Tenants Win Management Order for Property in First-tier Tribunal Case

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference :

CHI/8UH/LAM/2019/0001 Property :

[ADDRESS] [POSTCODE]

Applicant: [redacted]

[NAME] Mrs [COUNSEL] :

[COUNSEL] LLP, solicitors Respondent: [redacted] :

[COUNSEL] Solicitors

Type of application :

Appointment of a manager Tribunal member(s) : Judge Tildesley OBE Mr T Dickinson FRICS Mr W H Gater FRICS Venue :

Torquay & [ADDRESS] [POSTCODE] 1 April 2019 Date of decision : 1 April 2019

DECISION

2 Summary of Decision

1. In accordance with section 24(1) Landlord and Tenant Act 1987, Mr [APPELLANT] of [APPELLANT], [NAME], Queen Anne’s Battery, Plymouth, Devon, [POSTCODE] (“the Manager”) is appointed as manager of the Property known as [ADDRESS], [POSTCODE] more specifically defined on the attached plan.

2. The Order shall continue for a period of two years from 1 June 2019. If any party or parties interested wish to apply for an extension of the Order they are encouraged to do so at least three months before the Order expires.

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

4. The Manager shall register the Order against the Landlord’s registered title as a restriction under the Land Registration Act 2002 or any subsequent Act.

5. In accordance with section 20C Landlord and Tenant Act 1985, all the costs incurred by the landlord in relation to this application are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Applicants or any of the other leaseholders of the Property.

The Application 1. The Applicants seek a determination pursuant to s.24A of the Landlord and Tenant Act 1987 for the appointment of a manager over the block of flats in which they live, Haccombe House in Haccombe, Newton Abbot (‘the Property’).

3 2. Mr [NAME] is the leasehold owner of Flat 17 Haccombe House whilst Mrs [NAME] is the leasehold owner of Flat 18 Haccombe House.

3. The property is a Grade II* Listed large detached building and contains 27 flats let on long leaseholds except Flats 10 and 27 which are owned by the freeholder, Mr [NAME] [RESPONDENT], who has been the registered proprietor of the property under title number DN384750 since 2 July 1997.

4. Up until around late-2015 Mr [RESPONDENT] self-managed the Property. Between October 2015 and September 2018, the Property was managed on Mr [RESPONDENT]’s behalf by managing agents, [NAME], which were replaced by [NAME] from September 2018.

5. The Applicants served two notices under section 22 of the 1987 Act dated 3 May 2018. The first notice required urgent works to be remedied by 15 June 2018. The second notice set out priority works requiring remedy within six months, expired on 5 November 2018.

6. On 6 December 2018 the Applicants applied for an Order under section 24 of the 1987 Act and for an Order under section 20C of the Landlord and Tenant Act 1985 preventing the Respondent from recovering his legal costs through the service charge.

7. On 17 January 2019 the Tribunal issued directions to progress the application and the hearing was fixed for the 1 April 2019.

8. On 7 March 2019 the Tribunal informed the other leaseholders at the property inviting them to join as party to the application. The Tribunal received responses from 14 leaseholders.

9. The following leaseholders made written representations:

• [NAME] (Flat 1)

• [NAME] (Flat 2)

• [NAME] (Flat 5)

• [NAME] (Flat 6)

• [NAME] and [NAME] (Flat 9)

• [NAME] and [NAME] (Flat 13)

• [NAME] (Flat 16)

• [NAME] (Flat 20)

4 10. The Tribunal inspected the property before the hearing.

The Hearing

11. The Applicants attended and were represented by Mr [COUNSEL] of Counsel. Ms [COUNSEL], the instructing solicitor was also in attendance. Mr [RESPONDENT] who was accompanied by his wife, Mrs [NAME] [RESPONDENT], was represented by Mr [COUNSEL] Partner Solicitor assisted by Miss [COUNSEL].

12. The following leaseholders were also in attendance Mr [NAME], Ms [NAME], Mr and Mrs [NAME] (Flat 4), Mr [NAME], Mrs [NAME] (Flat 11), Mrs [NAME], Ms [NAME] (Flat 16) and Mr [NAME]. The leaseholders who had made written representations were given the opportunity to participate in the hearing.

13. The Applicants’ solicitors had prepared a hearing bundle which was admitted in evidence. The Issue 14. At the commencement of the hearing Mr [RESPONDENT] on behalf of Mr [RESPONDENT] formally conceded that the grounds for the making of a Management Order were met.

15. The dispute, therefore, focussed on whether Mr [NAME] should be appointed as Manager or the decision should be deferred to enable Mr [RESPONDENT] to put forward a person from the current managing agent [NAME] & Laing as manager.

16. The Tribunal heard evidence from Mr [NAME] who was subjected to detailed questions about his expertise and experience. Reasons 17. The Tribunal decided after considering the evidence that Mr [NAME] was a suitable person to be appointed as Manager and announced its decision at the hearing. Mr [NAME] accepted the appointment for a period of two years starting 1 June 2019.

