The issues in this case – and others concerning local authority leasehold – will be debated tomorrow morning on BBC Five Live with Eric Pickles, Communities Secretary, and Sebastian O’Kelly, of LKP, at 11.30am, Sunday January 12
A disastrous act of defiance in refusing to pay her share of a council’s major works scheme has cost Farieda Chandoo, 60, – who once looked after the five-year-old George Osborne – nearly £100,000.
She will also almost certainly have to sell her three-bedroom, split-level former council flat after being bailed out by her mortgage lenders.
Farieda, who was born in Trinidad, bought her comfortable flat in a 1970s three-storey block for £42,000 in 1997 from the former council tenant who had exercised the right to buy.
But she refused to accept that a £3.8 million refurbishment of the Brandon Estate, between Camberwell and the Oval, was necessary and believed the works to have been appallingly carried out. Her block, Kirwyn Way, had to pay £1.1 million.
As a result, she withheld payment of £40,000, which was her share for the works, setting in train a series of disasters which resulted in her facing a four-day forfeiture hearing at the county court last month (December 10 2013).
She now faces a total bill of nearly £100,000, and it could be more once the cost of the mortgage lender’s bail out is added to the total. The flat itself is only valued at £195,000.
“At one point I even got in touch with George Osborne’s mother through their business address,” says Farieda. “I hated to do it as it was like putting out the begging bowl.
“George was a lovely little boy and I was very fond of the family. But I never heard anything back. It was a long time ago.”
As she has always been in full-time employment as an NHS secretary, Farieda was the only leaseholder in Kirwyn Way who paid the full amount.
“I have always paid my service charge and I do not expect something for nothing,” says Farieda. “But I just will not pay for things that I did not receive.
“These works were badly carried out and made my life worse rather than improved it, so I refused to pay and fought the council in the Leasehold Valuation Tribunal.”
That took place in January 2011 and Farieda, who spent £500 on legal preparation for the case, was yet another lay applicant leaseholder to fail to persuade a tribunal when up against a legally represented freeholder.
In this case, however, and in contrast to so many private freeholders who use legal costs to play the Leasehold Valuation Tribunal system, Southwark did not ask for its legal costs at all.
Farieda’s argument was that the costs for council leaseholders should be capped at £10,000 – something which Eric Pickles, the Communities Secretary, is keen to introduce, although the figure will be higher in London at £15,000.
She also produced a string of complaints about the works, most of which were rejected.
But the builders did put a hole in the roof causing a leak to her flat. In addition, a front porch was erected which the tribunal ruled was not refurbishment, but new works, and the cost was removed from Farieda’s bill.
Nonetheless, on almost all points her arguments failed.
The tribunal ruled:
“This is yet another case of a leaseholder who has purchased a right to buy property from the original purchaser at the full market price, believed the property to be in good or at least acceptable condition and is then confronted with a bill for major works for over £38,000 which she is unable to afford and which had been imposed upon here by the landlord’s implementation of the Government’s Decent Homes Initiative.”
As well as considering the sum unjust, Farieda was simply unable to pay it, although Southwark does run a low interest loan scheme for council leaseholders in these positions.
“But I could not afford to pay £600 a month more,” said Farieda. She also refused to accept that she needed to.
She continued to dispute the amount, spending £13,000 on a solicitor and £2,000 on a surveyor to examine the works at Kirwyn Way.
Nonetheless, she was without any professional representation at the four-day county court hearing that started on December 10.
Why a forfeiture hearing should be assigned four days is a question that requires an answer, but Farieda was unshakeable in her belief that she could re-fight the battle lost in the LVT and assembled her arguments according.
LKP, which was contacted before the case, urged dialogue with the council to avoid a further avalanche of costs for the legal profession – and the charges of Farieda’s mortgage lender.
The result of the four-day hearing has been an utter disaster.
On this occasion, Southwark deployed a barrister and sought and obtained £24,000 in costs.
“I will have to sell my flat because of this and I have no idea what I will do,” she says. “I will have to move into some bedsit somewhere. This case has brought me utter ruin.”
How she has managed to carry out a full-time job in the face of this litigation is astonishing.
What can be done to stop more cases like Farieda Chandoo’s?
It is a failure all round that this case came to court and that a dignified, independent woman is almost certainly going to have to sell her home and go into rented accommodation.
It is an open question why the judiciary permitted a four-day forfeiture hearing with a lay applicant.
Forfeiture can be lifted in 10-minute hearings where mortgage lenders agree – as they usually do – to pay the outstanding debt.
If there was no chance of Farieda interesting the court in her complaints about the necessity and quality of the works at Kirwyn Way, then one has to ask whose interests were served by holding a protracted case.
When she was first presented with an eye-watering bill for the works, Farieda consulted her MP, Harriet Harman, and John Prescott, then deputy prime minister and the Communities Secretary.
There was a move to limit leaseholders’ liability in major works to £10,000, but it did not apply to Farieda.
Eric Pickles, the Conservative Communities Secretary, is now attempting to introduce this scheme. He was indignant at the case of local authority leaseholder Florence Bourne, 93, in Newham, north London, who died tormented by the fear that she would have to pay £50,000 towards the refurbishment of her block.
The proposal is that over a five-year period, local authority leaseholders will have a cap of £10,000 (£15,000 in London) for five years.
Of course, this scheme would not have assisted Farieda who has lived in her home since 1997.
Southwark is considering a scheme to offer to buy back ex-council flats from leaseholders who cannot afford to pay for the major works.
Inevitably, this gives rise to suspicions that Southwark will abuse its whip hand forced down prices before snapping them up.
In the case of Farieda Chandoo, there have been failings. She did need help, rather than being financially ruined. She did look into selling her flat back to the council or a housing association, but these solutions failed.
