By Sebastian O’Kelly
A pensioner faces having his £800,000 flat in one of London’s prime riverside developments forfeited by court order for refusing to pay service charges that he could not understand.
Astonishingly, the court action on November 28 is being pursued by the pensioner’s own neighbours in Plantation Wharf, Battersea – who may shortly include John Bercow, the Speaker of the House of Commons, and his wife Sally, who are negotiating the purchase of a flat.
Most of the residents have no idea that this drastic action – the absolute last stage in a leasehold dispute – is being carried out in their name.
The legal action was begun by Plantation Wharf Management Limited when it was controlled by the freehold owners at the mixed residential and commercial complex of 13 blocks. But residents took control of the company in October last year and the resident directors have ‘unanimously’ decided to continue the action.
In a further twist – also unknown to the residents – the chairman they elected to head Plantation Wharf Management Limited, Bryan [Howard] Lewis is a disgraced ex-solicitor, who has a criminal conviction for dishonesty. There is no suggestion that Plantation Wharf Management has acted improperly at any stage in the proceedings.
Following the intercession of the Leasehold Knowledge Partnership, local Battersea MP Jane Ellison has written to Lewis and his fellow directors urging restraint and to settle the issue without making the pensioner homeless.
Sir Peter Bottomley, MP for Worthing West who is intent on ending abuses in leasehold, has today urged Lewis to halt the litigation, with its spiralling costs.
“My direct request to you is that you see how to limit the costs he [the pensioner] may face, that you stay the action to take control of his property for forced sale and that you review whether the additional costs since you took responsibility have been as limited as possible.”
Baroness Gardner of Parkes, a strong campaigner for leaseholders, referred to “this absolutely tragic case” at last night’s meeting of the Federation of Private Residents Associations in London. She also met and commiserated with the individual concerned.
The pensioner, Dennis Jackson, 73, is a retired commercial photographer who has lived at Plantation Wharf for 16 years. With a neighbour, Rosemary Irving, who died in June, he complained that he was repeatedly being charged for works that were never done. For three years running he and Rosemary had been billed for a new electronic door-entry system, new carpets and contributions to £50,000 security gates for the estate.
But the works were never completed. Instead, the money was spent on more urgent repairs at the complex of 160 flats and 94 commercial premises that was built 18 years ago.
In protest, the pensioners withheld service charges that amounted to £9,164 for Dennis and £6,651 for Rosemary.
A county court ruled, as expected, that the case should be heard by the Leasehold Valuation Tribunal. With little more than what they felt was a reasonable argument – and no legal representation at all – the pensioners were unconcerned.
They naively believed that the LVTs were a low-cost redress tribunal where the costs involved in disputes were capped at £500. Both the Ministry of Justice website and that of the quango LEASE, the Leasehold Advisory Service, perpetuate this utterly mistaken view [see below].
“We were not that worried,” says Dennis. “We felt that this was the only way to stop what we thought was over-charging and bad budgeting at Plantation Wharf. Many of our neighbours, who were constantly complaining about the rising charges, wholly supported what Rosemary and I were doing.”
Had the pensioners initiated the action as the applicants, it is possible that the LVT may have sent them away to prepare a more thorough case.
Instead, the two pensioners entered into a calamitous legal dispute where they were opposed by solicitor Janice Northover, of Brechers, barrister Alexander Bastin and Phillip John, managing director of Mayfair-based property managing agent Tideway.
The hearing lasted for three days in February 2010, and a fourth in October, and in Dennis’s account the two pensioners were “utterly overwhelmed”. How a procedure that began with county court transfers in May 2009 ended with an LVT ruling in January 2011, is one of many unresolved questions that are involved in this case.
“We had no idea that it was going to be a full court case lasting four days in total. There was a huge amount of paperwork, including six massive lever arch files,” recalls Dennis. “We were absolutely swamped by it all and completely out of our depth.”
The LVT finally ruled in January 2011 that the service charges were justified – apart from a £200 reduction – but the accounts presented to residents by Tideway were strongly criticised for their complexity.
