Convent Court, Hatch Lane, Windsor, Berks, SL4 3QR CAM/00ME/LAM/2023/0004

FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No CAM/00ME/LAM/2023/0004
Between
Dr Violet Leavers and othersApplicant1.Salters Investments Ltd 2.Freehold Prime Investments LtdRespondent
Before
Tribunal Judge S EvansMrs M Hardman FRICS IRRV(Hons)Stephen Willmer, Counsel for the ApplicantDate 28 May 2024Property: Windsor, Berks, SL4 3QRType of application: a Manager pursuant to s.24 Landlord and Tenant Act 1987 Tribunal Judge S Evans

DECISION

[1]The Application for an appointment of a manager is granted.[2]Ms Sarah Cleaver is appointed manager of the Property for an initial period of 2 years from 28 May 2024 on the terms of the Management Order attached to this decision.[3]There shall be a s.20C order in favour of the Applicants, to the extent that 50% only of the Respondents’ costs incurred in these proceedings are to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Applicants.

REASONS

[1]The Application before the Tribunal is an application for the appointment of a manager, pursuant to section 24 of the Landlord and Tenant Act 1987.[2]As the parties have now effectively agreed all issues save for the Applicants’ application for an order under s.20C of the Landlord and Tenant Act 1985, the facts can be briefly stated.[3]The Property, Convent Court, as it names suggests, is a former Grade II religious institution which was converted in about 2005 into about 78 luxury flats.[4]On 27 March 2023 the lead Applicant, Dr Leavers of flats 24 and 78, applied for a fault-based management order, on the grounds that the landlord (in her application the First Respondent) had not insured the building until 26 January 2023, had not issued correct service charge demands, had proposed an unreasonable service charge increase, and left insufficient funds in the service charge accounts for daily expenses. Last but not least, she alleged that there was no suitably qualified managing agent for the Property, in breach of lease terms.[5]At this time, the Management Company under the Lease was CM 2005 Ltd, formerly known as Convent Management Ltd. However, it seems that Cleaver Property Management Ltd (CPML) had taken over management informally at one stage.[6]Hence the Applicants sought to have Miss Cleaver of CPML appointed as the Manager on this Application. 3[7]The Applicants relied in support of their Application on a s.22 notice under the 1987 Act, served on the First Respondent on 20 February 2023, citing many of the above breaches.[8]On 21 June 2023 CPML’s services were terminated by the landlord, and a body called Olanberg took over, it seems.[9]On 18 September 2023 the Management Company under the Lease, CM 2005 Ltd, entered into an agreement with a managing agent called HLM Property Management for the latter to manage the Property.[10]On 3 October 2023 the Tribunal gave directions. The issues identified by the Tribunal for determination were:(1) Is the preliminary notice compliant with section 22 of the 1987 Act; or if not, should dispensation be given?(2) Have the Applicants satisfied the Tribunal of the grounds for making an order, as specified in section 24(2) of the Act?(3) Is it just and convenient to make a Management Order?(4) Would the proposed Manager be a suitable appointee and, if so, on what terms, and for how long should the appointment be made?(5) Should an application be granted pursuant to s.20C of the Landlord and Tenant Act 1985?[11]On 31 October 2023 the Applicants commenced proceedings in the County Court alleging that they had been denied the right of first refusal to the Property, on the grounds that the First Respondent had conveyed the freehold to the Second Respondent on or about 13 April 2022. It is understood that the Second Respondent’s position is that the First Respondent should have always remained the legal and beneficial owner of the Property, and that the Respondents are seeking rectification of the register in that regard.[12]The agreement reached in these Tribunal proceedings is said to be without prejudice to the Applicants’ attention that they are entitled to exercise the right of first refusal and the Respondents’ counter contention that the applicants are not so entitled.[13]In January 2024 CM 2005 Ltd was dissolved. The Respondents say that they are in the process of restoring it to the register of companies.[14]As to these proceedings, the parties have exchanged cases and evidence, and the matter was listed for hearing on 30 January 2024.[15]On 12 April 2024, HML ceased to act as manager, when it terminated its contract, for alleged lack of service charge funds, the Applicants having 4 represented that the service charge demands sent were so defective that no payments were due. The First Hearing[16]The first hearing was held remotely but beset with connection problems. It did not get properly underway until past noon. The Applicants, through counsel, wished to make use of the remaining time and, if necessary, go part heard. The Respondents, by its counsel, preferred an adjournment. The Tribunal, separately, was concerned that the parties were appearing to sidestep the issue of whether a valid s.22 notice had been served on the right party or parties, given the issues over who the freeholder was at the date of service of the notice (and the parties being unable even to agree the date of transfer of the freehold).