Tribunal Appoints New Property Manager Under Landlord and Tenant Act

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case Reference : MAN/00CA/LAM/2021/0006

Property : 37 [ADDRESS] [POSTCODE]

Applicant: [redacted] : Mr [COUNSEL], Counsel. Mr [COUNSEL], [NAME]

Respondents : [redacted] [COMPANY] (2) Mr [NAME] (3) [NAME] [NAME] (4) [NAME] [NAME[NAME] : (2)` Dr [COUNSEL], Counsel. (2) Mr [COUNSEL], SHL Solicitors.

Type of Application : Section 24(1) of the [NAME]lord & Tenant Act 1987 Rule 13 Application under Tribunal Procedure Rules 2013

Tribunal Members : Regional Surveyor N. Walsh Judge J. Holbrook

Date of Decision

:

7 December 2022 Final Hearing Date & Venue : 10:30 am 31 October 2022 – [COMPANY], [ADDRESS].

DECISION

© CROWN COPYRIGHT 2022

2 DECISION

The Tribunal considers it just and convenient to appoint the Applicant’s proposed manager, [NAME] [APPELLANT], as the Tribunal appointed manager with effective from 1 January 2023 on the terms set out in annexed Management Order.

The Applicant’s Rule 13 cost application is refused.

REASONS Procedural history

1. The Tribunal received an application dated 5 November 2021 seeking the appointment of [NAME] [NAME] of [COMPANY] as the Tribunal appointed manager under section 24 of the Landlord and Tenant Act 1987 for 37 [ADDRESS] [POSTCODE] (the Property). The Applicant is [APPELLANT] the leasehold owner of Flat 2 at the Property.

2. On 16 December 2021 the Tribunal issued directions, which culminated in a Remote Video hearing on 23 August 2022. The Applicant was represented at the video hearing by Mr [COUNSEL] of Counsel and also in attendance was [NAME], a co-Respondent and the leaseholder owner of flat 1, his representative Dr [COUNSEL] of Counsel and the proposed manager [NAME] [COUNSEL]. Neither of the other two remaining co-Respondents attended this hearing.

4. At the video hearing the Tribunal dealt with a number of preliminary matters. Firstly, the Management Company, [RESPONDENT], appeared not to be named as a Respondent for the purposes of these proceedings. This was a clear error, the Section 22 Notice having been served on the management company. Given no objections from the parties, the Tribunal added [RESPONDENT] as a co-Respondent under rule 10 of the Tribunal Procedure Rules 2013. The second preliminary issues dealt with and permitted [NAME]’s position statement to be admitted into evidence.

5. The Tribunal decided, and indeed all parties present agreed, that because the Tribunal did not have a draft Management Order before it to review and insufficient information from the proposed manager, [NAME] [NAME], to assess her suitability for the role, an adjournment of the hearing was the most appropriate course of action.

6. The Tribunal issued directions in its post hearing Case Management Hearing Note, dated 24 August 2022, for a new hearing date. In the event that the parties were unable to agree to the appointment of a management agent without recourse to the Tribunal, the Tribunal directed the Applicant to re-file and re- serve a copy of the proposed draft Management Order, accompanied by the proposed manager’s draft management plan and service charge budget for the Property and any additional written submissions that the Applicant wished to make, with the Respondents having the opportunity to respond. The Tribunal is grateful to the Applicant and [NAME] for complying with the Tribunal’s directions and for their submissions.

3 7. Mrs [APPELLANT] the leaseholder owner of flat 4 is supporting the Applicant’s application and is content for Mr [APPELLANT] to take the lead in these proceedings, and therefore has decided not to participate personally.

8. An in-person hearing was held at the [COMPANY], [ADDRESS] on 31 October 2022. Mr [APPELLANT] did not attend but was represented by Counsel, Mr [COUNSEL]. Mr [COUNSEL] also attended and represented himself, Mrs [NAME] also attended but for the reasons already stated chose not to participate at the hearing. [NAME] [NAME] the leaseholder owner of flat 3 did not attend the hearing. [NAME] [NAME] did however provide a detailed statement of case enclosing extensive appended documents in compliance with the Tribunal’s initial directions, dated 16 December 2021, which the Tribunal has taken into consideration in reaching its decision.

