Tribunal-appointed Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Landlord’s failings

Technic Styling and Artcloud Management

Management of Canary Riverside 

Canary Riverside is under the independent management of Mr Sol Unsdorfer, who was appointed by the First Tier Tribunal (Property Chamber). The Tribunal’s decision detailing the reasons why it removed management of Canary Riverside from the Landlord in 2016 can be found here.

Mr Unsdorfer is the managing director of Parkgate Aspen, the company that provides the day-to-day management of the Canary Riverside estate. The Tribunal’s Decision appointing him can be found here and the Management Order (setting out the legal basis of Mr Unsdorfer’s appointment and the scope of his responsibilities) can be found here.

Mr Unsdorfer commenced management responsibilities on 1st October 2019. Leaseholders have applied to extend Mr Unsdorfer’s appointment. Mr Unsdorfer will continue to manage Canary Riverside until the FTT has determined the outcome of that application. We do not yet know when the hearing will take place.

The Management Order and the supplementary Order set out Mr Unsdorfer’s management responsibilities.

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.

You can find information on the original Tribunal applications relating to the appointment of a Manager and updates regarding subsequent Tribunal applications regarding the Management Order here. A copy of Mr Coates’ (the S24 manager between 1st October 2016 - 30th September 2019) final report to the FTT can be found 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 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.

Technic Styling Ltd and Artcloud Management Ltd

During the S.24 hearing the FTT heard evidence that Marathon Estates Ltd (“MEL”) was using a landlord-related company, Technic Styling Ltd (“TSL”), to procure sub-contractors to undertake work at Canary Riverside. CREM had - presumably in error - disclosed to RACR copies of quotations and estimates from sub-contractors to TSL together with copies of TSL’s version of the quotes and invoices that were paid by MEL. The sub-contractors provided estimates, undertook the work and submitted invoices to TSL.TSL then submitted their own quotations and invoices to MEL - adding a significant uplift to what the subcontractor had been paid. Instead of our service charge paying £750 to K.E.Thomas Esq £1,490 was paid to TSL - an uplift of 99%. Instead of paying £174 to Sealite Windows Ltd £444 was paid to Technic Styling - an uplift of 155%. The FTT judges were astonished. In his evidence to the FTT the estate manager, Nick Parojcic, made an opening statement that ‘Technic Styling are no longer employed by MEL’. This may well have been true - it appears that TSL had been replaced with a “TSL mark 2”- a company called Artcloud Management Ltd. Copies of the invoices referred to and documents revealing the connections between the two companies and the Landlord (Yianis) can be found here. Both companies were also used by MEL at West India Quay and paid substantial sums of WIQ service charge monies.

When the S.24 manager took over responsibility for managing Canary Riverside in October 2016 Artcloud Management was the single biggest outstanding creditor: due an astonishing £700,000 in unpaid invoices - the majority of which were dated October 2016. These two companies were not the only two companies associated with the landlord that were being paid substantial sums from the service charge account. Seasons Solutions, Hero Estates and Westminster management Services had also been paid significant amounts in the years leading up to the S.24 Order. And of course Marathon Estates, which portrayed itself as independent from the landlord, was actually a special purpose vehicle set up solely to manage Canary Riverside and West India Quay. In addition to receiving a large management fee (£180,000 pa in respect of Canary Riverside) the leaseholders also paid for all MEL’s operational costs, eg, rent (paid to the landlord), office furniture and equipment, stationery, computers and software.