The tribunal declared:
“Although it is correct that the substantial charges have not been significantly reduced, the Tribunal is troubled by the repeated over-budgeting which has occurred in this case and which has resulted in large sums having to be found by leaseholders, which ultimately are not put to the expenditure for which they were initially demanded – but simply disappear on other items of expenditure which are not well explained. It is correct that the figures appear ultimately in certified accounts, often delivered long after the end of the accounting year, but these accounts themselves are arranged in a complex fashion and are, if not impenetrable, very difficult for a lay leaseholder to understand without some kind of proper explanation.”
To recover the two pensioners’ service charges, Plantation Wharf Management Limited claimed legal expenses approaching £100,000 – “which on any view is a colossal sum”, noted the LVT. The LVT reduced legal costs by a third.
It issued a section 20c order that it would be wrong for these fees to be recouped from leaseholders through the service charges.
“The repeated over-budgeting, sometimes by very substantial sums, the failure properly to communicate with leaseholders, and the failure in some cases properly to demonstrate precisely how excess monies have been allocated to other works, all support the contention that there should be some limitation on the legal costs recoverable by the applicant as service charge.”
But Plantation Wharf Management Limited’s legal team, again Janice Northover and Alexander Bastin, successfully appealed against this ruling on legal costs in the Upper Tribunal (Lands Chamber) in December 2011. Neither Dennis nor Rosemary were even present.
An additional LVT action was also launched by the lawyers for the management company to recoup the legal costs from the pensioners as an administration charge.
The head of the Leasehold Valuation Tribunal service, barrister Siobhan McGrath, then intervened and instructed a single LVT to consider both actions in July 2012.
Meanwhile, the residents, headed by Bryan Lewis, took control of the Plantation Wharf Management in October 2011, something to which they were always entitled but had failed to exercise in the 18 years since the site was built.
In an extraordinary decision, the elected directors decided to continue the litigation against Dennis and Rosemary to recover the legal costs of their defiant stand over the service charges.
This means that if Dennis has his flat forfeited on November 28 it will be the result of his neighbours’ action, not that of the site’s freeholder.
The pensioners finally appreciated the gravity of their position and Rosemary instructed a barrister, with Dennis agreeing to share costs. But two weeks before the hearing in July last year, she died. Dennis asked the LVT to delay the case so that he could mourn his friend and find a lawyer, but was refused. Instead, yet again Dennis went before the LVT without legal representation. The LVT allowed him one afternoon of the hearing to attend Rosemary’s funeral.
The tribunal rejected Dennis’s arguments that the legal and other costs were too high. He was particularly indignant that Phillip John, the managing director of Tideway, was permitted to charge £250 an hour in order to explain the complex accounts that his own firm had prepared.
The tribunal found that administrative charges for the case of £39,951.25p were reasonable and payable by Dennis. But the lawyer, Janice Northover, is also demanding £2,654.84 in interest for her clients. Then will come the costs for taking the case to appeal, approximately £8,000 on Dennis’s understanding. Further legal costs will mount up if this case is taken to court again on November 28.
“I just cannot afford to pay this sort of money,” says Dennis, who last week put his flat on the market with estate agents Featherstone Leigh for £799,495. “It is horrifying that it is actually my neighbours who are now bringing this action to forfeit my lease and make me homeless.
“I may have a valuable flat, but like many pensioners I am on a fixed income and I cannot afford to pay this money.”
Dennis has a £173,000 mortgage on the property, and clearly can no longer afford to live at Plantation Wharf.
As the residents ponder the public fallout over this case their attention will inevitably turn to Bryan Lewis, the residents’ chairman of Plantation Wharf Management Limited, who insists that it is right for Dennis to forfeit his home.
Lewis, 64, a disgraced former property solicitor with a conviction for a criminal offence involving dishonesty, has “an appalling disciplinary history”, according to the Solicitors Disciplinary Tribunal. In 2008 three London solicitors were suspended for three to six months each, and fined £14,000, for employing him as a clerk involved in conveyancing work.