9. [NAME] [NAME], the proposed manager was unfortunately and unexpectedly unable to attend the hearing on 31 October 2022 due to illness. The hearing was therefore adjourned for a second time and reconvened on 14 November when [NAME] [NAME] was able to attend and the Tribunal was able to question her in order to assess her suitability to be appointed as manager, as well as her willingness to accept the role. Any party that wished to attend the Tribunal’s hearing with [NAME] [NAME] on 14 November 2022 as observers were invited to do so and a number did.

10. Mr [NAME] also made an application under Rule 13 of the Tribunal Procedures Rules 2013 on behalf of Mr [APPELLANT], seeking an order against Mr [APPELLANT] and [NAME] [APPELLANT] for the reimbursement of the costs that Mr [APPELLANT] has incurred in these proceedings. The Tribunal has had the benefit of both written and oral submissions in respect of this cost application from Mr [NAME], [NAME] and his solicitors but no submissions have been received from [NAME] [APPELLANT] in respect of the Applicant’s Rule 13 application.

11. The Tribunal did not inspect the Property and judgement was reserved.

Background

12. We are informed that the Property was constructed in 1913 and was subdivided into four self-contained flats in 1963. From the photograph on the front of [NAME] [NAME] Management Proposal document the Property is a former substantial house of standard brick and tile construction.

13. All four parties to this application hold their respective flats under 999-year underleases, which we are informed are virtually identical in terms. The underleases are granted out of a long leasehold interest held by [COMPANY], which as lessor is responsible for managing the Property, keeping it in good repair and insured under clause 3 of the underleases. Each flat owner is named as a director in the management company and is also an equal shareholder. By clause 2(vii) of the underleases the flat owners are required to contribute 25% of the cost incurred by the company in discharging its obligations under clause 3 of the underleases.

4 14. In around 2020, the internal common areas were re-carpeted and the front drive was re-surfaced with tarmacadam following works to the external drains. Despite the Property’s insurers only covering the resurfacing costs of the driveway immediately affected by the drainage works, a decision was made to re-surface the whole driveway so as to have the same finish throughout the driveway and to avail of the discounted price on offer for these works on account of the contractor being on site. This meant that there was a shortfall between the monies owed to the contractor and the monies recouped through the insurance claim. The costs attributable to the carpets and the resurfacing of the driveway, over and above the usual service charge levied, amounted to approximately £2,325 per flat.

15. The way in which these works were undertaken, approved and sanctioned led to a significant dispute between the parties. [NAME] [NAME] and Mr [NAME] do not believe that they were properly consulted nor afforded the opportunity to decide whether the works were necessary and appropriate, and they dispute that the works were properly instructed by the management company as opposed to individual flat owners acting independently.

16. Mr [APPELLANT] and [NAME] hold a very different view. They consider that the works were necessary and required, and there was prior agreement as to the necessity to redecorate and re-carpet the internal common areas. They believe that they communicated with both Mr [APPELLANT] and [NAME] prior to instructing the works to be undertaken and took their lack of a response as tacit agreement to what was being proposed.

17. The position between the parties now appears to have broken down to such an extent that Mr [APPELLANT] and [NAME] between them paid for the totality of the works, with Mr [NAME] and [NAME] [NAME] refusing to contribute to the cost of the carpets or the excess charges for the resurfacing of the driveway. Indeed, Mr [NAME] subsequently refused to pay any service charge demands from the management company and has instead been paying this amount into a separate bank account held by him.

18. It would appear common ground between all the parties that the position between the respective flat owners has broken down to such an extent that the management company is unable to function properly. The company is unable to agree what the current appropriate service charge should be, what future repair works are necessary above and beyond the usual day to day maintenance items, and whether necessary actions such as the placing of insurance cover have been done correctly or in fact unilaterally by one flat owner without the management company’s approval.

The Statutory Framework

19. Section 24 of the Landlord and Tenant Act provides:

(1) The appropriate tribunal may, on an application for an order under this section, by order (whether interlocutory or final) appoint a manager to carry out in relation to any premises to which this Part applies—

(a) such functions in connection with the management of the premises, or,

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(b) such functions of a receiver, or both, as the tribunal thinks fit.

