FTT Appointed Manager in Doghouse. Now what?

FTT Appointed Manager in Doghouse. Now what?

9:42 AM, 23rd August 2021, About 2 months ago 76

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A friend has just forwarded me a copy of a recent service charge case where the First Tier Tribunal makes 5x references to the Appointed Manager subverting the management order and another 5x references to the Appointed Manager breaching his fiduciary duties. The report concludes that the Appointed Manager did this for his own financial gain.

I have highlighted in yellow the most relevant portions of the 35-page report: Click here to view the report. Some examples given in the report are:

1. Charging £93,000 for major works that should have cost no more than £25,000.
2. Entering into a ‘management agreement’ with his own daughter’s block management company – where he is the sole shareholder.
3. Granting major work contracts to companies that the Appointed Manager had an undeclared financial interest in – and denying the connections when explicitly questioned on the matter.
4. Transferring service charge and reserve fund monies into his own ‘non-trading’ company bank account – and denying any connection with the company when explicitly questioned on the matter.
5. Using leaseholders’ reserve fund contributions to offset the service charge arrears of the freeholder.

Although this Appointed Manager’s management order is at an end at this particular building, my friend informs me that the Appointed Manager is the First Tier Tribunal Appointed Manager at another 7 buildings; manages c.150 buildings through his daughter’s block management company – where he is the sole shareholder and continues to operate without a care in the world.

Is it me, or is there something wrong with this picture?

Paul



Comments

by Vivienne Somerville

10:56 AM, 23rd August 2021, About 2 months ago

Wow. The report was a long read but well worth it to see the extent of the arrogance of the FTT Appointed Manager. I have heard that some FTT Appointed Managers believe themselves to be Gods. This one certainly did! Glad to see that the FTT gave him the dressing down that he deserved. Not so glad to hear that he continues to operate elsewhere though.

by BernieWales

11:53 AM, 23rd August 2021, About 2 months ago

An interesting and disappointing read - particularly as someone who has been a FTT Manager several times.

This is not the norm. The vast vast majority of appointed managers are highly professional and extremely experienced. The behaviour of Richard Davidoff is far from normal - but does highlight some of the deficiencies of the system. Sometimes there is insufficient scrutiny by particular tribunal members of the proposed manager - something which I know is being investigated by the FTT President, with a view to improving the system.

But I repeat. This is very very unusual and inappropriate behaviour by a FTT Manager.

by Gulliver

15:47 PM, 23rd August 2021, About 2 months ago

Reply to the comment left by Vivienne Somerville at 23/08/2021 - 10:56
The Appointed Manager was given even more of a dressing-down than is evident in the report. Apparently during the two day hearing in the case, the lead Judge called the Appointed Manager "A moron in a hurry." The lead Judge also told the Appointed Manager "Making a bad point three times does not make it a good point," and "When you are in a hole, it is better to stop digging."

by Gulliver

16:27 PM, 23rd August 2021, About 2 months ago

Reply to the comment left by BernieWales at 23/08/2021 - 11:53
I thought that an FTT Appointed Manager was supposed to be ‘a safe pair of hands’ to which a building with historical difficulties could be entrusted? The status of reporting directly to the FTT rather than the freeholder or the leaseholders is very powerful indeed.

In the wrong hands, an FTT Manager Appointment can lead to the kind of abuses that we have seen in this case.

I hope that it is unusual for FTT Appointed Managers to behave like this. It appears however that this particular FTT Appointed Manager has come a cropper before. I found a report dated 21-07-2021. It concerns another building where the same Manager was appointed by the FTT on a three year management order which expired in August 2020. Even though there was no application made to extend the management order before it expired, the FTT Appointed Manager is now seeking another three year management order for the same building. The FTT panel suspended the making of another management order for three months stating:

1. The FTT Appointed Manager had achieved nothing at all during the 1st three years.
2. The FTT Appointed Manager had breached the terms of the 1st management order by not sending the FTT annual reports and accounts.

