Launching a Leasehold Valuation Tribunal action can be “quite daunting”, according to barrister Siobhan McGrath, who heads the Leasehold Valuation Tribunal service.
She made this admission in an interview in last month’s Channel 4 Dispatches documentary Property Nightmare: The Truth About Leasehold.
It is hardly a ringing commendation for the Tribunal system she oversees which is supposedly designed for use by lay applicants. The following statement on the web site of LEASE, the Leasehold Advisory Service, can often be entirely misleading:
“Proceedings at the LVT are semi-formal. Neither side is required to be represented by a barrister, solicitor or valuer, evidence is not given on oath and the usual court rules do not apply.”
The LVT itself then adds the even more misleading statement when describing its cases: “The proceedings are orderly, but informal”
Knowledge of the huge hurdles in bringing cases at the LVT will not come as news to regular readers of this site who recall examples such as the “legal torture” of pensioners at Oakland Court, in Worthing, or the disgraceful £30,000 legal bill for a simple right to manage application at Kingsmere, in Brighton. (Search Oakland Court and Kingsmere on this site.)
McGrath’s statement to Dispatches last month is a total contrast to what she claimed early in her reign in 2001. Then, she told the Daily Telegraph:
“Around 65 and 70 per cent of leaseholders represent themselves at tribunals. Providing you have prepared your case well, not having legal representation should not prevent you from being successful.”
In a decade, LVTs have gone from a position where self-representation was the norm for most leaseholders, to one where full legal representation – barristers and solicitors – is becoming almost mandatory in larger cases. Even in smaller cases some form of legal representation is becoming more and more common.
In short, McGrath has presided over a system that has become far more costly and complex to the detriment of the interests of ordinary leaseholders.
Lawyers have jumped on board the bandwagon changing the once informal LVT system into a position where it often shadows the courts – and a rather unbalanced court, from the leaseholders’ point of view.
It is absurd that leaseholders cannot claim more than £500 of their legal costs. Those at Charter Quay, Kingston, ran up £40,000 of costs in order to fight the four LVT actions that finally secured them £500,000 in repaid service charges. These can never be recovered, and come on top of the months of work the leaseholders themselves spent on their case.
On the other hand, even a partially victorious landlord may be entitled to pass on his full legal costs through the service charges under the terms of a lease unless the Tribunal specifically acts to limit these costs (see below).
Barristers have discovered the LVT as an unglamorous, but remunerative backwater of the judicial tribunal system, and the result is greater complexity, expense and timid decisions. Tribunal chairman are often hectored and intimidated by pricey advocates threatening judicial review, or appeal to the Upper Tribunal.
But while LVTs have become more legalistic, the flexibilities offered under the rules have turned into weaknesses. These are exploited ruthlessly to the detriment of ordinary leaseholder applicants.
For example, landlords’ lawyers seem unbound by Civil Procedure Rules. If a party fails to follow a civil court’s directions, the offending party risks loosing a case by default.
Failure to follow LVT directions, as an applicant, risks the case being thrown out. But a Respondent’s failure to follow directions almost always results in the Tribunal doing little or nothing.
Tribunals sometimes overturn their own directions rather than face down a robust Respondent. For example, a Tribunal may start by obliging the Respondent to disclose all relevant invoices and then, when the landlord claims that he is unable to find all the bills, it then decides that such disclosure “disproportionate”.
It is a pity that not all LVT panel members are aware of the HMRC obligations for record keeping and that ALL major managing agents store invoices electronically. It is very unlikely that it is impossible to uncover invoices, as LVTs are repeatedly being informed.
Under McGrath’s long presidency, the LVT system seems to have withdrawn into its shell and has little input from the leaseholders it was set up to protect. McGrath claims that it achieves a high user satisfaction rating from applicants, but LKP is unaware of any single applicant who has been surveyed for this information.
The LVT system is now moving from the Department of Communities and Local Government to the Ministry of Justice, and a review of all the first tier property tribunals is underway. As of next year, the LVT will disappear to be replaced by the Property Chamber considering cases that were previously under the control of a number of separate bodies.
The good news is that the proposed changes to the rules appear to offer give the opportunity to turn over a new leaf. These rules will give the Property Chamber more powers to ensure that the parties follow directions by allowing them to impose penalties for failure to comply. How onerous these penalties might be is open to review
The most important change being considered is that of costs. The wholly one-sided restriction on the leaseholders’ legal costs needs to be junked – it would be an absurdity in any other court.
Criticism of the LVT system is gathering pace. Sir Peter Bottomley MP has recently received his written response to a question in the House following his statement that leaseholders experienced “legal torture” at the LVT.
The Ministry of Justice claimed there is no real problem. However the fact that they are amending the Tribunal rules suggests otherwise.
We seem a long way from 2005, when McGrath assured News on the Block magazine: “As ever, we hope our biggest achievement will be to continue funding a high quality, cost effective, fair and accessible tribunal service which helps relieve the high level of stress and worry which can often be a big part of any housing dispute.”
As far as the current system is concerned the overwhelming majority of those we have spoken to say there are fundamental failings. Going to the LVT is now costly, time consuming, stressful and far from a reliable route to consistent decision-making.
LVTs sat at the heart of many of the criticisms and recommendations made by the Greater London Authority in its leasehold report Highly Charged, published last March. Despite being asked by the GLA to comment on the recommendations, the LVT has chosen to say nothing.
Please contact LKP with your LVT experiences.