Tue 09 Apr 2024

Factor's duties relating to common repairs affecting private property

Newton Property Management Ltd v Rattray - Upper Tribunal (Scotland) | [2024] 3 WLUK 107 | 5 Mar 2024

The Factual Circumstances

The circumstances in this appeal to the Upper Tribunal were quite interesting, and the decision issued at the beginning of March is a warning to homeowners to take careful legal advice in respect of their rights and obligations when encountering common repairs.

The respondents owned an apartment in a block of flats. Their apartment included a balcony which overhung the flats below. The balcony was the sole property of the respondents and not common property. It is important to note that the relevant deed of conditions, in addition to providing a mechanism and provisions in respect of common repairs, provided for servitude rights of access to carry out common repairs with liability for damage caused when exercising such rights. It also ought to be noted that the appellants did not acquire the business of, nor did they take on the liabilities of the former factor. Although, there was some suggestion by the respondents that the appellants may have subsequently assumed such liability, the First Tier Tribunal (FTT) made no finding in fact on this issue.

The starting point was that sometime in 2020 water ingress was discovered in the flats below the respondents' balcony. On a basis which is unclear from the decision in this case, the appellants predecessors removed the appellants balcony flooring (despite it being private property) on the understanding that it would be re-instated once the works were complete at no cost to the respondent. 

Several years later the balcony flooring had not been reinstated. The building factor's interest now lay with the appellants. Following a meeting of co-owners during which they voted by majority not to fund the repairs to the balcony, the appellants had informed the respondents that they were refusing to re-instate the balcony boarding unless the respondents bore the entire cost of this re-instatement on the basis that the balcony (and its boarding) was private property. 

Rather than raising proceedings against the other proprietors for the cost of making good the damage (i.e. re-instating the balcony boarding) in terms of the conditions of the servitude, the respondents applied to the FTT for an order declaring that the appellants were in breach of their duties as factors and compelling the appellants, as factors, to re-instate the balcony boarding with the cost of that being divided amongst the owners of the block of flats, whom failing the appellants themselves.

Proceedings in the First Tier Tribunal

The FTT originally found in favour of the respondents, holding that as the balcony boarding's removal was required in order to carry out common repairs, that the respondents were entitled to the re-instatement of the balcony boarding akin to a common repair with that cost being divided amongst the proprietors within the block of flats and, critically, in the event that this cost was not met by the other proprietors that this cost be borne by the appellants themselves. The FTT issued a Property Factor Enforcement Order to that effect. 

The Appeal to the Upper Tribunal

The appellants thereafter appealed relying upon four distinct grounds of appeal but essentially on the basis that the FTT had failed to properly interpret the relevant deed of conditions by conflating two sections of the deed, namely, liability for common repairs and liability for damage during the course of exercise of a servitude. 

It is important to note that the liability for damage arising from exercise of the servitude rights applied only to individual proprietors and not to the factor’s duties to manage the common parts of the development. It would therefore appear that the respondents had misdirected their action and in fact should have raised proceedings against the other owners for a payment of damages associated with the cost of making good the damage to their property to facilitate the common repairs.

It was held that the FTT's decision also lacked logical cohesion in that it was ordering the appellant to instruct works without being authorised to do so by the proprietors of the development and contrary to a decision of the proprietors not to treat the repair of the decking as a common repair. The Property Factor Enforcement Order would involve the appellants acting contrary to the Deed of Conditions to instruct works without the authorisation of the proprietors who had already voted against meeting the cost of these repairs. In ordering this and also ordering that the appellants bear this cost in the event it is not met by the other owners, the appellants would have had no avenue to seek reimbursement from the various proprietors who would otherwise be obliged to meet their respective shares of any work instructed on their behalf as a common repair.

On reading the decision of the FTT, the appellant's position instinctively seems to have much merit. The relevant deed of conditions did not allow for the appellant to apply the division of costs between proprietors if the works were not common repairs. Given that the proprietors had voted against the disputed costs and the appellants had no authority to act contrary to that vote, it is difficult to see how the appellant could possibly have complied with the order of the FTT and it appears that the FTT had not given proper consideration to that point.

The Upper Tribunal favoured the argument put forward by the appellants and was quite critical of the FTT's findings both in fact and in law and therefore quashed the decision of the FTT, recalled the Property Factor Enforcement Order and remitted the case back to a differently constituted Tribunal.

Learning point from this case?

A simple summary of the situation could be expressed as that the respondents were not obliged to meet the re-instatement costs but had pursued the incorrect party on the incorrect basis to recover those costs. Clearly a lot of time and expense could easily have been avoided here if the respondents had obtained the correct legal advice prior to commencing their application.

Whilst the First Tier Tribunal decision came in for some quite heavy criticism from the Upper Tribunal, justifiably, it should be noted that the appellants had failed to make any oral submissions or indeed appear at the various hearings and instead relied solely upon written submissions. Perhaps the situation would have been clearer to the First Tier Tribunal and a better decision reached in the first instance had the appellant fully engaged from the outset.

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