[17]The Tribunal therefore decided to grant the Respondents’ application to adjourn the hearing to another date, and made directions for the parties to file and serve evidence as to who the landlord was for the purposes of s.22, at the time of service, whether there was any other relevant person who should have been served, and whether the Tribunal should dispense with service if need be. The Second Hearing[18]Following the hearing the parties filed and served the evidence ordered, and the matter was listed for a second hearing on 14 May 2024. On the Friday before the hearing, the Respondents wrote to the Applicants to inform them they did not oppose jurisdiction, nor did they oppose the making of Management Order appointing Miss Cleaver as Manager.[19]On the day before the hearing, the Applicants served on the Respondents a draft Management Order, which was filed with the Tribunal shortly before the hearing commenced at 10am.[20]The Applicants were represented by Mr Bowker of Counsel, and the Respondents by Mr Stimmler of Counsel. We are grateful to them both for their helpful oral submissions and written skeleton arguments.[21]With Counsel’s assistance, and after allowing some time for discussions between them, the issues set out in paragraph 10 above could be narrowed. The Respondents did not take issue with service of the s.22 Notice on the First Respondent only. In addition, no argument was advanced by the Respondents as to the appointment of Ms Cleaver as Manager, or her suitability, subject to any questions the Tribunal might have. The draft Management Order was largely agreed. The parties agreed that the Tribunal would be invited to make the order on the grounds contained in s.24(2)(b) of the 1987 Act only. 5[22]The Tribunal indicated it would have some questions for Ms Cleaver, and would need assistance from Counsel as to why the Tribunal should appoint a Manager, given the parties were already agreed on that course of action.[23]Mr Bowker for the Applicants called Ms Cleaver, and with care (and with the permission of the Tribunal) asked her to confirm her professional qualifications, her willingness to be appointed personally as the Manager, and to confirm she had adequate insurance of at least £2M. She was asked whether she had read the draft order and could operate under its terms. Ms Cleaver answered all these questions positively. Mr Stimmler had no questions for Ms Cleaver.[25]The Tribunal asked Ms Cleaver if she were an appointed manager elsewhere. She confirmed she was not.[26]The Tribunal asked Miss Cleaver to confirm that she was aware that she personally would be the appointed manager, and not CPML. She said she was aware.[27]The Tribunal asked Ms Cleaver what made her think the issues concerning reapportionment of service charges could be resolved with her assistance. There were 3 flats which were not being billed under the current provisions. She made it clear she would work with legal advisors to achieve this.[28]She was asked how confident she was that the leaseholders would now pay their service charges. She answered that she was not sure how to phrase it, but most leaseholders were looking for CPML to return, and they were aware that there cannot be management without funds. The FTT proceedings had also been contributory to the service charges not being paid, and the reapportionment issue.[29]Ms Cleaver considered that a planned maintenance programme was realistic with an additional month being afforded, i.e. by the end of July 2024.[30]In relation to her experience of larger estates, Miss Cleaver informed the Tribunal that this was not the largest development managed by CPML; it was the third largest. She accepted that she had certain concerns, in that 25 of the units were Respondent-owned/controlled, and that they had prepayment meters, which was not the case with the other units. However, those concerns were based on her historical experience, and she needed to further understand the situation.[31]She was asked what she would do if service charges were not paid. She stated that she believed the Management Order would allow her to enforce collection through the Tribunal or elsewhere. 6[32]She was aware that major works were required to the roof and windows. She was uncertain whether there was a reserve fund. There had been a building survey in 2020 which gave a works estimate in the sum of £660,000, which she considered to be closer to £800,000 to £850,000 in today's money.[33]As to whether it was just and convenient to make an order, Mr Bowker took the Tribunal to various photographs showing the condition of parts of the Property in January 2024. These showed defects such as potholes, slipped tiles, a broken fountain, and damp ingress in some areas. He contended there had been long term lack of maintenance, crossing over the line of what might be expected in terms of routine maintenance. Quite simply, he contended, the Property was an unpleasant place in which to live.[34]Mr Bowker pointed to the Management Agreement between CM 2005 Ltd and HLM Property Management, and in particular its Schedule of Services, the very first paragraph of which set out a duty to collect in the service charges. This had not been done, whatever the reason.[35]He accepted there was an issue over reapportionment of service charges, although both parties considered this might be capable of resolution.