FTT Appointed Manager in Doghouse. Now what?

FTT Appointed Manager in Doghouse. Now what?

9:42 AM, 23rd August 2021, About a month 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 BernieWales

14:11 PM, 2nd September 2021, About 3 weeks ago

Reply to the comment left by Nick Hargrave at 02/09/2021 - 13:57
Sounds like you need to use Right to Enfranchise.

by BernieWales

14:14 PM, 2nd September 2021, About 3 weeks ago

Reply to the comment left by Gulliver at 02/09/2021 - 13:38
Can I just check ...

Is there a Residents' Management Company ... or ... is there a named Management Company? Both are possible with tri-partite leases, but one is far more leaseholder unfriendly.

by Gulliver

14:25 PM, 2nd September 2021, About 3 weeks ago

Reply to the comment left by BernieWales at 02/09/2021 - 14:14
What I understand the case to be is that the leases in Nick's building have a named management company as a party to the lease but this named management company was set up as a Residents' Management Company by the freeholder/developer - pending sale of the flats.

Once all the flats were sold (I presume that this is a new-build development) the freeholder/developer resigned as Director from the named management company - leaving Richard Davidoff (temporarily) as the sole Director of the named management company.

It appears however that Nick and his fellow leaseholders have been blocked from becoming members of the named management company and that Richard Davidoff (as sole Director of the named management company) has employed ABC Block Management Limited as the managing agent of the development.

It now appears that Nick and his fellow leaseholders have had to apply for Right to Manage as a means of getting control of the named management company. The freeholder has accepted the leaseholders' RTM claim but Richard Davidoff (as sole director of the named management company) is disputing the leaseholders' RTM claim.

Is this an accurate assessment, Nick?

by Nick Hargrave

14:33 PM, 2nd September 2021, About 3 weeks ago

Reply to the comment left by Gulliver at 02/09/2021 - 14:25
Looks accurate to me. We will get there eventually I think through the FTT system and have professional representation for this. But it is another case study of how Richard Davidoff gives managing agents a bad name.

The incorrect claim to leaseholders in 2019 about our relationship with the management company - and the subsequent attempt to blame solicitors that he won't name - are issues that I suspect we will take further in due course.

by BernieWales

18:58 PM, 2nd September 2021, About 3 weeks ago

For those of you who live in flats or invest in flats, which clearly is those in this string, this will be of interest.
The management of a block of flats is often controlled by leaseholders, via a Residents Management Company, a Residents Freehold Company, or a Right to Manage Company. This involves both company law and Landlord & Tenant law ... both of which are complex and ever-changing. Whether you're on the controlling side as a Resident Director - or the receiving side as a leaseholder/shareholder - you probably don't know all you should/could know in order to fully understand how the management of the building should be run.
To help leaseholders, shareholders and Resident Directors update their knowledge and understanding, ARMA ... the Association of Residential Managing Agents ... is running a training event at the end of September > https://arma.org.uk/training-events/training-courses/tc101-resident-directors-training Split over three days, there are three 2-hour sessions, which cover the following topics and more:
> The Lease - demystified
> The Company - what type is yours?
> Three Hats - directors' various roles
> Managing Agents - professional advice, needing support
> Memorandum & Articles of Association - demystified too
> The Law - the important bits to know
> G D P R - don't get caught out
> Meetings - when, who, what and why
> The Neighbour From Hell - avoid the battle but win the war
> First-tier Tribunal or Court - a layman's guide to the law in practice
> Accounts - what money goes where and why
> Section 20 - notices and practicalities
> Right to Buy - what to do ... fast
> Right to Enfranchise - when and how to succeed
> Directors and Officers Insurance - "CYA"
... together with interactive questions and answers throughout. And all for a stupidly low price of £30 per person.
I urge anyone who owns a flat, whether as an investment or as their home, to attend this live webinar course. You are guaranteed to learn something useful and I have no doubt that knowledge will save you more than the course fee.
And for those who cannot attend at the end of September, there's my own online course ... at a higher price ... here > https://bernie-wales-school.thinkific.com
Whichever route you choose - enjoy learning leasehold 🙂

by Vivienne Somerville

3:22 AM, 3rd September 2021, About 3 weeks ago

Reply to the comment left by BernieWales at 02/09/2021 - 09:39What? That's crackers to state that ARMA cannot take action because the ARMA member is ABC Block Management Limited and not Richard Davidoff.

