The case concerns a Victorian terraced property on three floors, with commercial premises on the ground floor and residential flats on the upper floors.
The applicants are leaseholders of two of the residential flats. In 2018, as a result of historic complaints of building neglect, they issued an application, asking the FTT to appoint the respondent as a manager for a period of five years with a view to carry out necessary remedial works given that the landlord was failing to comply with its repairing/maintenance obligations under the lease.
The FTT decided that it was just and convenient to appoint the respondent, however it reduced the period to a term of two years, starting on 1 February 2019 and ending on 31 January 2021. The objective of the order was for the manager to execute a package of internal and external works which had been identified by and costed in the expert report of Mr Dobson FRICS. The order also provided that the landlord was to pay 50% of the costs of the internal works and 60% of the costs of the external works as they retained the commercial premises and two of the residential flats.
The relationship between the tenants and the manager soon broke down irretrievably when the applicants discovered a series of irregularities concerning the major works. It became apparent that:
- the costs of the works were substantially more in scope and pricing than Dobson’s specification (as the respondent no longer retained the services of Mr Dobson and asked the FTT to appoint another surveyor without informing the tenants, who prepared a more extensive schedule of works);
- the respondent withdrew money from the reserve fund to settle sums that should have been paid by the landlord;
- there were conflicts of interest between the respondent and the companies that he appointed to manage the building on his behalf and carry out the remedial works.
The tenants became increasingly concerned about the lack of transparency in the manager’s conduct and, in March 2020, issued another application in the FTT, seeking a determination of the service charges rendered during the period in which the order was in place.
At the expiry of the order in January 2021, an application was also made requesting directions to the manager under Part II Landlord and Tenant Act 1987. As part of this application, the FTT reiterated the position that a tribunal-appointed manager is meant to act as an officer of the tribunal and independently of the parties. As such, a manager would be expected to observe a high standard of conduct and foster a relationship of trust and confidence with the tenants. Furthermore, the FTT held that a manager was bound to act within the confines of the order making the appointment, meaning that he should not go over and above the scope of the order or act as if the order gave him absolute discretion. Where it becomes apparent that the outcomes sought to be achieved by the Management Order are unobtainable, it is open to the manager to apply to the tribunal for directions or for the order to be varied or discharged.
In particular, the FTT found the respondent an unsatisfactory witness as he seemed to have limited knowledge of the detail of the case and constantly referred to others to answer questions about the management of the property. The FTT also criticised him for adopting a dismissive attitude towards the tenants.
The decision is of great significance as it highlights the point that a Management Order does not confer complete discretion on how to manage a property to a tribunal-appointed manager. Instead, a manager is bound by the fiduciary duty that he owes to the tenants and, as an officer of the tribunal, should observe a high standard of professional conduct.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at September 2021.