By Harry Scoffin
Controversial freeholder Israel Moskovitz and his legal team were reprimanded in the property tribunal last month for failing to hand over £69,633.72 to a right to manage company.
Bridge Court South RTM, 24-flats in Leyton, north-east London, won back half the contingency fund from the control of Mr Moskovitz’s manager Y and Y Management.
The other half is for the separate building Bridge Court North, which also has 24 flats but with commercial premises below. As a result, it remains under the control of Mr Moskovitz.
Barrister Justin Bates provided the statement of case on behalf of Mr Moskovitz, who was represented on the day by Mr Simon Allison, of Landmark Chambers.
Mr Bates argued that because the site was run as one entity, Mr Moskovitz’s freehold company Triplerose Limited, the two blocks had never had separate accounts.
“… the Applicant [Mr Moskovitz’s Triplerose] is unwilling to make an estimate or apportionment [to hand over to the RTM]. As a statutory trustee of the service charge funds that would be inappropriate.
“Accordingly, the FTT needs to decide what – if anything – should be paid over to the Respondent.
“The Applicant considers that, as a matter of law, nothing is payable …”
These objections were rejected by Judge Nicholas Nicol, who stated in his ruling:
“This argument is so obviously wrong as to do no credit to the experienced lawyers who managed to convince themselves that it was appropriate to waste the Tribunal’s time with it.”
“The service charges held on the Applicant’s behalf include sums paid in respect of the premises, Bridge Court South. The fact that the lease does not require any apportionment to each block is entirely beside the point.
“When the right to manage is exercised, the funds must be apportioned. Depending on the circumstances, this might not be an easy task but such difficulties are not relevant to the principle.”
Judge Nicol added:
“The Tribunal is aware that the criticism made of the Applicant’s representatives here is, for good reason, rare but, with this particular landlord, it appears to be part of a pattern.”
Judge Nicol, who took only five days to make his ruling, ordered Mr Moskovitz’s Triplerose to hand over £69,633.72, exactly half of the reserve fund, to the Bridge Court South RTM.
The same tribunal ordered leaseholders to pay £6,100 to cover the landowner’s legal fees and the costs associated with handing over the management of the block.
Bridge Court South mounted several attempts to gain the right to manage before the current leaseholders were successful in removing Y and Y Management at their second attempt in September 2018.
Judge Nicol referenced the frustrations of Bridge Court South RTM to achieve its right to manage.
“… a reluctant landlord may stray into putting up obstacles without any genuine foundations.
“Parties must be aware that arguments raised purely for such tactical reasons will be given short shrift and may have costs consequences.”
It is ironical that Mr Moskovitz’s Triplerose Limited managed the two-block site as one, when the Triplerose decision in the Court of Appeal argued the precise opposite and undermined multi-block RTMs.
The Law Commission has been tasked by government to remove the arbitrary 25% rule concerning commercial premises as part of its work to reform right to manage.
The reform effort also involves removing the incentives for landlords “to adopt a tactical approach” to tenants trying to take control of their service charges.
The body’s recommendations are due to be published in February, which may come as relief to leaseholders of Bridge Court North and others in similar situations.
The ruling can be read here: BridgeCourtRTMDecision2
Justin Bates legal opinion: FTTReserveFundApplication