(2) The appropriate tribunal may only make an order under this section in the following circumstances, namely

(a) where the tribunal is satisfied—

(i) that any relevant person either is in breach of any obligation owed by him to the tenant under his tenancy and relating to the management of the premises in question or any part of them or (in the case of an obligation dependent on notice) would be in breach of any such obligation but for the fact that it has not been reasonably practicable for the tenant to give him the appropriate notice, and

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) that it is just and convenient to make the order in all the circumstances of the case;

(ac) where the tribunal is satisfied—

(i) that any relevant person has failed to comply with any relevant provision of a code of practice approved by the Secretary of State under section 87 of the Leasehold Reform, Housing and Urban Development Act 1993 (codes of management practice), and .

(ii) that it is just and convenient to make the order in all the circumstances of the case;

Hearing, submissions and evidence in respect of the substantive S24 application

20. Mr [NAME] has drawn the Tribunal’s attention to the fact that given the breakdown in the parties’ relationship the management company is unable to function and to discharge its obligations under the underleases. He outlined that Mr [APPELLANT] and [NAME] wished to see a more corporate approach adopted which enables the recovery of the costs expended by the management company, necessary works to the chimney and roof to be undertaken and the external redecoration of the Property.

21. Mr [NAME] contended that [NAME] and [NAME] [NAME] wished the management of the Property to be retained on a more informal basis. However, this is not working and Mrs [NAME] is currently unable to sell her flat because of the ongoing dispute. Mr [NAME] outlined that the position in respect of [NAME] [NAME] is unknown because she has failed to engage with these proceedings.

6 22. Mr [NAME] submitted that it is just and convenient to appoint a manager in these circumstances and indeed this is the only course of action open to enable the Property to be properly and effectively managed.

23. Mr [NAME] explained that the problems arose when the monthly service charge increased dramatically to £500 pcm. He had no issues with the general run of the mill monthly maintenance costs and expenditure but considered that significant costly items of repair should and needed to be discussed and agreed by the leaseholders.

24. [NAME] accepted the need for a manager to be appointed and was not opposed to the appointment of [NAME] [NAME]. [NAME] also now wanted matters to be put on a more formal basis, which he felt would introduce a professional distance between the parties and enable more effective consultation through the statutory S20 process.

25. [NAME] also helpfully confirmed that if [NAME] [NAME] is appointed that he would provide her with copies of the bank statements for the account that he has been paying his service charge monies into and that he would transfer the accumulated funds to [NAME] [NAME] to be incorporated into the Property’s service charge accounts.

26. Mr [NAME] then took the Tribunal through the proposed Management Order, which broadly mirrored the recommended draft order appended to the Tribunal Practice Statement but with a number of suggested amendments by the Applicant to address the specific circumstances in this case. Namely:

- Paragraph 5 sets out that the Management Order is seeking to address and resolve the historic dispute concerning the re-carpeting of internal common parts and the re-surfacing of the driveway, the necessity of works to the chimney stacks and external redecoration, and the level of future service charges. - Paragraph 6 provides for the creation of a sinking fund, the recovery of improvements in addition to repairs, setting budgets for service charge years prior to the appointment of the manager (by which the Tribunal took to mean the final service charge accounts for the preceding years) and the power to seek the recovery of service charges in respect of previous years. - Given that Mrs [NAME] is seeking to sell her flat, on enquiry from the Tribunal, all parties considered that it was sensible for paragraph 15 to be retained and that this power should be transferred to the Tribunal appointed manager, if appointed, so as to ensure that Mrs [NAME] can obtain all the necessary approvals required for the sale of her flat in a timely fashion.

27. Mr [APPELLANT] was clear that the Applicant was not necessarily seeking the creation of a sinking fund but simply considered that this was a sensible facility for any prospect Tribunal appointed manager to have, should they require it. The inclusion of the power to recover improvements was to ensure that Mr [NAME] and [NAME] [NAME] could not avoid contributing to cost of the carpets and the re-surfacing of the driveway on the grounds that the works constituted improvements and not repairs. Mr [NAME] was upfront that the purpose of this amendment was to avoid the possibility that these costs were not payable in the event that improvements are not recoverable under the terms of the leases.

7 28. Mr [APPELLANT] outlined that the Applicant was seeking a 3-year term of appointment for [NAME] [APPELLANT], which Mr [NAME] considered to be an appropriate period to remedy the issues identified and to enable relationships to be repaired.

