Trust gets judgement (variable annual management charge to freeholders)

On 16th February last Mr Justice Peter Gibson delivered a judge­ment approving the Trust’s proposals for variable annual manage­ment charges to freeholders of the Suburb.

The scheme of manage­ment applies only to free­holders. Neither the scheme as it stands, nor the approved variation, can make leasehold properties pay their propor­tionate costs towards the Trust’s general time and ex­pense. In 1974 a charge was fixed for five years, to be reviewed thereafter. It was very shortly found to be grossly inadequate, and on the expiry of the first 5-year period the Trust proceeded to try and obtain a revised charge following the provision of the scheme. In fact it was found that the scheme proved ‘un­workable’ on this point and the Trust was forced to apply for a variation of the scheme, which it did, in the first place, in November 1980.

The essence of the judgment on the Trust’s appli­cation is that in ‘the current and subsequent years each owner is obliged to pay, on demand, an amount estimated by the Trust to be the manage­ment charge for the year’. There is, however, some room for objection on the part of freeholders. So long as at least 200 freeholders, that is about 10 per cent, notify the Trust of their objections to the charge within 6 weeks of themselves being notified of the amount, a surveyor, appointed by the President of the Royal Institu­tion of Chartered Surveyors, will act in an expert capacity and independently determine a fair charge for the year in question.

Whether the charge is initially acceptable to more than 90 per cent of free­ holders or it is ultimately determined by a surveyor, it is mandatory. Non-payment will inevitably lead to Trust time and money being spent in efforts to obtain the amount — and the costs of this will, of course, fall on residents of the Suburb.

The scheme of manage­ment benefits the Suburb as a whole even though freeholders and not leaseholders pay the management charge. In addi­tion to managing the scheme, the Trust also acts as Ash- dale’s attorney in connection with leasehold properties which number over 1,000. Ashdale’s management fee and contributions towards the maintenance of the Suburb have increased over the years but are still far from adequate, and the Trust has apparently been meeting its deficit in handling leaseholds out of a capital reserve. It is currently negotiating with Ashdale on this matter.

In the opinion of Mr. Justice Gibson, the manage­ment charge imposed ‘reason­able obligations’ on freehold­ers. He deemed its method of assessment ‘fair and practi­cable’, based as it is partly on the proportion of free­holders to leaseholders — about 2:1 — and partly on the amount of time spent on the respective concerns. Last year, for example, 42 per cent of the Trust’s expenses was apportioned to free­holders. He also underlined the fact that the Trust is assumed to operate the scheme in an ‘economical, efficient and consistent manner’, so that the charge should reflect this and not escalate out of all proportion. Finally, recourse to an in­dependent surveyor who 'should bear in mind all these considerations would consti­tute a ‘safeguard’ against excessively high charges.
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Trust gets judgement (variable annual management charge to freeholders)
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