A link to the report is here:
https://1drv.ms/b/s!AkKBm3fxCVLJcQOrYcVLOzviGy8

by BernieWales

17:48 PM, 23rd August 2021, About 2 months ago

This is a very rare event. 99.99% of appointed managers are entirely professional, experienced and honest. Richard Davidoff is a one-off as far as I'm aware (and I watch for these things).
Perhaps RoPA will help with this type of scenario (Regulation of Property Agents) when it appears soon.

by BernieWales

17:51 PM, 23rd August 2021, About 2 months ago

Reply to the comment left by Gulliver at 23/08/2021 - 15:47
And the Tribunal ordered him to repay the funds (about £20k) immediately ... not soon ... immediately! If he doesn't, he'll then be in contempt of Court and might end up in jail.

by Vivienne Somerville

18:48 PM, 23rd August 2021, About 2 months ago

Reply to the comment left by BernieWales at 23/08/2021 - 17:51Yes. The appointed manager has been ordered to repay c. 25K forthwith but how forthwith is forthwith when the appointed manager should have automatically repaid the sums in January 2021? Why should the appointed manager have needed any prompting by the FTT to make the repayments in the first place?
And how in heaven did the appointed manager think he could get away with making a 9.3K claim for his costs in defending a case where he had basically stuck two fingers up at the FTT, the freeholder and the leaseholders for years?
It is frightening that if similar financial abuses are occurring at all 150 blocks that the appointed manager claims to be managing, this could run into millions of pounds being defrauded each year. This is only a 5 unit block. Imagine the amounts that could be defrauded from much larger blocks of 20 or even 100 units? The FTT should have an internal system for referring these cases to the appropriate bodies ....

by Gulliver

8:41 AM, 24th August 2021, About 2 months ago

This FTT report has found that Richard Davidoff aka Raziel Davidoff and ABC Block Management aka ABC Estates have inflated service charge costs at the building. This FTT report also found that the only entities to have benefitted from this inflation of costs are Richard Davidoff aka Raziel Davidoff; ABC Block Management Limited aka ABC Estates; RD Estate Services Limited and their nominated contractors - such as Valens Contractors Limited (a company owned and controlled by the wife of Mark Reed, Head of Block Management at ABC Block Management Limited).
Paragraph 86 (ii) of the report says: On 20 January 2021 sums of £2,011.50 and £819.50 were transferred to RD Estate Services Limited, a company in which Raziel Davidoff is the sole director. Mr Davidoff was unable to provide an explanation for these transfers.

Isn’t this fraud?

The bottom line is had the leaseholders and the freeholder not stood their ground, they would have paid demands totalling £106,573.90 for service charges worth no more than £25,000.

Isn’t this attempted fraud?

by Gulliver

11:25 AM, 25th August 2021, About 2 months ago

If you have the ear of the FTT President, could you suggest that changes are urgently required please?
As was stated above by by Vivienne Somerville, if similar financial abuses are occurring at the 150 buildings that this Appointed Manager claims to be managing, this could result in millions of pounds per year being defrauded from leaseholders and freeholders alike – by the same Appointed Manager.
Yet the FTT has no internal system for referring systemic behaviours like those demonstrated by this particular Appointed Manager to the authorities. When leaseholders refer such issues to other authorities, they can only do so in respect of their own building – which makes the issues look less systemic and smaller scale than they actually are.
Failing to deal thoroughly with repeat offenders, such as this Appointed Manager means that the financial abuses continue and such Appointed Managers become increasingly emboldened ...

by Gulliver

11:32 AM, 25th August 2021, About 2 months ago

Reply to the comment left by BernieWales at 23/08/2021 - 11:53
If you have the ear of the FTT President, could you suggest that changes are urgently required please?
As was stated above by by Vivienne Somerville, if similar financial abuses are occurring at the 150 buildings that this Appointed Manager claims to be managing, this could result in millions of pounds per year being defrauded from leaseholders and freeholders alike – by the same Appointed Manager.

Yet the FTT has no internal system for referring systemic behaviours like those demonstrated by this particular Appointed Manager to the authorities. When leaseholders refer such issues to other authorities, they can only do so in respect of their own building – which makes the issues look less systemic and smaller scale than they actually are.

Failing to deal thoroughly with repeat offenders, such as this Appointed Manager means that the financial abuses continue and such Appointed Managers become increasingly emboldened ...

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