Rule 13 submissions

29. The Applicant is seeking an order for Mr [APPELLANT] and [NAME] [APPELLANT] to pay a significant contribution to his costs pursuant to Rule 13(1)(b) of the 2013 Tribunal Procedure Rules, on the basis that they have acted unreasonably. Mr [NAME] cited the decision of [ADDRESS] Company (1985) [COMPANY] v Alexander [2016] UKUT 290 (LC) and invited the Tribunal to deal with costs on a summary basis to avoid the need for satellite litigation in respect of costs.

30. Mr [NAME] in his oral submissions referred the Tribunal to the detailed grounds he set out in the Applicant’s supplementary position statement. The crux of which was the lack of engagement by both [NAME] but particularly [NAME] [NAME] with these proceedings. This despite, as [NAME] contends, it being abundantly clear to all parties that the company was deadlocked and could no longer function to manage the property effectively. In the case of [NAME] Mr [NAME] asserts that it was unreasonable to wait until the eleventh hour before agreeing the draft management order and to the appointment of [NAME] [NAME].

31. Mr [COUNSEL] urged the Tribunal not to accept [NAME] solicitor’s “mea culpa” letter of 28 October 2022. He contended that it did not stand up to scrutiny nor did their claim that neither they nor [NAME] were in a position to respond until they had sight of the draft Management Order and the proposed manager’s Management Proposal.

32. Mr [NAME] referred the Tribunal to the minutes of a meeting between [NAME] and [NAME] [APPELLANT] on 4 October 2022 which were copied to Mr [APPELLANT] and [NAME]. These minutes refer to the Property being well managed and Mr [APPELLANT] acting in an unreasonable and disruptive fashion and describe his application to the Tribunal as being vexatious. Mr [NAME] contended that this constituted unreasonable behaviour on the behalf of Mr [APPELLANT] and [NAME] [APPELLANT] and given this, the Applicant was left with no alternative but to make this application to the Tribunal.

33. When asked as to the amount of costs being sought or the division of costs between [NAME] [NAME] and [NAME], Mr [NAME] did not wish to specify figures or percentages, preferring instead to leave this to the Tribunal’s discretion.

34. [NAME]’s solicitors have submitted in correspondence that any blame for delay rests wholly at their door and not [NAME]’s. However, they point out that the proposed manager’s detailed management plan and proposed budgets were only received by them on 13 October. SHL then wrote to [NAME] on the same day and met with him on 21 October and then wrote to the Applicant and the Tribunal on 24 October setting our [NAME]’s response. [NAME] accordingly opposes the cost application for these reasons.

8 35. [NAME] [NAME] has not made any submissions or representations in respect of the Applicant’s Rule 13 cost application.

[NAME] [APPELLANT] witness evidence

36. [NAME] [NAME] being unable to attend the hearing on 31 October gave her witness evidence by video on 14 November 2022. [NAME] [NAME] confirmed that she was willing to undertake the role and she acknowledged and understood that the Tribunal appointed manager role was a personal appointment rather than the appointment of her firm.

37. [NAME] [NAME] confirmed that she has no conflicts of interest and that she understood that as a Tribunal appointed manager she would be working independently of, but clearly in the interests of, all leaseholders but ultimately answerable only to the Tribunal. [NAME] [NAME] confirmed her standard fees as being £1,800 per annum and that she would operate in full compliance with the RICS Service Charge Code in all respects.

38. [NAME] [NAME] outlined to the Tribunal what her immediate priorities would be if appointed to the role, such as addressing existing fire safety issues and the dampness at the rear of the Property. [NAME] [NAME] also confirmed that her Professional Indemnity insurance cover was to £500,000 for a single claim.

Discussion

Section 24 application

39. It is accepted by all the parties that attended the hearing that the current position is untenable and that an external manager needs to be appointed. The Tribunal has determined that the possibility of consensual progress being made between the parties here to remedy the current position is next to nil, in respect of such matters as agreeing an appropriate monthly service charge, the repair works required and their prioritisation. The lessor management company is paralysed by lack of a majority view amongst its leaseholder directors and so is unable to take the necessary management actions required.

