Management of Canary Riverside
Appointment of an Independent Manager and HML Andertons
Management of Canary Riverside
Canary Riverside is under the independent management of a Tribunal-appointed manager, Mr Alan Coates. Mr Coates of the HML Group was appointed by the First Tier Tribunal (FTT) under Section 24 of the Landlord and Tenant Act 1987. The Tribunal determined that the serious failings in the landlord's management of the estate over many years made it 'just and convenient' to remove management responsibility for Canary Riverside from CREM (the landlord: Canary Riverside Estate Management), and place it with an independent manager accountable to the Tribunal.
Mr Coates commenced management responsibilities on 1st October 2016, and his appointment runs until 30th September 2021. His legal responsibilities are set out in the Management Order.
A Section 24 manager takes over the landlord's right to manage the building. The manager is independent of the landlord and leaseholders, and is accountable solely to the FTT. His/her role is to act in the best interests of the estate as a whole and manage the estate in accordance with the leases, legislation and the RICS Code.
A S24 manager’s role is sometimes wrongly compared/confused with that of a managing agent. The S24 manager is court-appointed official, similar to the role carried out by a court-appointed receiver. A managing agent is the company contracted to provide day-to-day management services, reporting to the S24 manager/landlord/Right to Manage company etc.
For more information on the S24 appointment please refer to the Leasehold Advisory Service's ('LEASE') explanation here. HML is the managing agent providing the day-to-day management of the estate.
The Management Order sets out the legal basis of the Manager's appointment, including the nature and scope of his responsibilities.
You can find information on the original Tribunal applications relating to Mr Coates' appointment, and updates regarding subsequent Tribunal applications regarding the Management Order here.
Why did the Tribunal appoint a Manager to replace the Landlord?
The decision by the court to appoint a manager to take over the responsibilities of a landlord is not taken lightly, and happens because of serious failings in the management of an estate. At Canary Riverside the Tribunal found that CREM had failed to adequately manage the estate or recognise any failings in their management, including :
Poor financial management:
leaseholders had suffered from poor management of their properties for several years, with a lack of accounting and transparency in the management and finances in particular. Five years’ service charge accounts were outstanding, and lessees had never been given the full accounts or details of their reserves.
CREM did not give leaseholders access to the accounting records, despite this being required by law. The records that were eventually provided (once the legal action commenced) were incomplete and/or so heavily redacted as to be meaningless.
CREM appeared to have used service charge monies belonging to the leaseholders.
the residential reserves had been included in CREM’s own accounts as cash at bank, with no indication whatsoever that the monies belonged to the leaseholders’. It was only once the legal action commenced the CREM notified the bank that the monies were actually being held on trust.
the tribunal acknowledged that, had it not been for the leaseholders' application, CREM would not have addressed the issues raised by the leaseholders - including producing five years' outstanding accounts.
CREM failed to credit leaseholders in a timely manner with past year’s underspends.
Poor estate management:
major maintenance issues were only dealt with after the leaseholders commenced their legal action. This included replacing the crumbling garden path and repairing leaking windows.
the managing agent, Marathon Estates (a landlord company) did not have sufficient staff or experience to manage the estate.
unreasonable service charges in excess of £400,000 had been spent on repairs to chiller plant that was at the end of its useful life.
a planned preventative maintenance plan was not implemented nor taken into consideration when setting budgets.
The full decision can be read here. The Tribunal added that other allegations were made by the leaseholders, but that the breaches already detailed in its decision were sufficient grounds, and it did not need to detail any further breaches. The brevity of the FTT’s decision is unfortunate, as it is the only official record of the five-day hearing.
CREM appeals against the appointment and costs:
CREM immediately appealed against the Tribunal's decision to appoint a manager, claiming that the grounds were not sufficient to warrant the appointment. Having lost all of its appeals, including asking for a judicial review, CREM applied to change the Management Order, reducing the term and scope of the Manager's appointment. Its 'application to vary' the Order took place in 2017 (see legal updates here), and a new Management Order was issued by the Tribunal in September 2017.
However, CREM disagreed with the new Management Order and submitted an appeal. Please see the updates on the legal proceedings here.
The S24 leaseholders won their costs application to prevent CREM from charging its £336,000 legal costs (incurred fighting the S24 application) to leaseholders via the service charge. CREM appealed this decision and as a result of a quirk of the Tribunal rules it was confirmed that CREM could recover a proportion of its legal costs from leaseholders who were not party to the S24 application - despite the fact it had lost. CREM had already charged a significant proportion of its legal fees to the 2015/16 and 2016/17 service charge before the S24 appointment took effect.