ARMA membership is only open to companies and not individuals. Besides, ABC Block Management Limited was found by the FTT to be complicit with the actions of Richard Davidoff. The below is taken from the ARMA website:

ABOUT OUR MEMBERS
ARMA represents firms of managing agents. We do not represent individual property managers. Our members range from small family run businesses looking after a few blocks to national companies managing tens of thousands of flats across numerous developments.
https://arma.org.uk/about-arma

by Vivienne Somerville

20:31 PM, 3rd September 2021, About 3 weeks ago

Reply to the comment left by Shreena Shah at 01/09/2021 - 16:09There is a parallel discussion taking place on the Leasehold Knowledge Partnership website. I am sure that those readers would like to hear of your experience of Richard Davidoff and ABC Estates from a lettings viewpoint. Especially your concerns that what occurred to you was not simple negligence. It will add to the overall picture of what might actually be going on ...
The link is here:
https://www.leaseholdknowledge.com/richard-davidoff-of-abc-estates-breached-his-fiduciary-duties-after-disastrous-performance-as-a-court-appointed-manager-rules-property-tribunal/

by Vivienne Somerville

20:39 PM, 3rd September 2021, About 3 weeks ago

Reply to the comment left by Christine Crowe at 01/09/2021 - 22:19
There is a parallel discussion taking place on the Leasehold Knowledge Partnership website. I am sure that those readers would like to hear of your experience of Richard Davidoff and ABC Estates from a different FTT region. It will add to the overall picture of what might actually be going on ...

The link is here:
https://www.leaseholdknowledge.com/richard-davidoff-of-abc-estates-breached-his-fiduciary-duties-after-disastrous-performance-as-a-court-appointed-manager-rules-property-tribunal/

by BernieWales

13:41 PM, 10th September 2021, About 2 weeks ago

Related discussion here > Managing Agents Are Crooks > https://berniewales.co.uk/managing-agents-are-crooks/

Please read and then comment below the article. I'm genuinely interested in your views, so please do respond. Thanks.

by Gulliver

20:06 PM, 10th September 2021, About 2 weeks ago

Reply to the comment left by BernieWales at 10/09/2021 - 13:41
I thought it might be useful to cite the full text of your article here so that the non property professionals among us can continue the debate in this forum. I certainly have a few contributions to make myself. Below therefore is the full text of the article that you have posted on your own website:

Managing Agents Are Crooks
On 12th August 2021, the First-tier Tribunal issued a decision, following complaints about an appointed Manager. That decision sparked much debate on the property forums and blogs. And that debate soon turned to “This crook is a managing agent. Managing agents are crooks. ARMA, IRPM, and the FTT do nothing about it – they are therefore complicit.” The tone of that debate made me upset, angry, frustrated and disappointed … hence this article.

The FTT decision centred around the less than professional activities of Richard Davidoff, a Tribunal appointed Manager. You can find the full decision here. It’s an interesting read and I encourage you to take the time to read it – and learn from the mistakes of those involved.

Richard Davidoff appointed a managing agent; ABC Estates … full name; Aldermartin Baines & Cuthbert … a firm in which he has a controlling interest. He did that at a management fee higher than that permitted by the FTT Management Order. Unprofessional behaviour.

Service charge demands for extortionate sums were issued to leaseholders, based upon estimates for major works – inflated estimates, from companies where Richard Davidoff had a controlling interest – or members of his family had a controlling interest. Unprofessional behaviour.

The leaseholders applied to the FTT because they did not believe the charges were “reasonable” nor did they believe all the works were needed. In short, the FTT agreed and ordered Richard Davidoff to pay back £20,811 … and some costs. Unprofessional behaviour confirmed.

The case was reported on the Nearly Legal blog
It also appeared on the Property118 website
Oddly, it did not appear on Property Tribes

If you check those links, you’ll see that I commented. Regrettably, the conversation soon transferred
• from ‘Richard Davidoff is a crook’
• to ‘something should be done’
• to ‘the FTT are toothless’
• and ‘ARMA/IRPM will do nothing’.