18. The Tribunal placed weight on the following facts in reaching its decision: a) Mr [NAME] has more than 20 years’ experience in the property industry including six years spent exclusively in block and estate management.

5 b) Plymouth Block Management of which Mr [NAME] is managing director was awarded the Smaller Managing Agent of the year award at the ARMA Ace Awards in 2017 and has been accredited and incorporated with ISO 9001: 2015 (Quality Management System). c) Mr [NAME] has relevant experience and a track record with listed properties. The Tribunal cross examined Mr [NAME] on his management of the six properties which he gave as examples of similar properties to the subject property. The Tribunal was satisfied with the manner in which he dealt with the problems at these properties. d) Mr [NAME] has the necessary expertise to tackle the principal issues with the subject property, namely service charge arrears and putting together a major works programme. e) Mr [NAME] gave a satisfactory explanation for his various directorship appointments which was a particular concern for Mr and Mrs [NAME]. f) The Tribunal believed that Mr [NAME] would after these proceedings have a better understanding of the nature of the appointment which is personal to him and that his authority stems from the Management Order rather than the lease. The Tribunal also noted that one of the property managers at Plymouth Block Management had held the position of Tribunal appointed manager g) The Tribunal considered his proposed fee of £250 per annum per flat (£6,750) plus VAT was reasonable having regard to the market rate for managing agents in the South West Region and the premium that is associated with the appointment. The Tribunal noted the leaseholders’ concerns about Mr [NAME] proposed fees for additional works. The Tribunal, however, indicated that this was standard professional practice and recognised in the Service charge residential management Code published by the Royal Institution of Chartered Surveyors (RICS) (Part 3 of the Third Edition with effective date of 1 June 2016). h) The Tribunal did not consider an adjournment to assess Mr [RESPONDENT] against a manager nominated by Mr [RESPONDENT] would alter the Tribunal’s view about his suitability for appointment. Further the Tribunal was satisfied that the short delay with Mr [NAME] coming up to speed would not have an adverse effect on the property.

6 i) The Tribunal took note of Ms [NAME] evidence that the Applicants have no prior personal or professional connection with Mr [NAME] who was an entirely independent and impartial third party. Ms [NAME] also gave evidence of her concern that there may not be many suitable alternative nominees to Mr [NAME]. Ms [NAME] had contacted a number of managing agents in the region to enquire whether they would be willing and able to take on the proposed management of the property and none were able to assist with her enquiry. The Tribunal explained to the Respondent and the leaseholders that Mr [RESPONDENT] was answerable to the Tribunal and not to [NAME] and or Mr [RESPONDENT].

19. The appointment was made subject to the following conditions: a) The Tribunal expressed that the objectives for the order were to collect service charges and arrears in a timely fashion, to agree a major works programme fully costed and to establish good relations with the freeholder and leaseholders. b) The Tribunal would expect Mr [NAME] to visit the property in person at least once a month in the first year. c) By 1 May 2019 Mr [NAME] to supply the Tribunal, and the representatives for the parties with a management plan for the next five years identifying the priorities for the next two years. Mr [RESPONDENT] indicated that he would affix the plan to the residents’ noticeboard in the communal areas so that all leaseholders could view it. d) By 1 May 2019 Mr [NAME] to supply the Tribunal and the parties’ representatives with details of his charges and in particular his fees for additional duties. The form of the charges should be in accordance with the RICS Code. Mr [RESPONDENT] to affix the charges to the noticeboard. e) The Tribunal questioned the wisdom of Mr [NAME] bringing in a new [NAME] to assess the major works required for the property. The Tribunal indicated that there had already been two reports prepared by reputable surveyors and that Mr [NAME] should engage the services of one of those surveyors to take forward the programme. f) By 1 June 2019 Mr [NAME] to provide a certificate of liability for the professional indemnity cover which should specifically state that it applies to Mr [NAME] duties as a Tribunal appointed manager

7 g) The Tribunal will provide the representatives with a draft order for their comments within 7 days. The Extent of the Property Covered in the Management Order 20. Mr [NAME] indicated that the parties had reached an agreement with the extent of the property subject to the management order. Essentially the management order did not extend to the area used by Mr [RESPONDENT] for the nursery business, the area developed by Mr [RESPONDENT] for wildlife and plants and the private garden area. The Tribunal approved Mr [NAME] suggestion of producing a plan drawn up by a [NAME] clearly identifying the boundaries of those areas subject to the management order. The Respondent to provide the Tribunal and the Manager with a copy of the plan by no later than 1 May 2019. Section 20C Order and Costs 21. Mr [RESPONDENT] stated that he would pay his own legal costs in connection with these proceedings and that no costs would be passed through the service charge. For the avoidance of doubt, the Tribunal nonetheless determines that it is just and equitable in the circumstances for an order to be made under Section 20C of the 1985 Act, so that the Respondent may not pass any of his costs incurred in connection with the proceedings before the Tribunal through the service charge.

