UPDATE: 5 November 2021
Leaseholders have passed this decision by ARMA to LKP:
“ABC Estates expelled from ARMA The Board of Directors have now Under the Bye-Laws of the Association have hereby expelled ABC Block Management Limited as a member as of the 4th November 2021.
“In addition to this they must cease using ARMA’s logo and remove any reference to membership on any business notepaper, website or any other published or public material whatsoever and return their ARMA membership certificate.
“There is no right of appeal against the decision under our Articles of Association.“
Major works bill ballooned from £10,000 to £100,000 without justification
Leaseholders and freehold owner unite to reclaim payments
The property tribunal ruling prompts formal complaint over ABC Estates to ARMA
Leaseholders who sought the protection of a section 24 court appointed manager were aghast when projected major works estimated at his appointment at £10,000 were revised upwards to nearly £100,000.
Leaseholders were even joined by the freeholder with whom they had been in dispute in criticising the performance of Richard Davidoff, managing director of ABC Estates.
In a devastating ruling of August 12 the tribunal found that Richard Davidoff had failed in his fiduciary duties, 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 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.
The tribunal, under Judge Robert Latham, made these observations after noting: “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.”
Richard Davidoff left the site, 112 Blackheath Road in south east London, in January.
“Mr Davidoff failed to fulfil his duties as the tribunal would expect from a tribunal appointed manager who acts as an officer of the tribunal,” the ruling said.
Most unusually the property tribunal also apologised to leaseholders for ignoring their emails that matters were seriously awry at 112 Blackheath Road under its own tribunal appointed manager.
The tribunal ordered that the two leaseholders who brought the case be refunded £11,844.32 and £12,196.92. The freehold owner, required to pay £59,614, “has not paid one penny. She took the view that the sums demanded were “outright extortion”; she would not be “held to ransom” on her own property”, the tribunal noted.
A host of other charges, billed to ABC Estates, were ruled inadmissible. The company is a member of ARMA, and the tribunal ruling has been forwarded to the trade body as the basis of a separate official complaint.
“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,” the tribunal says
One of the leaseholders emailed ABC Estates in February 2020 pointing out that the proposed contractor, Valens Limited had been dissolved in 2018. Mark Reed, of ABC Estates replied that the company was in fact 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?” the leaseholder asked.
Mr 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.
In March, Mr Reed responded to the leaseholder: “It should be noted that I am not a director, shareholder, nor do I receive any financial remuneration from Valens Ltd.”
Richard Davidoff’s puffs his services on YouTube here:
The tribunal noted:
“There is only one consolation from this sorry saga. The tenants and the landlord are now united in common cause against the tribunal appointed manager.”
The tribunal stated: “The Applicants’ primary case is that the Respondent [Richard Davidoff] has sought to inflate the fees that he can claim through the Management Order. Regardless of whether he sought to do so, the Tribunal is satisfied that his actions have led to inflated and wholly unreasonable sums being demanded …
“Mr Davidoff failed to fulfil his duties as the tribunal would expect from a tribunal appointed manager who acts as an officer of the tribunal.
“We can see no justification for the agreement which Mr Davidoff signed with ABC. This seems to have been no more than a device to enable Mr Davidoff to levy charges and to deal with service charge funds outside the scope of the Management Order.”
The tribunal ruled that Richard Davidoff pay the leaseholders £300 application fee to the tribunal, and issued a section 20c order under the Landlord and Tenant Act 1985 barring him from passing on any legal costs through the service charge.
The tribunal issue these cautionary words to leaseholders seeking a court appointed manager:
There is a mistaken belief that if tenants have a rogue landlord who has neglected their flats for many years, all they need to do is to apply for a tribunal appointed manager pursuant to Part II of the Landlord and Tenant Act 1987 (“the 1987 Act”) and their problems will be resolved. This application highlights the limitations of what can be achieved by
such an appointment.
The full ruling is here:
I notice that the ABC Estates office is based in Matthew Offord MPs’ constituency and Matthew Offord MP is a member of the APPG on leasehold reform.
Could LKP make Matthew Offord MP aware that such deplorable practices are occuring on his patch?
Upon going back to the case, there is one other noteworthy area which may be a case for HMRC to look at further.
In paragraph 80 it is noted that Mr Davidoff says Mark Reed, Head of Block Management at ABC, was a “self-employed contractor. The tribunal then notes that Mr Reed has always styled himself as ABC’s Head of Block Management. From our block’s own experience of ABC, Mr Reed has never appeared to be anything other than an employee in his work.
Given recent developments on IR35 et al, it is worth checking whether this arrangement still exists – which could potentially now be construed as tax avoidance.