Accordingly, the Tribunal is no doubt that the necessary conditions required to warrant the appointment of a Tribunal manager exist. Namely, the lessor is unable to discharge its obligations under the leases and the Tribunal finds accordingly that the requirements of S24(2)(a)(i) are met and it is ‘just and convenient’ to make such an appointment under S24(2)(b).

40. Without a Tribunal appointed manager, the Tribunal fails to see how the Property will be properly managed and how the existing consequences for leaseholders, especially Mrs [NAME] inability to be able to sell her flat, can be remedied.

41. Having interviewed [NAME] [NAME], the Tribunal is satisfied that she is a suitable person to undertake this role. [NAME] [NAME] demonstrated a good understanding of the requirements and duties of the role. [NAME] [NAME] proposed fees of £1,800, her latest and higher service charge budget estimates, Professional Indemnity cover, management plan and prioritisation all appear reasonable.

9 42. The appointment of a Tribunal appointed manager is normally and mostly a forward-looking exercise. In this instance however the Tribunal accepts that a resolution is required in respect of the dispute concerning the carpets and the re-surfacing of the driveway. This goes to the very heart of the breakdown in the relationships between the leaseholders and in the absence of finally determining whether Mr [NAME] and [NAME] [NAME] are liable to contribute to these costs, or not, it is unlikely that the leaseholders and the management company will be able to function in the future without the external intervention of the Tribunal.

43. The Tribunal is however not persuaded by the Applicant’s suggestion to incorporate within the Management Order the explicit right to recover the costs of improvement works and that the power to create a sinking fund is the right course of action. The purpose of appointing a manager under S24 of the Act is to ensure that the Property is properly managed going forward and not to ensure the recovery of costs incurred by any means, irrespective of whether or not those costs are recoverable under the terms of the lease or by statute.

44. It is appropriate that the independent appointed manager is able to seek the recovery of outstanding service charges, if they consider these to be payable in accordance with the terms of the leases and statute, for example the S20 Consultation provisions under the Landlord and Tenant Act 1985 have been complied with. The Tribunal will incorporate that power within the Management Order and will also direct the Manager to decide, upon a review of the Leases, and to communicate to the Leaseholders whether she intends to seek the recovery of a 25% contribution from Mr [NAME] and [NAME] [NAME] in respect of the monies expended upon carpets and the new drive surface. All parties, [NAME] [NAME] as the appointed manager and the leaseholders, shall have the benefits and protection of S27A of the Landlord and Tenant Act should monies be pursued in respect of these costs. However, the Tribunal does not feel it is necessary or appropriate to make changes to the terms of the Management Order which could potentially alter the parties’ contractual liability at the date the disputed works were undertaken.

45. For similar reasons, the Tribunal is not persuaded of the need to establish a sinking fund. This goes beyond the existing terms of the Leases and we do not consider that the lack of a sinking fund inhibits the managers ability to effectively manage the Property. Should major and significant works be required, the manager is able to levy an appropriate service charge on completion of the usual S20 consultation requirements under the 1985 Landlord and Tenant Act. We are conscious that this application, while successful, is an application to appoint a manager to ensure the Property is properly managed going forward and not an application to vary the terms of the Leases. The term of any management order is usually relatively short lived before reverting back to the person or corporate entity with the contractual right to manage the Property in accordance with the terms of those Lease terms. We can see no material benefit in making the variations sought to the existing terms of the Leases and in fact this has the potential to cause confusion when the Management Order ceases. Not to mention the fact that this could potentially create a liability for parties that did not exist under the contractual lease terms. The Tribunal is not persuaded that this is just or right.

10 46. The Tribunal is therefore satisfied that it is just and convenient to appoint [NAME] [NAME] as the Tribunal appointed manager for the Property for the term of 3 years, as sought by the Applicant, on the terms of the attached Management Order. A 3-year period would appear to the Tribunal to be a sensible term to address the outstanding repair and liability issues, and hopefully allow sufficient time to resolve these matters such that the management company can take back the responsibility for managing the Property in 3 years’ time. Whether this be retaining the services of an external property manager or not.

