Property tribunal tightens up how it appoints section 24 court-appointed managers after the Richard Davidoff debacle

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Following the debacle of Richard Davidoff’s performance as a court-appointed manager, the property tribunal has issued a “practice statement” to tighten up the process by which the appointments are made.

Broadly, would-be section 24 managers need to be experienced, to have read the lease, inspected the premises and have insurance, a complaints procedure and a client money protection scheme (see in full below).

In addition, they need “membership of a professional body at a level of seniority commensurate with the responsibilities of a Tribunal appointed manager”.

So that rules out Mr Davidoff from future appointments – he presently has two extant ones – as his company ABC Estates was expelled from the Association of Residential Managing Agents last November, and he personally was expelled from the Institute of Residential Property Managers in December.

Richard Davidoff of ABC Estates expelled from IRPM

The practice statement adds:

“Before appointing a person as a Manager, the Tribunal will need to be satisfied that the Manager would have no conflict of interest in taking up appointment. The Manager must also seek to avoid conflict of interest in the placing of contracts and discharging their other duties during their appointment.

“A conflict will occur if the dealings would be regarded by the average consumer as conflicting with the Manager’s obligations under the order.”

The leaseholders and freeholder at Blackheath Road, in Southwark, South London, where Mr Davidoff was appointed through a section 24, certainly did have issues on this score.

The property tribunal ruled last August that Mr Davidoff had “breached his fiduciary duties”.

Richard Davidoff, of ABC Estates, ‘breached his fiduciary duties’ after disastrous performance as a court-appointed manager, rules property tribunal

Projected major works estimated at his appointment at £10,000 were revised upwards to nearly £100,000.

The highly critical ruling found that Richard Davidoff was not a “satisfactory witness”, was arrogant and dismissive of the leaseholders and had proposed to entrust the major works to a company whose sole director was the wife of Mark Reed, the head of block management at ABC Estates.

The tribunal reported the freeholder describing Richard Davidoff’s cash calls as “outright extortion” after receiving “six demands totalling £59,613.70, with no explanation justifying these charges”.

It concluded that Richard Davidoff’s appointment had been a complete failure and that no work had been done to improve the four-flat and commercial unit property in the two years of his appointment.

In the ruling, Judge Robert Latham observed:

“Any criticism of the conduct of the manager will be examined with care, because they are made against the manager in his capacity as an officer of the tribunal.”

The IRPM, which regulates professional qualifications for residential property managers, was also considering a formal complaint against Mark Reed, but he resigned from the organisation before it came to a conclusion.

Mr Reed had also figured in the property tribunal ruling, apparently informing leaseholders that the company entrusted with the major works was Valens Contractors Limited.

“Can you confirm whether any staff members of ABC Estates have any connection to any of the companies that were asked to tender for the work?” a leaseholder asked, according to the tribunal ruling.

Mark Reed replied: “Not that I am aware of.”

This was surprising as the sole director of Valens Contractors Limited was then Lisa Velenski, Mr Reed’s wife, the tribunal noted.

It said in its ruling:

“The relationship between the tenants and the manager broke down irretrievably when they discovered that the company who had provided the lowest quote was owned by the wife of the person [Mark Reed, head of block management at ABC Estates] who had served the statutory Notice of Estimates.”

Last November, Mr Davidoff was in the property tribunal again, as leaseholders had to resort to a right to manage application to remove as he was the sole director of their own residents’ management company.

Richard Davidoff fails to block right to manage – from a residents’ management company where he is the only director

The property tribunal’s practice statement can be read here:

https://www.leaseholdknowledge.com/wp-content/uploads/2022/01/Practice-statement-December-2021.pdf