Charlotte Leonora Rose Walker (Flat A) Martin Nicolaas Norbertus Brenninkmeijer (Flat B) Camilla Trevelyan-Daley (Flat C)ApplicantBernard Patrick McGowanRespondent
Before
Judge Robert LathamOliver Dowty MRICSPaul Cleaver (Court appointed Manager) for the ApplicantNo appearance Waseem Akhter Khwaja and Asta No appearance Variation of Order for appointment of for the RespondentDate 15 May 2023Property: SW8 3RG Charlotte Leonora Rose Walker (Flat A)Type of application: manager Judge Robert Latham
DECISION
Decisions of the Tribunal(1) The Tribunal extends the current Management Order which was made on 3 April 2023 until 30 on the terms of the order annexed hereto.(2) The Tribunal determines that the Respondent shall pay the Applicants £300 within 28 days of this Decision, in respect of the reimbursement of the tribunal fees paid by the Applicants. The Application[1]Since 14 April 2014, the property at 57 Queenstown Road, London, SW8 3RG ("the Property") has been managed by a Manager appointed by this tribunal. The Property is a Victorian Terrace house which has been converted into three residential units and one commercial unit. It was initially managed by Mr John Mortimer. Since 26 April 2017, the property has been managed by Mr Paul Cleaver. He was initially appointed for a period of two years. On 3 April 2018, this was extended for a further period of five years.[2]On 8 March 2023, the Applicants applied for the Management Order to be varied to extend the current order for a further period of 5 years. The Applicants consider that that Mr Cleaver's appointment has been a success. They have concerns about the management of the property being returned to the Respondent. An extension is sought to ensure the continued good management of the Property.[3]On 10 March 2023, a Procedural Judge gave Directions. He joined Waseem Akhter Khwaja and Asta Khwaja as Interested Persons. They apparently hold a lease in respect of the commercial premises, but vacated them some months ago. They have played no active part in these proceedings.[4]On 7 April 2023, the Applicants filed their Bundle of Documents (157 pages) with the materials required by the Directions. By 21 April 2023, the Respondent was directed to file his Bundle in Response. He has failed to do so. The Hearing[5]The Applicants were represented by Mr Cleaver, the Manager appointed by the Tribunal. The application has been issued by Mr Cleaver on behalf of the Applicants. He stated that he had been authorised to issue the application on their behalf and that he has kept them informed of the progress of the application, including the level of fees that he proposes. On 6 April, he sent a copy of the Application Bundle to the Applicants. Mr Cleaver confirmed that the Applicants were aware of the hearing, but none had felt it necessary to attend.[6]The Respondent has played no part in the proceedings and did not appear. The Tribunal notes that the Respondent failed to engage with the two previous applications to extend the Management Order. Mr Cleaver confirmed that the Respondent is aware of the application, as he has suggested that he might appoint managing agents. Mr Cleaver heard nothing further. The Law[7]An application to extend the appointment of a manager takes effect as a variation of the Current Order. Section 24(9) of the 1987 Act provides: The appropriate tribunal may, on the application of any person interested, vary or discharge (whether conditionally or unconditionally) an order made under this section …[8]The Court of Appeal considered the Tribunal’s discretion afforded by section 24(9) in Orchard Court Residents’ Association v St Anthony’s Homes Ltd [2003] 2 EGLR 28, where the Tribunal had extended a management order and the landlord had appealed that decision. Keane LJ stated: "[11] It is to be noted that the legislature has not thought it fit to embody in section 24(9) the various criteria set out in section 24(2). There is a clear contrast between the requirements when an order is made and when an order is varied. It seems to me that the section is drawing a distinction between making an order and varying an order. Although it might perhaps be said that, in some circumstances, the court is always making an order when it varies an existing order, that cannot be the correct interpretation in the context of this statutory provision. [12] There are no explicit criteria in section 24(9) in contrast to section 24(2). Moreover, if an application is made by a relevant person (such as a landlord) to vary or discharge an existing order, the legislature has expressly required the tribunal to be satisfied of certain matters: see section 24(9A). The inclusion of those express requirements in subsection (9A) and the omission of anything of that sort in subsection (9) itself has to be seen as deliberate, and it confirms the contrast between section 24(2) and section 24(9). [13] Sections 24(2) and 24(9) deal with quite different situations. Section 24(2) is concerned with making an order where one does not exist, whereas section 24(9) is dealing with an order that is already in existence because the tribunal has already been satisfied that the tests in section 24(2) have been met. [14] I quite accept that, in exercising its discretion under section 24(9), a tribunal must have regard to relevant considerations: that is trite law …. But when one looks at paras 20 and 21 of the tribunal's decision, it is quite clear that this tribunal did have such regard. However, section 24(2) did not require it to be satisfied that at least one of those thresholds had been passed. Nor can I see any reason why this particular type of variation, the extension of a manager’s term, should have to meet the criteria in section 24(2). Mr Heather has conceded that there is no limit on the length of time for which a manager may be appointed in the first place. In those circumstances, why should one require the section 24(2) tests to be met all over again.”