Rule 13 Application

47. The Tribunal’s powers to make orders for costs are governed by rule 13 of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013. The general principle (set out in rule 13(1)(b)) is that the Tribunal may only make an order in respect of costs if a person has acted unreasonably in bringing, defending or conducting proceedings before the Tribunal. The application of rule 13 was considered and explained by the Upper Tribunal (Lands Chamber) in the case of [ADDRESS] Company (1985) [COMPANY] v Alexander [2016] UKUT 290 (LC). The correct application of the rule requires the Tribunal to adopt the following approach when determining an application for costs:

1. Is there a reasonable explanation for the behaviour complained of?

2. If not, then, as a matter of discretion, should an order for costs be made?

3. If an order for costs should be made, what should be the terms of that order?

48. While the Tribunal does understand the frustration of the Applicant in having to bring formal tribunal proceedings to achieve this outcome, as opposed to being able to resolve this matter by agreement, this is not in itself however tantamount to unreasonable behaviour on behalf of the Respondents. [NAME] [NAME] and [NAME] have engaged with these proceedings, albeit not to the extent that the Applicant would have liked. Even if both Respondents had completely ignored the application and declined completely to participate in the proceedings, this does not necessarily constitute unreasonable behaviour.

49. The Tribunal would similarly be slow to discourage parties from making late admissions or concessions for fear of it of this having adverse cost implications. While this may be a cause of frustration for the Applicant, nevertheless and in accordance with the decision of [ADDRESS], an essential first step or pre- condition must be that this conduct transgresses the line of reasonableness. As the following extracts from [ADDRESS] make clear, the test in assessing unreasonable behaviour is set at quite a high bar and even more so for a litigant in person.

“24. An assessment of whether behaviour is unreasonable requires a value judgement in which views might differ but the standard of behaviour expected of the parties ought not be set at an unrealistic level………….. It is not enough that the conduct leads in the event to an unsuccessful outcome. The test may be expressed in different ways. Would a reasonable person in the position of the party have conducted themselves in the manner complained of? Or Sir [NAME]

11 [NAME] “acid test”: is there a reasonable explanation of the conduct complained of?”

50. Given the manner in which this dispute arose, relating to the cost of the carpets and the re-surfacing of the driveway, we can understand why the Respondents were reticent to agree to appoint a manager suggested by Mr [APPELLANT]. It is not a question of whether they were right or wrong, merely was there a reasonable explanation for their actions. We consider there was. The disputed issue as to whether [NAME] [NAME] and [NAME] should contribute to the cost of the carpets and the re-surfacing of the driveway is inextricably linked with the S24 application to appoint a manager and absence of resolving this issue by agreement it is hard to see how either [NAME] [NAME] or [NAME] have acted in anyway unreasonable during the course of these proceedings. Both have engaged to varying degrees and indeed [NAME] has engaged legal representation. We can readily understand the Respondents initial reluctance to accept Mr [APPELLANT]’s proposed manager for fear of this affecting their potential liability for the disputed re-carpeting and driveway resurfacing works.

Accordingly, we fail to see how the Respondents conduct during these proceedings could be classed as being unreasonable. It is important to note that unreasonable conduct in the context of rule 13 is limited to conduct in bringing, defending or conducting the proceedings. The quality of any conduct by either Respondent leading up to these proceedings is immaterial.

51. For these reasons the Tribunal declines to make a Rule 13 Costs Order and the Applicant’s Rule 13 application is refused.

[NAME]. [NAME]

7 December 2022

FIRST-TIER TRIBUNAL [NAME] (RESIDENTIAL PROPERTY) Case Reference: MAN/00CA/LAM/2021/0006 Property: 37 [ADDRESS], [POSTCODE] Applicant: [redacted] Respondents: [redacted] (2) [NAME] (3) [NAME] (4) [NAME[NAME] The Manager: [NAME] Tribunal Members: Regional Surveyor N. Walsh Judge J. Holbrook Date of Order:

7 December 2022

MANAGEMENT ORDER

Interpretation

1. In this Order:

“The Property” means the flats and other premises known as 37 [ADDRESS], [POSTCODE] and registered at HM [NAME] title number MS152797 and shall include the building, outhouses, gardens, amenity space, drives, pathways landscaped areas, flower beds, passages, bin- stores, common parts, storage rooms basements, electricity and power rooms; and all other parts of the property.

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

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

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

“The Manager” means [NAME], [NAME]) [COMPANY], 54 [ADDRESS], [POSTCODE].