Worse than that, the tone turned (as it so often does)
• from ‘This person is a crook’
• to ‘this crook is a managing agent’
• to ‘Managing Agents are Crooks’.

The profession that I have spent my life enhancing was having mud thrown at it – and that mud was sticking. That made me upset and angry.
So I did a little digging.

According to ABC’s website brochure, (downloaded locally to here) ABC Estates is a member of ARMA and Richard Davidoff is a member of IRPM. The logos of both professional bodies are displayed in the brochure … although it’s interesting to note that the address for ARMA is considerably out of date.
I therefore emailed the top guns; Nigel Glen at ARMA and Andrew Bulmer at IRPM, to make them aware and to request that they take action. Both said they were aware. The action they could take was limited, in my opinion.

I also emailed Siobhan McGrath on the subject of Tribunal appointments – continuing a long-running e-discussion about this subject and improvements which could/should be made. Her work to bring about change within HMCTS is ongoing and, in my opinion, is akin to swimming through treacle because the legal profession is slow to accept change, apparently.

Anyway, back to potential complaints.
The IRPM Complaints Procedure (see here) allows
2. Complaints may be made against a Member by:
2.1 The Institute;
2.2 Another Member;
2.3 A member of the public.
So far as IRPM are concerned, Andrew Bulmer has advised me that “the matter has been brought to our attention. And I will confirm to you that it is receiving attention, though I am not able to confirm the nature of the complaint, who made it or who is the subject of the complaint. You will appreciate that complaints are confidential until found.” Fair enough, I appreciate the need for confidentiality (innocent until proven guilty and all that) but that does nothing to stop the current mud-slinging by those who think ‘managing agents are crooks’. No comment in the public domain is unhelpful, in my opinion.

Andrew Bulmer has further advised me that “You will see from our complaints procedure that there are timelines for handling complaints. This is to allow cases to be properly prepared and for those subject to complaints to be given time to respond. That is the process for every court and Tribunal in the land and is an essential prerequisite of any system of justice.” Yes, but no comment in the public domain is frustrating for those IRPM members who want to see action being taken to uphold the good reputation of managing agents.

Moving on to ARMA … I recently referred a different case and requested guidance, where occupational leaseholders had discovered an ARMA managing agent whose Court appointed Manager client had died in 2015, but they continue to manage. Here are my questions and the replies I got:
Can I make a formal complaint to ARMA on behalf of the occupational lessees, my clients?

> “No. ARMA has no mechanism for a member to make a complaint on behalf of their client.”

Can the occupational lessees make a formal complaint to ARMA?

> “No. ARMA has no mechanism for lessees to make a complaint about an ARMA member.”

Or is there a better route you’d like taken?

> “This would be one for the client to seek legal advice. We could direct them to the legal helpline in the first instance.”

I found this frustrating. As a leasehold professional advising occupational leaseholders, I cannot make a complaint about documented wrong-doing by an ARMA member. Nor can the leaseholders who are directly involved. The only person who can make the complaint to ARMA is the client … and he’s dead! Something has got to be wrong with that situation, surely?

And relating those answers to the Richard Davidoff case – the client is arguably the First-tier Tribunal, but lodging a complaint with ARMA is not within their remit, so they’re not in a position to do so. There appears to be no way for a complaint to be raised in this scenario. Frustrating again.

This is situation crazy. You can see why the #leaseholdscandal brigade has the view that ARMA and IRPM are there to protect their members, not to maintain high professional standards. The view is wrong – but I can understand how that view can be formed.

The system needs change, in my opinion. I have suggested to Nigel and Andrew the following:
• The ARMA complaints procedure should allow anyone to complain, provided they submit sufficient documentary evidence of ‘wrong-doing’.
• The IRPM complaints procedure should allow anyone to complain, provided they submit sufficient documentary evidence of ‘wrong-doing’. (NB. I think it does already, but check the link above if uncertain.)
• ARMA and IRPM should be seen to be proactive – not silently reactive and slow – in investigation of ‘wrong-doing’ publicised in the public domain; such as the Richard Davidoff case.

Where managing agents and/or property managers are being portrayed as villains (one bad apple means all apples are bad) ARMA and IRPM should be seen to take swift, proactive, positive investigation – and the results of those investigations should be publicly available (generally publicly available) perhaps in a similar way to published Tribunal decisions.


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