Last week Lewis told Dennis in writing that he had “gained nothing from the LVT action”, and that he and his fellow directors of the Plantation Wharf Management Limited were “unanimous” in recovering the costs.
“I also offered to negotiate a peace settlement between you, the management company and the freeholder. I stated that the costs would become disproportionate if the action was pursued, but my advice was not heeded and the offer was not accepted.
“You have gained nothing from the LVT action, which is a clear indication of the misguidance of your joint decision to pursue an application to the LVT.”
Dennis says that this account is completely incorrect, and that Lewis never had this conversation with himself and Rosemary Irving.
“Because of our stand the residents at last got control of Plantation Wharf Management and now, miraculously, the service charges have come down,” says Dennis. “My own service charges were £4,400 before and are now £2,830. The stand that Rosemary and I took was the catalyst for this change and we have probably saved the other residents £150,000 in service charges. It is outrageous that I now face total ruin in the name of the other residents whom I helped.”
Sam Fryer, who owns a £950,00 flat at Plantation Wharf, agrees. “What Dennis is saying is absolutely true. Because of his and Rosemary’s stand we are all better off. The residents should dip into their pockets and help him out over this. I strongly disagree with the decision that he faces the forfeiture of his home.”
Fryer, too, has faced the full ire of Plantation Wharf Management legal team in court. She refused to pay £700 in service charges, ended up losing and having to pay £6,000 in legal and other costs.
Lewis acknowledges that the board could stop the legal proceedings. He has received letters from both Sir Peter Bottomley and Jane Ellison urging him to do precisely that.
Lewis admits that it was the costs involved in fighting the pensioners that prompted him and other concerned residents to gain control of Plantation Wharf Management Limited.
“Dennis and Rosemary were urged by me and others not to continue with this action. They were told this many times.
“Because of his folly the residents of Plantation Wharf are facing an enormous legal bill. Why should the residents suffer because of this?”
Lewis made no attempt to cover up his criminal conviction, or the fact that he is prevented from practising as a solicitor.
“I do understand Dennis’s anguish,” he said. “He has been the author of his own ruin, just as I was of mine. Thanks to family and friends I managed to put my life back in order, and so must he.”
But Dennis is not a struck off solicitor seeking rehabilitation, just the owner of a flat who got no explanation for the bills he received and so would not pay them.
LKP would like to thank Nic Shulman, of News on the Block, for drawing this matter to our attention at the LKP / Carlex Westminster briefing for MPs last week.
Both LEASE and the Ministry of Justice websites spread the myth that LVTs are low cost tribunals
LVTs are part of the Residential Property Tribunal Service (RPTS) and provide an accessible and relatively informal way to resolve residential leasehold disputes.
Each party is normally responsible for their own costs of appearing before the LVT, although a lease may make provision for the landlord to recover his professional costs through service charges. The paragraph ‘Limitation of service charges – landlord’s costs’ explains the type of application that can be made to a LVT if this is the case.
In addition, the LVT may determine that a party to the proceedings shall pay another party’s costs incurred in the case. The amount that the LVT can award is currently limited to £500, and only applies in the following limited circumstances:
- where the application has been dismissed by the LVT because it believes the application is frivolous or vexatious or otherwise
- an abuse of process; or
- where a person has acted ‘frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings’.
Ministry of Justice
Can the LVT order one party to pay the other party’s costs?
No. Save in exceptional, limited, circumstances each party has to pay its own costs. Those circumstances are where:
(a) an application has been dismissed on ground that it is frivolous
or vexatious or otherwise an abuse of process or
(b) a party has in the opinion of the LVT acted frivolously, vexatiously, abusively or disruptively or otherwise unreasonably in connection with the proceedings.
Furthermore, even in such a case the LVT may not award an amount in excess of £500.
Some leases allow a landlord to recover legal costs as part of the service charge. The LVT has the power to make an order preventing a landlord from taking this step. This is known as a section 20C order. A party may ask for a s20C order either in the application form or, by completing a separate form obtainable from the LVT office.