“The Tribunal” means the First-tier Tribunal ([NAME]).

ORDER

In accordance with section 24(1) of the Landlord and Tenant Act 1987 (“the Act”) [APPELLANT] of [NAME]) [COMPANY], 54 [ADDRESS], [POSTCODE] is appointed as Manager of the Property.

The Manager’s appointment shall start on 1 January 2023 (“the start date”) and shall end on 31 December 2025 (“the end date”).

For the avoidance of doubt this Order supplements but does not displace covenants under the Leases and the 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.

The purpose of this Management Order is to provide for the management of the Property which includes taking steps to resolve the following problems of inadequate management identified by the tribunal:

A dispute between the Tenants as to the liability of [NAME] and [NAME[NAME] to contribute to the costs incurred personally by [APPELLANT] and [NAME] in undertaking works to re-carpet common areas and re-surface the driveway to the Property.

A dispute between the Tenants as to the necessity for repairs to be undertaken to chimney stacks and the exterior of the Property to be painted.

A dispute between the Tenants as to the appropriate level of contribution to be made in order to allow the Landlord to fulfil its obligations pursuant to the Leases.

To address the problems identified in the previous paragraph the Manager is empowered to:

Create service charge accounts and budgets and make consequent demand of and collect in from each Tenant their respective 25% proportionate share of any such service charge, for which purpose the service charge year shall run from the date of the Manager’s appointment.

Create final service charge accounts for any year pre-dating the Manager’s appointment.

Determine whether demands, in accordance with the terms of the Leases, should be made of Tenants to make payment in respect of works which have already been carried out and if so in what amount, and to collect such amounts.

Take such steps as may be necessary from time to time to compel payment of service charges by the Tenants.

Take such steps as may be required to utilise monies collected by way of service charge for the performance of the Landlord’s obligations pursuant to the Leases.

The Manager shall manage the Property in accordance with:

• the terms of this Order and the Directions set out below; • the respective obligations of the Landlord and the Tenants under the Leases whereby the Property is demised by the Landlord (save where modified by this Order); • 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 (“RICS”) and approved by the Secretary of State pursuant to section 87 Leasehold Reform Housing and Urban Development Act 1993 (whether the Manager is a Member of the RICS or not); and • the provisions of sections 18 to 30 of the Landlord and Tenant Act 1985.

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 the responsibility of the Manager under this Order.

The tribunal requires the 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.

The 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.

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 Manager’s appointment will continue until that application has been finally determined.

The Manager is appointed to take all decisions about the management of the Property necessary to achieve the purposes of this Order. If the Manager is unable to decide what course to take, the Manager may apply to the Tribunal for further directions, in accordance with section 24(4) of the Act. Circumstances in which a request for such directions may be appropriate include, but are not limited to:

a serious or persistent failure by any party to comply with an obligation imposed by this Order;

circumstances where there are insufficient sums held by the Manager to discharge their obligations under this Order and/or for the parties to pay the Manager’s remuneration; and

where the Manager is in doubt as to the proper construction and meaning of this Order.

Contracts

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 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 Manager, save that:

the Landlord shall indemnify the Manager for any liabilities arising before commencement of this Order; and the 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.

The 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 and pre-contract enquiries

The Manager shall be responsible for carrying out those functions in the residential Leases concerning approvals and permissions, including those for sublettings, assignments, alterations and improvements, that the Leases provide should be carried out by the Landlord.

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

Legal Proceedings

The 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 her appointment.

Such entitlement includes bringing proceedings in respect of arrears of service charge and rent attributable to any of the 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.

The 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

The Tenants are responsible for payment of the Manager’s fees, which are payable under the provisions of this Order and which may be collected under the service charge mechanisms established by this Order.

The sums payable are:

an annual fee of £450 per flat for performing the duties set out in paragraph 3.4 of the RICS Code (so far as applicable); and VAT on the above fees.

Ground Rent and Service charge

The Manager shall collect the ground rents payable under the residential Leases. The Manager shall collect all service charges and insurance premium contributions payable under the Leases or in accordance with the terms and mechanisms in this Order.

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

• demand payments in advance and balancing payments at the end of the accounting year; and • alter the accounting year and to collect arrears of service charge and insurance that have accrued before her appointment.