[36]As to whether it was just and convenient to make the Order rather than simply allow the parties to contract to do it consensually, Mr Bowker emphasised that the Respondents had tried a normal contractual relationship with managing agents, and it had not worked. The right to sue over previous debts had not been exercised. A Management Order would give the necessary “bite” to ensure that both parties complied with their obligations to pay and collect service charges. The draft Management Order provided that in any conflict between the Lease and the Order, the Order will take precedence. Having the Order will, simply, carry an enormous amount of weight.[37]Mr Bowker confirmed that on an open basis he had informed Mr Stimmler that Ms Cleaver had indicated that she would not be prepared to manage the Property on a simple contractual basis, without a Management Order being made by this Tribunal.[38]The Respondents’ counsel’s skeleton argument accepted that during the First Respondent’s tenure mistakes have been made in the management of the Property, but these issues had been remedied, and the Applicants would have been unlikely to have obtained a Management Order were HLM still in situ.[39]Mr Stimmler represented that the lease does contemplate reapportionment and HLM had tried to resolve the issue, but the Applicants had opposed it on the basis of the calculation of square footage involved. He confirmed that the Respondents were not saying the matter could not be resolved; to 7 the contrary, there was a reasonable expectation it could be, and if not a section 27A application could always be made.[40]As to the prepayment meters, Mr Stimmler emphasised that the 25 flats mentioned were owned not by the Respondents but by associated companies; a proposal by the Respondents that there be prepayment meters across the board had been opposed by the leaseholders. He was uncertain precisely what the real issue was, because there ought to be separate bills, but there might be an issue over the standing charge. However, the Respondents fully accepted that it was within the manager's powers to apply for a resolution of that issue.[41]Regarding non payment of service charges, Mr Stimmler contended that fact cut both ways. The Applicants had not paid their charges. They said the demands were defective. There were no funds left. HLM had left accordingly. Clearly, there had been a breakdown in relationship between the Applicants and the Respondents. The management order was going to have force in respect of all interested parties.[42]The Respondents accepted that there was building work to be done, although it was disputed that the degree of works was as high as represented by Mr Bowker.[43]CPML had been instructed previously on an ad hoc basis, and the Respondents had been informed that Ms Cleaver was not prepared to be instructed on my contractual basis. Getting a third party now to manage was something in which there could be little confidence. The Respondents were therefore somewhere between a rock and a hard place. Determination (1) Is the preliminary notice compliant with section 22 of the 1987 Act; or if not, should dispensation be given?[44]The Tribunal is satisfied that the section 22 Notice was valid in form and validly served on the First Respondent. The parties agree. (2) Have the Applicants satisfied the Tribunal of the grounds for making an order, as specified in section 24(2)(b) of the Act? Is it just and convenient to make a Management Order?[45]It was also not in dispute that the grounds for making an order were made out pursuant to s.24(2)(b). However, the decision is for this Tribunal.[46]We agree that it is just and convenient to make a Management Order, for a combination of reasons. First and foremost, the history of management of this Property is chequered. There has been a clear breakdown in relationship between the various managers and the Applicants over recent years. Allegations of fault have been levelled from both sides. There are no 8 service charge funds, and the parties are at a precipice. Whilst there is a temporary and welcome ceasefire, a relapse in relations is entirely possible without an order. We agree that the “bite” of a Management Order will assist to restore the balance of order in a general sense; and there is a need here for the Manager to have the authority of an appointment, even though the landlord could simply proceed to contract with CPML. A similar situation called for a Management Order in the case of Opie v Kyriacou, LON/00BE/LAM/2009/0016, according to Service Charges & Management at para. 21-46 (in Mr Bowker’s bundle of authorities).[47]Secondly, and in a similar vein, we consider that the prospects of obtaining yet another manager for this Property on a purely contractual basis would be extremely problematic, and take a disproportionate time, against the deteriorating state of the Property and the other outstanding issues. (3) Would the proposed Manager be a suitable appointee and, if so, on what terms, and for how long should the appointment be made?[48]Ms Cleaver’s lack of experience as an appointed manager cannot be an impediment; otherwise no proposed manager could ever be appointed for the very first time.