[9]We remind ourselves that Part II of the 1987 Act is a “problem solving jurisdiction” (see Chuan-Hui v K Group Holdings Inc [2021] EWCA Civ 403; [2021] 1 WLR 5981 per Henderson LJ at [29]). In Kol v Bowring [2015] UKUT 530 (LC), HHJ Gerald noted at [22] that the purpose of appointing a manager is to: “…enable that property to be managed subject to the control of the tribunal in circumstances where the landlords’ management or discharge of its obligations under the provisions of the lease have been found wanting. Looking at matters very broadly, the whole purpose of the jurisdiction is to enable the F-tT to ensure that what has hitherto been done inadequately and perhaps improperly is done adequately and properly”. The Background[10]The Property at 57 Queenstown Road, London, SW8 3RG is a Victorian Terrace house which has been converted into three residential units and one commercial unit. Only one of the three Applicants occupy their flats. The commercial unit on the ground floor is required to pay 8.3% towards the service charge.[11]It seems that the internal floor space of the commercial unit exceeds 25% of the internal floor space of the Premises. This has precluded an application for the Right to Manage under the Commonhold and Leasehold Reform Act 2002.[12]In 2014, the Tribunal appointed a manager because the landlord had failed to manage the property in a proper manner and had failed to keep it in a proper state of repair. Both the exterior and the interior and the property had been neglected. The commercial unit was not contributing to the service charge.[13]The Applicants are satisfied with the manner in which the Property has been managed by the Manager. A proper service charge account has been established. In 2019, a package of exterior and internal repairs was executed. A health and safety audit has been completed. Fire safety has been addressed. The Property has been insured.[14]The commercial premises are still in arrears with their service charge contribution. In 2019, the outstanding arrears were discharged by a mortgagee. The current arrears at £4,688. However, some £30k has been accumulated in a reserve fund and the Applicants are willing to cover the shortfall until the Manager can recover the arrears. The Interested Persons who occupied the commercial unit, have now left. The status of the current occupant is unclear.[15]The Applicants have no confidence that the Property will be properly managed if the management order is discharged. The Respondent has failed to engage with the current application. He failed to engage with the previous applications.[16]The Manager's management plan will focus on the following: "1. Finances: Continue the day-to-day financial management of the building by setting annual budgets in accordance with the lease and management order, collecting and accounting for service charges and pursuing non-payers.[2]Insurance: Maintain suitable insurance cover for the building.[3]Health and Safety: Implement the health and safety improvements recommended in the General Risk Assessment and Electrical Installation Condition Report undertaken to date, and schedule updated risk assessments continue to meet industry standards.[4]Major Works: To arrange external and internal refurbishment works when they fall due under the 10-year plan established for the property.[5]AOB: Continue to undertake minor repairs both cyclical and ad hoc in nature and maintain the provision of regular management activities." The Tribunal’s Determination[17]This Tribunal only appoints a manager as a last resort when it is apparent that this is just and convenient to ensure that a property is properly managed. It is exceptional that management orders extend to a period in excess of ten years. We are satisfied that in the current case it is necessary to extend the management order for a further five years. The Right to Manage option is not available because of the commercial premises. The three Applicants support the extension. The Respondent has again failed to engage with the application. He has come up with no proposals for the effective management of the Property.[18]The Tribunal has considered the terms of the proposed management order. This has been amended to reflect the terms suggested in the Practice Statement, dated 11 January 2022.[19]We have also considered the suggested remuneration. Mr Cleaver informed the Tribunal that this had been discussed with the Applicants. We have reduced the basic management fee from £518 to £500 per unit per annum, exclusive of VAT. However, we have agreed for it to be adjusted annually in line with RPI. Tenants must recognise that a Tribunal appointed manager is likely to charge somewhat more than a managing agent to reflect the practical difficulties in managing the property and which have led to the application.[20]We note that there are occasions when the Manager may use an in-house contractor whether a surveyor or builder. There is no objection to this provided that the Manager recognises the potential conflict of interest and ensures that best value is secured. He must also ensure that there is transparency.[21]Clause 9 of the Management Order gives any interested party permission to apply to the Tribunal to vary or discharge the Order.[22]The Tribunal will serve this decision on the Manager who is representing the Applicants, the Respondent and the Interested Persons. We direct the Manager to serve the decision on the three Applicants. Application for refund of fees[23]The Applicants apply for a refund of the fees that they have paid in making this application, pursuant to Rule 13(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. The Applicants have succeeded with their application and the Tribunal is satisfied that it is appropriate to make such an order. Judge Robert Latham 15 May 2023 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).