The 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.

The Manager is entitled to recover 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

The Manager may recover administration charges from individual Tenants for her costs incurred in collecting ground rent, service charges and insurance which includes the costs of reminder letters, 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.

Disputes

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 Manager and litigation costs incurred by the Manager), a Tenant, or the 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.

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 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.

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

In the event of a dispute regarding the reimbursement of unexpended monies at the end of the Manager’s appointment, the Manager, 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 LANDLORD

The Landlord must comply with the terms of this Order.

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 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. The Landlord shall give all reasonable assistance and co-operation to the 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 the Manager’s said rights, duties or powers except by due process of law.

The Landlord is to allow the Manager and their employees and agents access to all parts of the Property and must provide keys, passwords, and any other documents or information necessary for the practical management of the Property in order that the Manager might conveniently perform their functions and duties, and exercise their powers under this Order.

Within 14 days from the date of this Order the Landlord must provide all necessary information to the Manager to provide for an orderly transfer of responsibilities, to include the transfer of:

all accounts, books and records relating to the Property, including a complete record of all unpaid service charges; and all funds relating to the Property including uncommitted service charges and any monies standing to the credit of a reserve or sinking fund.

DIRECTION TO [NAME]

To protect the direction in paragraph 33 for procurement by the Landlord, of a direct covenant with the Manager, the Registrar is ordered to enter the following restriction in the register of the Landlord’s estate under title no MS152797. The restriction is to have overriding priority against any search with priority or pending application for a

disposition of the registered estate (other than a charge) that has been lodged after the 5 December 2022.

“No disposition of the registered estate (other than a charge) by the proprietor of the registered estate, or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be completed by registration without a certificate signed by the applicant for registration or their conveyancer that the provisions of paragraph 33 of an Order of the Tribunal dated 5 D e c e m b e r 2 0 2 2 have been complied with”.

DIRECTIONS TO MANAGER

The Manager must adhere to the terms of the Order above. Registration The Manager must make an application to HM [NAME] for entry of the restriction referred to in paragraph 37, within 14 days of the date of this Order.

Conflicts of Interest

The 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 Manager should apply to the Tribunal for directions.

Complaints

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

Insurance

The Manager must maintain appropriate building insurance for the Property and ensure that the Manager’s interest is noted on the insurance policy.

From the date of appointment, and throughout the appointment, the Manager must ensure that she has appropriate professional indemnity insurance cover in the sum of at least £500,000 and shall provide copies of the certificate of liability insurance to the Tribunal, and, upon request, to any Tenant or the Landlord. The Certificate should specifically state that it applies to the duties of a Tribunal appointed Manager.

Accounts

The Manager must:

prepare and submit to the Landlord and the Tenants 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;

maintain efficient records and books of account and produce these for inspection, to include receipts or other evidence of expenditure, upon request by the Landlord or a Tenant under section 22 Landlord and Tenant Act 1985;

maintain on trust an interest-bearing account at such bank or building society as the

Manager shall from time to time decide, into which ground rent, service charge contributions, Insurance Rent, and all other monies arising under the Leases shall be paid; and hold all monies collected in accordance with the provisions of the Code.

Repairs and maintenance

The Manager must:

by the start date draw up a planned maintenance programme 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 Tenant and to the Landlord;

subject to receiving sufficient prior funds:

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.

arrange and supervise any required major works to the Property, including preparing a specification of works and obtaining competitive tenders.

liaise with all relevant statutory bodies in the carrying out of their management functions under the Order; and

ensure that the Landlord, and the Tenants, are consulted on any planned and major works to the Property and to give proper regard to their views.

The Manager has the power to incur expenditure in respect of health and safety equipment reasonably required to comply with regulatory and statutory requirements.

Reporting

By no later than six months from the date of appointment (and then annually) the Manager must prepare and submit a brief written report to the Tenants, 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

No later than 56 days before the end date, the Manager must:

apply to the tribunal for directions as to the disposal of any unexpended monies; 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

seek a direction from the tribunal as to the mechanism for determining any unresolved disputes arising from the Manager’s term of appointment (whether through court or tribunal proceedings or otherwise).

Unless the tribunal directs otherwise the Manager must within two months of the end date:

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 14 days; and

answer any such queries within a further 14 days.

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