[49]We take at face value her positive affirmations (paragraphs 23 and 26 above). We were concerned at one stage that she may have underestimated the challenge she faces in this case, but that concern has been assuaged, given the parties’ pledges of assistance and this Tribunal’s ability to exercise appropriate oversight.[50]We considered the draft Management Order largely agreed between the parties and scrutinised the paragraphs which depart from the “standard” draft. We are satisfied that the latest terms, since filed with the Tribunal, and annexed to this decision, are appropriate and workable, save for(a) the addition of the word “reasonable”, which we have inserted before the word “payment” in paragraph 8(2), for reasons of protection of the leaseholders from whom additional sums may be demanded from time to time;(b) the removal of paragraph 21 for the same reasons;(c) a change of date in paragraph 39 to today’s date.[51]As to duration, we agree that 2 years should be the initial appointment. (4) Should an application be granted pursuant to s.20C of the Landlord and Tenant Act 1985?[52]As to s.20C of the 1985 Act, Mr Bowker contended that the Applicants had succeeded on their Application. It would not be fair, to use his words, for the Applicants to pick up the landlord’s bill. The application for 20C had been prefaced in the Applicants’ Counsel’s skeleton argument for the first hearing. The arguments came as no surprise to the Respondents. 9[53]Mr Stimmler responded to say that the lack of a formal application under s.20C was a complete answer to the issue. He contended that the Tribunal’s decision to make a Management Order would be made ultimately on a non-fault basis. He contended that when HLM had been appointed, they had faced real difficulties, in particular resistance from the Applicants in making payment of service charges, which had ultimately led to HLM stepping down. The current situation could not all be squarely laid at the Respondents’ door.[54]In Tenants of Langford Court v Doren Ltd (LRX/37/2000), HHJ Rich held: "In my judgement the only principle upon which the discretion should be exercised is to have regard to what is just and equitable in all the circumstances. The circumstances include the conduct and circumstances of all parties as well as the outcome of the proceedings in which they arise…………In my judgement the primary consideration that the LVT should keep in mind is that the power to make an order under section 20C should be used only in order to ensure that the right to claim costs as part of the service charge is not used in circumstances that makes its use unjust. Excessive costs unreasonably incurred will not, in any event, be recoverable by reason of s.19 of the Landlord and Tenant Act 1985. Section 20C may provide a short route by which a Tribunal which has heard the litigation giving rise to the costs can avoid arguments under s.19, but its purpose is to give an opportunity to ensure fair treatment as between landlord and tenant, in circumstances where even although costs have been reasonably incurred by the landlord, it would be unjust that the tenant or some particular tenant should have to pay them."[55]The Tribunal determines that a formal application was not necessary. The issue was indicated in the directions, and prefaced in the Applicants’ first skeleton argument.[56]Otherwise, we agree, to an extent, with both positions. The Applicants have been successful, but we cannot overlook the fact the Applicants’ nonpayment of service charges has led in part to the current absence of a manager, and that the Tribunal is invited to proceed on what is ultimately a non-fault basis (as a matter of good sense and practicality).[57]We consider that it would be just and equitable to make the following order. There shall be a s.20C order in favour of the Applicants, to the extent that 50% only of the Respondents’ costs incurred in these proceedings are to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the Applicants. Parting points 10[58]There was no application made for the application and hearing fees; and we would have made no order for the same in any event.[59]As to any Rule 13 costs, which were mooted in written arguments but not pursued in the hearing, but reserved for later, we reminded the parties of Willow Court Management Co. Ltd v Alexander [2016] UKUT 0290 (LC), in which the Upper Tribunal considered the power under Rule 13(1)(b) of the procedural Rules 2013 to award costs on basis of unreasonable behaviour. The Upper Tribunal at para. 43 had observed that Rule 13 applications should not be regarded as routine, that submissions are likely to be better framed in the light of the Tribunal's decision rather than in anticipation of it, and that applications made before the decision is available should not be encouraged.[60]We therefore need say no more than this, in the unlikely event the parties wish to take this further. Willow Court informs us that unreasonable conduct is a precondition of the power to award costs. This first stage is application of an objective standard of conduct, not an exercise of discretion. In paragraph 25 of Willow Court, the Upper Tribunal considered it improbable that (without more) the examples urged upon it would justify making an order under the Rule; the examples given (in para. 23 of the decision) included a party who fails to prepare adequately for a hearing, who fails to reduce proper evidence in support of their case, who fails to state their case clearly, or who seeks a wholly unrealistic or unachievable outcome. In paragraph 26 of Willow Court, the Upper Tribunal considered that Tribunals should not be overzealous in detecting unreasonable conduct after the event.