issues identified in paragraph 7 of this Order for the period of the appointment, allowing for the periodic re-decoration and repair of the exterior and interior common parts of the Property, as well as any roads, accessways, mechanical, electrical and other installations serving the Property, and shall send a copy to every Lessee and to the Landlord. b. Subject to receiving sufficient prior funds: i. Carry out all required repair and maintenance required at the Property, in accordance with the Landlord’s covenants in the Leases, including instructing contractors to attend and rectify problems and is entitled to recover the cost of doing so as service charge payable under the Leases or in accordance with the Order. ii. Arrange and supervise any required major works to the Property, including preparing a specification of works and obtaining competitive tenders. c. Liaise with all relevant statutory bodies in the carrying out of their management functions under the Order; and d. Ensure that the Landlord, and the Tenants, are consulted on any planned or major works to the Property and to give proper regard to their views.

53. The New Manager has the power to incur expenditure in respect of health and safety equipment reasonably required to comply with regulatory and statutory requirements. Reporting 54. By no later than six months from the date of appointment (and then annually) the New Manager must prepare and submit a brief written report to the Lessees, and the Landlord, on the progress of the management of the Property up to that date, providing a copy to the Tribunal at the same time. End of Appointment 55. No later than 60 days before the end date, the New Manager must:

BIR/ooFN/LAM/2023/0002 - 11 - a. apply to the tribunal for directions as to the disposal of any unexpended monies; and b. include with that application a brief written report on the progress and outcome of the management of the Property up to that date (a “Final Report”); and c. seek a direction from the tribunal as to the mechanism for determining any unresolved disputes arising from the New Manager’s term of appointment (whether through court or tribunal proceedings or otherwise).

56. Unless the tribunal directs otherwise the New Manager must within 28 days of the end date: a. prepare final closing accounts and send copies of the accounts and the Final Report to the Landlord and Tenants, who may raise queries on them within 28 days; and b. answer any such queries within a further 28 days.

57. The New Manager must reimburse any unexpended monies to the paying parties, or, if it be the case, to any new Tribunal appointed manager within 28 days of the end date or, in the case of a dispute, as decided by the Tribunal upon an application by any interested party.

BIR/ooFN/LAM/2023/0002 - 12 -

SCHEDULE TO THE MANAGEMENT ORDER

ANNUAL FEE:

The New Manager shall be entitled to charge an annual fee of £400.00 per unit (exclusive of VAT) for performing the duties as set out below and in accordance with paragraph 3.4 of the [NAME_80] (so far as applicable);

The New Manager shall be entitled to review the fee annually upon each anniversary of this Order. Any increase shall not exceed the percentage rate of increase in the UK Consumer Prices Index (CPI) measured by reference to the index for that measure published in November of that year unless directed otherwise by the Tribunal.

FEES FOR ADDITIONAL SERVICES:

For services that are not included in the annual fee, the New Manager shall be entitled to charge additional fees as set out below and in paragraph 3.5 of the [NAME_80] (so far as applicable);

The New Manager shall be entitled to review the fees annually upon each anniversary, any increase shall not exceed the value of the (12 month) UK Consumer Prices Index (CPI) unless directed otherwise by the Tribunal.

SCHEDULE OF SERVICES

1. Hourly Charge Out Rates Director £250 + VAT per hour Senior Property/Accounts Manager £200 + VAT per hour Property/Accounts Manager £150 + VAT per hour Assistant Property/Accounts Manager £100 + VAT per hour Administrator £50 + VAT per hour 2. Licence for Alterations (Fee to be paid by the Lessee concerned or the Landlord) The administration fee is between £250.00 to £750.00 (ex VAT) depending on the complexity of the application and the degree of liaison required. Building surveyors fees and legal fees (if applicable) will be charged separately by the professionals concerned.

3. Pre-sale Enquiries (Fee to be paid by the Lessee concerned or Landlord) The administration fee for the provision of information relating to pre-sale enquiries is £360.00 (ex VAT). The information packs provided should be tailored to the flat in question and include comprehensive replies to all the

BIR/ooFN/LAM/2023/0002 - 13 - questions normally raised by solicitors along with all relevant documentation. The information pack should be provided within 14 days of a written request.

4. Licence to Assign / Notice of Transfer or Mortgage (if applicable) (Fee to be paid by the Lessee concerned or Landlord) The administration fee of £115.00 (ex VAT) per notice. Legal fees for the preparation of the documentation will be charged separately by the solicitors concerned. Credit Control Action (further than standard reminder process) 5. (Fees to be recovered from the Lessee concerned or the Landlord) The New Manager reserves the right to charge on an hourly basis for any additional credit control work required where either a Lessee or the Landlord does not pay their due service charge / administration charges (or ground rent) following the third and final reminder; including for the writing of further letters; referral to legal action and attendance at court or Tribunal as and where may be required.

6. Preparation and Attendance at Court / FTT Reduced daily rates would be charged for necessary attendance at Tribunal / FTT.

7. Major Works Supervision Services The fee for the administration of major building works (which includes all relevant site meetings, attendance, inspections, assisting with preparation of specifications, tendering and general contract administration) is not to exceed 1 % of the contract sum (for projects of over £50k) and 2% of the contract sum (for projects under £50k). Compliance with CDM Regulations will be arranged via a separate contractor and a fixed fee (or percentage of the contract sum if appropriate). Note: Major works are normally defined as those requiring formal consultation with leaseholders under the Landlord and Tenant Acts.