Government seeks £20.5 million off John Christodoulou for Canary Riverside building safety works, reports FT

Housing secretary Michael Gove has begun a legal action against John Christodoulou’s Yianis Group to pay £20.5 million building safety works at Canary Riverside, according to the FT.

This is the latest court room drama at the prime Docklands site, where Mr Christodoulou has been fighting in the property tribunal to wrest back management control from a s24 court appointed manager.

The government’s action marks the first move by Mr Gove’s department to use legal powers under the Building Safety Act to get building owners to contribute to fixing safety issues.

It is also wants developers Urban Splash to pay £46 million of remediation costs at seven buildings in Manchester, and Hollybrook to pay £3.4 million for a building in London.

“Where developers and freeholders have profited from unsafe buildings, we will use powers in the landmark Building Safety Act to recover funds . . . We will continue to take action against those who do not take responsibility for building safety issues,” a housing official is quoted.

The Act allows the government, regulators or other “interested persons” such as leaseholders to apply for orders requiring building owners, developers or others to fix building safety defects or make payments towards the costs.

Yianis Group is reported to have acknowledged receiving the government’s application, but that it had not been served on the companies.

“We are not going to comment on this matter save as to say that the [secretary of state] has taken such action without as much as requesting a meeting with the companies,” the company said.

The government is seeking the order against Yianis Holdings Ltd and two other companies in the group.

Yianis told the FT that property tribunals had found that the two other companies were “accountable persons” under the Act for the four residential buildings within the Canary Riverside development.

This issue has been the subject of the latest round of legal disputes between Yianis and the section 24 manager, who is strongly supported by leaseholders.

The Upper Tribunal ruled on appeal last month (below) that while the section 24 manager was not an “accountable person” under the Act, he was “nevertheless obliged by the management order to continue to carry out the functions conferred on him by the order, notwithstanding that those include building safety responsibilities which are also duties of the accountable person under Part 4 of the 2022 Act. He is not obliged to carry out building safety functions which are not required of him by the management order”.

So Yianis got the responsibilities of being the responsible person, but did not succeed in taking back the management.

The Canary Riverside leaseholders were victorious in late 2022 after a tribunal ruled that they had been overcharged £1.6 million in purported insurance-related services and linked taxes.

The first-tier tribunal criticised a “complete lack of transparency with leaseholders regarding these commission payments” by the freehold owner and a management company, both Yianis Group subsidiaries.

The upper tribunal, which ruled this month, found partly in favour of the landlord but said it had “failed to demonstrate” that it was entitled to any more than £579,000 of the £1.6 million.

The FT also reports that the government wants property group Urban Splash to pay £46 million of remediation costs at seven buildings in Manchester, and developer Hollybrook to pay £3.4 million for a building in London.

In total the three actions seek to recoup £70 million.

There was no comment from either Urban Splash or Hollybrook.

The Upper Tribunal ruling can be read here:

https://www.leaseholdknowledge.com/wp-content/uploads/2024/03/CanaryRiversideUpperTribunalResponsiblePerson.pdf