[61]With those parting thoughts, we are grateful to the parties for making the Tribunal’s task in this case easier. They are to be commended for reaching consensus on many matters, not least the terms of the draft Management Order, which we have largely approved. Judge: S J Evans Date: 28/5/24 ANNEX – RIGHTS OF APPEAL[1]If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) then a written Application for permission must be made to 11 the First-Tier at the Regional Office which has been dealing with the case.[2]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.[3]If the Application is not made within the 28-day time limit, such Application must include a request to 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.[4]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. --- decision_2.pdf --- © CROWN COPYRIGHT 2025 FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/00ME/LAM/2023/0004 Property : Convent Court, Hatch Lane, Windsor SL4 3QR Applicant : Dr Violet Leavers and others Respondents : Salters Investments Ltd[2]Freehold Prime Investments Ltd Representative : Stephen Willmer, Counsel Type of application : Appointment of Manager Tribunal members : Judge K. Saward Mrs M. Hardman FRICS IRRV (Hons) Date of hearing : 20 January 2025 Date of decision : 27 January 2025 DECISION AND REASONS 2 Decisions of the Tribunal[1]The Management Order dated 28 May 2024 (and varied on 9 September 2024) is further varied at paragraph 8(1) so as to permit the Manager to demand in writing from each of the Tenant’s a preliminary payment of up to £3,500.00, of which sum £500.00 is to be allocated to the fees of the Manager and Cleaver Property Management Limited incurred in carrying out the terms of the Order.[2]The Tribunal directs the Manager to apportion the service charges for Flats 98, 99 and 100 in accordance with their square footage. For these purposes, Flat 98 is 356 square feet, Flat 99 is 364 square feet and Flat 100 is 507 square feet. Notwithstanding that the Tribunal makes no decision on liability (being outside the scope of this decision) the apportionment for Flats 98, 99 and 100 is to be applied with effect from 13 April 2022, and any necessary adjustments to the service charges be made accordingly.[3]The Manager should exercise her own judgement over the number of flats within the Property that the service charges are to be apportioned to.[4]The Tribunal directs the Manager to proceed to raise service charges for 2023 and 2024 based upon the information provided, albeit incomplete.[5]The Tribunal directs the Respondents to provide the appointed Manager with information on the source of energy supply to Flat 100 within 14 days of the date of this Decision. REASONS Background[6]By a Decision dated 28 May 2024, the Tribunal appointed Sarah Cleaver of Cleaver Property Management Limited (“CPM”) as manager of the property at Convent Court, Hatch Lane, Windsor (“the Property”) for an initial period of 2 years. The appointment was made under section 24(1) Landlord and Tenant Act 1987 and followed an application made by Dr Leavers and other leaseholders at the Property.[7]The Property is a former convent converted into a residential development between 2001 and 2007 and let on long leases. On 1 January 2007 CPM became managing agents until the appointment was terminated on 21 June 2023. HLM Property Management (‘HLM’) were subsequently appointed managing agents with effect from 18 September 2023. They resigned on 14 April 2024.[8]As the appointed manager, Ms Cleaver must manage the Property in accordance with the Management Order appended to the Tribunal’s Decision. The Management Order includes directions to the landlord, 3 Freehold Prime Investments Limited (or its successors), to comply with the terms of the Order.[9]Since appointment, Ms Cleaver contends that:-(1) documents are outstanding from the landlord in breach of the direction at paragraph 37(1) of the Management Order requiring the transfer of “all accounts, books and records relating to the Property, including a complete record of all unpaid service charges”; and(2) there is non-compliance with paragraph 35 of the Management Order, which directed the landlord to “give all reasonable assistance and co-operation to the Manager in pursuance of their functions, rights, duties and powers under this Order.”[10]Ms Cleaver has sought further directions from the Tribunal.[11]A remote case management hearing took place on 9 September 2024 whereupon the Tribunal varied paragraph 8(1) of the Management Order to permit the Manager to demand in writing from each tenant a preliminary payment of up to £2,000. At the same time, directions were issued in readiness for a remote hearing on 4 November 2024.[12]By agreement of all parties, the Manager was directed to provide a witness statement supporting the contention that the landlord has breached paragraph 37, including details of documents received and those not received. The Respondents were directed to provide a witness statement supporting their contention that paragraph 37(1) has not been breached. They were also directed to provide the percentage apportionment of maintenance expenses for all flats within the Property.