She is still bitter about the quality of the works: pointed to fractured masonry, rotting woodwork, rainwater accumulating on the flat roofs.
It is all too likely that Kirwyn Way will need another refurb at some point in the not too distant future.
The accommodation standards fall well short of the truly opulent council offices enjoyed by Southwark’s housing staff in Tooley Street, beside London Bridge.
We must hope that Farieda Chandoo is the last of Southwark’s leaseholders to suffer these sorts of losses in the courts.
Farieda Chandoo’s LVT ruling can be read here
Anyone reading this case will be horrified by it and have the utmost sympathy for the trauma Farleda is going through.
We can always be wise after the event,( i made a similar mistake over ground rent which proved expensive, but fortunately not ruinous)
All the campaigning sites Campaign against retirement leasehold exploitation/LKP and About Action give the advice in the strongest terms that you should always PAY UNDER PROTEST, and claim back.
This means you are fully protected from any action a Freeholder/Managing Agent would like to take as you would have complied with your lease.
It is then a matter of claiming against the Freeholder/ Managing Agents, who would have to demonstrate that the work was fairly charged and carried out to a reasonable standard in order to defend themselves..
Typo, Sorry I meant About Peverel!
Further to the advice about paying under protest rather than withholding payment, I would like to add, that if you withhold payment the issue that will be the only concern for the court is to determine if you have complied with your lease? Mitigation (in that poor or no service was supplied is not a factor.
However, if you have paid (under protest) and then challenged in court, the onus completely changes. It is now for the Freeholder/Managing Agent to prove that they have complied with the lease. In the case outlined, Southwark Council would have to prove to the court that the work was reasonably priced and carried out to a satisfactory standard..
I am sorry but the above comments are wrong.
There is no right to withhold nor any “pay under protest”. If an owner disputes charge made or to be made, they should pay and qualify that they neither agree nor admit the charges as being due. That is then followed up with the basis of their dispute.
It is open to those who do not pay to immediately exercise their right to have the FTT determine that the charges, made or to be made, based on the lessee’s argument.
As a FH is then unable to take action for forfeiture until determination is made, the swift acting owner can skirt payment. If the FH seeks a money claim then that is different , however a Court will in most cases upon argument, defer judgement pending determination in the FTT.
It is clear that the LH must take the intitiatve and exercise their rights at the earliest oppurtunity( taking advice first on the lease and the costs of such action to see if your case is one of the few exceptions).
It is misleading to expect that there is any onus as posted, the claimant FH or LH must make their case and their argument, and the respondent defend their positions against the arguments made. A recent UT case, coincidentally on a council property chastised the FTT ( then LVT) for going beyond the arguments made by the lessee and limited ( some would say curtailed) the inquisitorial role of the FTT. It would be an unwise lessee that expects a court or lessee to make the arguments for them or expect that in response to a simple or brief refutal of charges, that the FH has the onus to defend its position comprehensively or lose.
I will read the LVT or FTT determination but if the defects pointed in the work are valid, then the above case I referred to is an example, as far as I can see now, of the behind the scenes briefing that has, particularly in public sector cases, stuffed residential leaseholders in social housing in general. I too am bemused by a four day listing or the need for a barrister over 24k worth of time when the matter has been( or should have been) substantially determined at the T. I would expect to see that the case to the T ws either flawed in its decision or that, as above, the arguments presented too insubtantial( despite I assume their inherant validity) to assist her claim. The photo is most telling I can see from it that there is an inherant defect that was not addressed and caused the render and coping to blow. … Frankly as I have said on other threads the scandal in public sector leaseholds far exceeds that of the likes of Peveral and clearly government does not like its tribunals awarding claims against its funded works.
The four-day county court case in December, which cost Farieda Chandoo £24,000, is incomprehensible. A forfeiture case can be dealt with in 10 minutes especially when, as here, the leaseholder’s mortgage lender was offering to pay off the debt.
Farieda was convinced that all the issues dealt with in the LVT – which were unambiguous and clear and were not appealed – could be re-opened.
Before the case, I urged her to employ an open access barrister we have used before, contact the council and mediate.
The unfactored costs here are those of her mortgage lender, which also employed a barrister.
The total costs involved are likely to exceed £100,000.
Thank you my suspicions were correct. Though the claimant can state “determined” but the county court are not unknown to rexamine issues nor accept them blindly, in simple terms, where they may be in error or some dispute of fact, and that it is they who have to consider the burden of forfeiture on an owner.
It is not the case that Southwark refused to claim costs at the LVT. It can’t unless it can show that the other party acted frivilously and vexatiously and even then it would not be awarded costs equivalent to those incurred at a county court hearing. Note that Southwark had no compunctions steaming in at the county court.
Ms Chandoo has not received the best advice on the evidence presented here. I don’t absolve her solicitors. And I don’t absolve her completely either. 15 minutes with a CAB housing adviser might have been wiser. Better to have taken the time to talk to a decision-maker, rather than a debt clerk, at the local authority.
Paragraph 55 of the ruling makes clear that Southwark stated that it would not be seeking costs at this hearing.
Or employ a chartered building surveyor to provide independant expert evidence on the shortcomings of the works which would have assisted her in what arguments to present. One way that the FTT can work is that provided with the facts and argument the legal aspect is not so important. Presented with clear shortcomings and the reasons for those by a professional, it is easier to ask for a determination of a reasonable cost” should I have to pay for something that has not been done right?” than soley rely on anecdotal evidence and photograhphs and a l;awyer.
Don’t forget that costs changed in July at the FTT and are no longer so limited. readers should also make sure they understand the difference betwen those costs and costs due under the lease for proceedings.