Risks & Rules for Management Companies in Gibraltar | Property

Over 60% of people in Gibraltar live in apartments run by management companies.

The rules which govern the apartment blocks are set out in detail, not just in the underleases but also in “House Rules”, company statutes and legislation such as the Housing Act which contains provision for property management and case law.

If you look at it this way, you will immediately realise that being a member or director of a Management Company is not something simple. Moreover, they deal with apartment owners’ valuable property rights and the money that they pay in service charges.

Yet, a surprisingly small number of people who volunteer for unpaid office in the councils and boards of directors of their buildings realise that in so doing they are effectively undertaking legal obligations which render them personally liable for their acts and omissions.

Aside from this, they will be dealing with their own neighbours and it is always important that they be seen to be acting fairly and within the bounds of their authority and good estate management practice to avoid unpleasantness which can easily descend into uncomfortable feuds!

That is why when considering whether you take such a position it is essential to ask for a copy of the management company’s “directors and officers” insurance to safeguard against claims. But that is not all.

A director or council member is obliged to know all his or her obligations in law in the same way as the director of a commercial company. There is nothing informal in a management company scheme. This is something that can only be achieved following discussion with legally qualified and highly experienced advisors and every properly run Management Company must have a directors’ reference handbook clearly setting out responsibilities. This is not a luxury or a matter of choice, it is something that must be done.

Recently there have been two Supreme Court of Gibraltar cases which highlight the seriousness of the issues and the large amounts of money at risk when something goes wrong in connection with the management of an apartment building.

The cases involve the carrying out of works which led to disputes which ended up in Court at great expense and anxiety to all those involved.

One can only imagine what might happen if the matter in dispute related to the improper appointment of contractors or worse still, if the failing related to health and safety.

These latest Gibraltar cases can be found here: The Sails Management Ltd & Brympton Management Ltd 

In both cases the winning party was represented by the barrister Nicholas Gomez of Charles Gomez & Co.

The cases have attracted academic attention in the United Kingdom because of the complex legal points that arose and the application of those legal principles to the facts of each case.

In Sails Management Ltd v Slack and Cox, Nicholas Gomez acted for the Management Company whereas in Brympton Management Ltd v Bacarese he acted for the apartment owners.

It is clear on a reading of these cases that the Judges came to their decisions based on the different management regimes. In the Sails case it was held that the management company had acted clearly and coherently whereas in the Brympton case those in charge of management appeared to have acted with a general lack of organisation and consideration for the personal circumstances of the apartment owners.

These cases clearly puts paid to any notion that a management company can act in an arbitrary fashion. The Courts will not allow such behaviour.

Everyday management company directors and council members must take decisions which impact on the rights and interests of apartment owners. There is a well-established system for dealing with all these matters and certainly persons in positions of responsibility are not entitled to make rules up as they go along.

By doing so they risk incurring expense to the body of members that they represent and could even be found personally liable.

For advice on any property management issues, contact us here and we will get back to you by return.