[13]In furtherance of those directions, the Tribunal received a witness statement from Ms Cleaver dated 23 September 2024 and a witness statement dated 24 October 2024 from Nadeem Naz, who identified himself as a director of the First Respondent with authority to make the statement for both Respondents.[14]The hearing scheduled for 4 November 2024 was opened and adjourned that day without evidence being heard. Case management directions were issued on 8 November 2024. Pursuant to those directions, Ms Cleaver submitted a further witness statement erroneously dated 22 October 2024 instead of 22 November 2024. The Respondents’ response dated 23 December 2024 is signed by their Solicitors.[15]Dr Leavers also provided a witness statement dated 3 December 2024 along with another statement submitted on 7 January 2025 responding to the Respondents’ Solicitors. 4[16]Following the adjourned hearing on 4 November 2024, the Tribunal wrote to HLM on 18 November 2024 forewarning that the Tribunal was minded to make a direction adding HLM as a party to these proceedings. Anticipating this may be unnecessary, the Tribunal firstly directed HLM, under Rule 6(3)(d) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 (“the 2013 Rules”), to complete a schedule of documents which Ms Cleaver had stated to be critical or high priority. The deadline for return of the completed schedule to the Tribunal (with copy to the parties) was 2 December 2024. The completed table was returned by HLM with copies of documents within their possession, albeit not all the requested information. In the circumstances, it would serve no purpose to add HLM to the proceedings. The hearing[17]The resumed hearing took place by Cloud Video Platform on 20 January 2025. Ms Cleaver was represented by her Solicitor, Cassandra Zanelli. Although Ms Cleaver was present, Ms Zanelli asked that Ms Cleaver be allowed to observe only due to illness. Dr Leavers attended and answered questions from the Tribunal.[18]Mr Stephen Willmer appeared for both Respondents. Mr Willmer indicated that he wished to call Mr Naz to give evidence and answer questions. Whilst Mr Naz was present for the start of the hearing, he disappeared early in the proceedings. When he re-joined by mobile phone, Mr Naz said he had a low battery. There was a lot of background noise and after briefly answering a question from the Tribunal, Mr Naz lost connection again. The Tribunal adjourned for a short period to allow Mr Naz opportunity to rejoin from a suitable location with reliable connection. Upon resumption, Mr Willmer advised that Mr Naz did not think that he would participate further. There was no application for adjournment, and the hearing proceeded.[19]The procedure adopted by the Tribunal was to take the main issues identified in Ms Cleaver’s last witness statement as the framework for the hearing, namely;(1) service charge apportionment;(2) service charge billing;(3) issues relating to time limits for service charge demands;(4) utility billing;(5) outstanding documentation; and(6) application for further variation of the Management Order.[20]This decision follows the same approach. For the avoidance of doubt, issues concerning ground rent and whether the Respondents are owed 5 sums for buildings insurance are not before this Tribunal. The scope of this decision arises from the Management Order made under section 24(4) of the 1987 Act and Ms Cleaver’s application for further directions on matters relating to the exercise of her functions under the Order and incidental/ancillary matters. Service charge apportionment[21]By the time of the hearing the Respondents had confirmed agreement, via their Solicitors, that the service charge be apportioned on the basis of square footage of the flats. This is reflected in how the leases are drawn. At the outset, Mr Willmer reaffirmed that the principle of apportionment is not in dispute.[22]Ms Cleaver seeks clarification on:(1) the number of flats that the service charge is to be apportioned between; and(2) the square footage for numbers 98, 99 and 100. Number of flats[23]The issue over numbers arises because of the creation of 3 leases for numbers 98, 99 and 100, all dated 13 April 2022. Ms Cleaver thought there were 79 flats, there being 80 leases registered with HM Land Registry, one of which is for a chapel. The Respondents had stated there were 83 flats, but Mr Willmer said this was a typographical error and he was instructed there are 81 flats. Dr Leavers specified 78 flats because she believes numbers 10a and 100 are the same flat.[24]During Mr Naz’s brief participation, he told the Tribunal that number 100 is the chapel. He disappeared before he could be questioned further on his answer which is wholly inconsistent with the response filed by the Respondents’ Solicitors. It identifies numbers 98, 99 and 100 all as “the new flats”. This appeared to correspond with Mr Willmer’s instructions who explicitly referred to leases granted over 3 additional flats.[25]The Tribunal finds it extraordinary how it cannot be known how many flats there are within a building. It is a question of fact that the Tribunal cannot answer. The Tribunal has considered directing that the Respondents and Ms Cleaver attend the Property to count the flats, but it has concerns over further delays and whether the question would remain unresolved. Essentially, the Manager needs to make a decision on the information available.