22. The Tribunal indicated that it would not be sympathetic to an application for costs from the Applicants because the threshold of unreasonable conduct had not been met by Mr [RESPONDENT]. The Tribunal considered that Mr [RESPONDENT] had conducted the proceedings in a helpful and constructive manner.

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Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).

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CHI/8UH/LAM/2019/0001 Property :

[ADDRESS] [POSTCODE]

Applicant: [redacted]

[NAME] Mrs [COUNSEL] :

[COMPANY], solicitors Respondent: [redacted] :

[COUNSEL] Solicitors

Type of application :

Torquay & [ADDRESS] [POSTCODE] 1 April 2019 Date of decision : 26 June 2019

SUPPLEMENTAL DECISION

2

1. On 1 April 2019 the Tribunal determined as follows: • In accordance with section 24(1) Landlord and Tenant Act 1987, Mr [APPELLANT] of [APPELLANT], [NAME], Queen Anne’s Battery, Plymouth, Devon, [POSTCODE] (“the Manager”) is appointed as manager of the Property known as [ADDRESS], [POSTCODE] more specifically defined on the attached plan. • The Order shall continue for a period of two years from 1 June 2019. If any party or parties interested wish to apply for an extension of the Order they are encouraged to do so at least three months before the Order expires. • The Manager shall manage the Property in accordance with ▪ the directions and schedule of functions and services attached to this Order; ▪ save where modified by this Order, the respective obligations of the Landlord and the Lease whereby the Property is demised by the Landlord and in particular with regard to repair, decoration, provision of services and insurance of the Property; and ▪ 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 and approved by the Secretary of State pursuant to section 87 Leasehold Reform Housing and Urban Development act 1993. • The Manager shall register the Order against the Landlord’s registered title as a restriction under the Land Registration Act 2002 or any subsequent Act. • In accordance with section 20C Landlord and Tenant Act 1985, all the costs incurred by the landlord in relation to this application are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Applicants or any of the other leaseholders of the Property.

2. The appointment was made subject to the following conditions: a) The Tribunal expressed that the objectives for the order were to collect service charges and arrears in a timely fashion, to agree a major works programme fully costed and to establish good relations with the freeholder and leaseholders.

3 b) The Tribunal would expect Mr [NAME] to visit the property in person at least once a month in the first year. c) By 1 May 2019 Mr [NAME] to supply the Tribunal, and the representatives for the parties with a management plan for the next five years identifying the priorities for the next two years. Mr [RESPONDENT] indicated that he would affix the plan to the residents’ noticeboard in the communal areas so that all leaseholders could view it. d) By 1 May 2019 Mr [NAME] to supply the Tribunal and the parties’ representatives with details of his charges and in particular his fees for additional duties. The form of the charges should be in accordance with the RICS Code. Mr [RESPONDENT] to affix the charges to the noticeboard. e) The Tribunal questioned the wisdom of Mr [NAME] bringing in a new [NAME] to assess the major works required for the property. The Tribunal indicated that there had already been two reports prepared by reputable surveyors and that Mr [NAME] should engage the services of one of those surveyors to take forward the programme. f) By 1 June 2019 Mr [NAME] to provide a certificate of liability for the professional indemnity cover which should specifically state that it applies to Mr [NAME] duties as a Tribunal appointed manager g) Mr [NAME] indicated that the parties had reached an agreement with the extent of the property subject to the management order. Essentially the management order did not extend to the area used by Mr [RESPONDENT] for the nursery business, the area developed by Mr [RESPONDENT] for wildlife and plants and the private garden area. The Tribunal approved Mr [NAME] suggestion of producing a plan drawn up by a [NAME] clearly identifying the boundaries of those areas subject to the management order. The Respondent to provide the Tribunal and the Manager with a copy of the plan by no later than 1 May 2019.

3. Mr [NAME] was unable to take up the appointment on 1 June 2019. There was also a delay with the provision of the plans referred to in 2(g) above.

4. Mr [NAME] has now informed the Tribunal that he is in a position to take up his appointment on 1 July 2019. The Tribunal has also received the agreed plans which have been incorporated in the Management Order attached together with the agreed wording of the parties.

4

5. The Tribunal having reviewed the documents provided by Mr [NAME] have two outstanding matters and require Mr [NAME] to resolve them by 15 July 2019 and inform the Tribunal and parties accordingly.

6. The matters outstanding are:

• To provide confirmation in writing from the broker that the professional indemnity cover for Mr [NAME] covers his duties as a Tribunal appointed manager and that the policy conforms with ARMA minimum standards. Mr [NAME] to supply a certificate of liability for professional indemnity cover.

• To provide a list of fees for additional duties which are not covered within the fee for Tribunal appointed manager. The list provided appears to include all fees charged by Mr [NAME]. The Tribunal refers Mr [NAME] to paragraphs 3.3 – 3.7 of the RICS Code: Service Charge Residential Management Code 3rd Edition.

7. Subject to resolution of the outstanding matters the Management Order shall commence on 15 July 2019.

8. The Tribunal asks Mr [RESPONDENT] to affix these documents to the Leaseholder’s Noticeboard.