[26]The Tribunal notes that the Schedule prepared by Ms Cleaver appended to her last witness statement for January 2023 identifies 79 flats (including 10a) but omitting number 100. Mr Naz was not present to clarify whether number 100 replaced 10a, and Mr Willmer did not have instructions. Given these factors and there are 80 registered leases, the Tribunal suggests (as a steer to assist in the progression of this matter) that 80 flats would be a prudent number to apply at this time. If 6 challenged, any further evidence can be considered through the process under section 27A of the Landlord and Tenant Act 1985. Floorspace[27]None of the figures put forward for the square footage of numbers 98, 99 or 100 correspond. The information provided by the Respondents Solicitors is that: “The square footage of flat 98 is 409 square feet; flat 99 is 376 square feet; and flat 100 is 430 square feet.” This is not within a witness statement, a representative being unable to provide a witness statement under Rule 14(3)(a) of the 2013 Rules. Mr Willmer acknowledged that unless Mr Naz was cross-examined, the stated figures could only be taken as a “bare assertion”. The Tribunal has no information at all on how the figures were calculated.[28]As it so happened, Mr Willmer was able to obtain instructions from Mr Naz during the adjournment on this one item to accept the figures quoted by Ms Cleaver from Foxtons letting agents. The agents had advertised both Flats 98 and 99 as being 491 square feet. It does not necessarily follow that internal measurement were undertaken, and that cannot be assumed. It appears odd that both flats are given as the same size when the Respondents indicated a notable difference between the two flats. Flat 100 is not being advertised.[29]Dr Leavers questioned the accuracy of the Foxtons figures as Flats 98 and 99 are “very tiny” and created from what was once a corridor. Dr Leavers stated that she had asked a Valuer to scale off the drawings obtained from HM Land Registry. The resultant figures were: 356 square feet for Flat 98, 364 square feet for Flat 99, and 507 square feet for Flat 100. From the Tribunal’s own observations, they are not “abstract calculations” as Mr Willmer put it. The figures appear realistic.[30]The Tribunal is unattracted to the request for directions that a suitably qualified person inspects Flats 98, 99 and 100 for a measuring survey. As Dr Leavers pointed out, this will cause more delay. It would not be a proportionate response. There are copy leases for the three flats with scaled drawings registered at HM Land Registry from which a reasonably accurate calculation should be capable of being made. Indeed, utilising scaled drawings is not an unusual approach.[31]Based on the scaled drawings, the Tribunal considers the figures cited by Dr Leavers to be the most credible and those that should be applied. Service charge billing[32]The Tribunal is invited to confirm how far Ms Cleaver is backdating service charges. Whether it is to the date of her appointment or earlier. The Tribunal queried why the question was being asked. In response both Ms Zanelli and Mr Willmer agreed that there is no reason in law why a Manager could not bill for charges prior to the date of 7 appointment. Of course, that is subject to statutory time restrictions to which we return below.[33]The Respondents’ Solicitors had taken a jurisdictional point that the Tribunal could not give a direction on the First Respondent’s liability to contribute towards service charges pre-dating the appointment of the Manager. Mr Willmer did not pursue this point acknowledging that “if a debt is owed, it’s owed”. However, the Tribunal clearly cannot pre- judge any future determination on the liability for service charges that would properly be made through an application under section 27A of the 1985 Act.[34]Nevertheless, Mr Willmer confirmed that service charge adjustments would be needed with effect from 13 April 2022, being the date of the new leases for the three flats.[35]It emerged that the Manager’s concern stems from whether she could correct the billing from 13 April 2022, bearing in mind potential impacts from the statutory time constraints.[36]As the appointed Manager, Ms Cleaver should reapportion and make adjustments to reflect the creation of the new flats even if it transpires that such charges are not recoverable. We see no basis to disregard the 3 flats altogether from the calculations from 13 April 2022 if that is a source of uncertainty for the Manager. Time limits on making demands[37]Under section 20B(1) of the Landlord and Tenant Act 1985 a tenant has no liability for any service charge incurred more than 18 months before a demand for payment of the service charge is served on them. Subsection (1) does not however apply if within the relevant period of 18 months beginning with the date that the costs are incurred, the tenant was notified in writing that the costs had been incurred and the tenant would subsequently be required to contribute (section 20B(2)).[38]Ms Zanelli accepted at the hearing that section 20B is a statutory provision over which the Tribunal has no discretion. There may be possibility of service charges being time barred from recovery with regard to Flats 98, 99 and 100, but that is not a matter this Tribunal can address as part of these proceedings.[39]Ms Zanelli explained that Ms Cleaver’s concern arises from “a black hole” with two gaps in time not being accounted for when there was no Manager in place and no records. The Tribunal acknowledges that there have been various opportunities for the Respondents to provide documents to enable the Manager to fulfil her functions under the Management Order. Directions to produce all requested documents have not been complied with. There are currently no accounts for 2023 and 2024 due to incomplete records. 8[40]The expectation of the Tribunal is that Ms Cleaver now proceeds to levy service charges on the financial information that has been provided, albeit still incomplete. Where there are periods without any records, the Tribunal recognises that Ms Cleaver would be unable to collect service charges through no fault of her own. Utility billing[41]The Respondents have confirmed that Flats 98 and 99 have their own metered electricity supply with payment being made directly to the utility provider. Therefore, the issue of back-billing for utilities from 13 April 2022 does not apply to these two flats.[42]The Respondents say there is no meter currently installed at Flat 100 as it is not yet occupied. This response has not reassured Ms Cleaver because works have been in progress at Flat 100 for which it is believed tradespersons would need an electricity supply. The concern is that the communal supply has been used.[43]Mr Willmer accepted that the Respondents’ written response did not address the point. It was agreed that if the Tribunal was minded to make an order then the Respondents be directed to supply details of the source of energy supply for Flat 100. This would not cause delay in raising service charges as utilities are billed separately under the lease.[44]As Mr Naz was not present to provide an explanation, the Tribunal shall direct the production of further information on the energy supply for Flat 100. If the communal supply has been utilised, then the Manager will need to exercise reasonable judgement on the effect upon billing. Outstanding documentation[45]From the undisputed chronology, there were two periods when there were no managing agents appointed. There are gaps in records when the First Respondent self-managed the Property between 21 June 2023 to 17 September 2023 and also from 14 April 2024 to 27 May 2024.[46]Despite Ms Cleaver’s repeated requests, and the Tribunal Directions, the Respondents have failed to produce all the financial information requested to levy service charges for the accounting periods of 2023 and 2024. Whilst HLM provided information from their short period of management, including a hand-over pack, the schedule records that the year end accounts for 2023 could not be produced because “there was not enough information for the accountants to produce.”[47]Ms Zanelli explained, and Mr Willmer agreed, that the Respondents have had plenty of opportunity to address the requirements and there is a knock-on effect in being able to enforce liability for service charges.[48]The Tribunal cannot provide the “note of comfort” sought by Ms Cleaver in the event of a counterclaim or offset. 9[49]However, the Tribunal notes that the Second Respondent, as named landlord within the Management Order, has neither provided all the information directed by paragraph 37(1) thereof, nor given all reasonable assistance and co-operation to the Manager as directed by paragraph 35. Furthermore, the Tribunal has not been assisted by the lack of participation by Mr Naz at the hearing.[50]The conduct of the Respondents has led to a situation whereby the Manager can only raise service charges for 2023 and 2024 based upon the information provided. The Management Order[51]Paragraph 8(1) of the Management Order was previously varied by the Tribunal to increase the preliminary payment that the Manager may demand of each tenant from £1,000 to £2,000. Ms Cleaver requests a further increase to £3,500.[52]The Tribunal is sympathetic to the impact upon tenants as relayed by Dr Leavers, and the effect upon those with smaller flats. By the same token, the transition has not been straightforward as evident from these proceedings. After giving the matter very careful consideration, the Tribunal has decided to exercise its discretion under section 24(9) of the 1987 Act to vary the Management Order by increasing the preliminary payment to £3,500, of which £500 is to be allocated to the Manager’s and CPM’s fees.[53]In reaching this view, the Tribunal is satisfied, in accordance with section 24(9A), that the variation will not result in a recurrence of the circumstances leading to the order being made, and that it is just and convenient in all the circumstances of this case to vary the Order.[54]Towards the end of the hearing Ms Zanelli sought a further variation to the Management Order in the ‘Schedule of Additional Fees’. This had not been mooted before and would come as a surprise to the parties. It raised a clear point of procedural fairness with the Applicants, in particular, unable to prepare a response. Accordingly, no variation is made in this regard. Name: Judge K. Saward Date: 27 January 2025 10 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).