Ian Byrne MP wades in urging RMC directors to reconsider possession order
UPDATE: Amended 11 November 2021 as quantum of service charges and Ms Perry’s valuation of her former flat were disputed.
A mother and her 12-year-old son have been evicted from her grade 2 listed flat over a service charge dispute ballooned through legal fees into a debt of more than £20,000.
They are now living on the sofa of a friend’s house.
Caroline Perry, 50, was evicted from her flat at Basil Grange, in West Derby, Liverpool, on September 15 and she was instructed to clear out her possessions by Wednesday last week (29 September) before the flat is prepared for re-sale.
According to a barrister who offered her services pro bono and who has examined the rulings in the case, her legal position is weak. She told LKP:
“Although I have considerable sympathy with her [Ms Perry] on a personal level, from a legal perspective I think she has exhausted all available remedies.”
However, Ms Perry has now transferred £11,000 to the solicitors acting for the Basil Grange Management Company Limited and £9,132 will be paid in 14 days along with further charges after her mother applied for an equity release loan, she says.
Ms Perry is backed by Liverpool West Derby MP Ian Byrne.
He has written to the directors of Basil Grange Management Company Limited and its legal advisors Dallas and Richardson Solicitors:
“We are all living in a very uncertain and difficult times post covid and I urge you to accept this payment and reconsider this eviction notice to allow Ms Perry to settle the outstanding amount and return to her home.
“I fund a housing solicitor from my office and sit on the APPG for Leaseholds and will be doing all that I can to support my constituent and ensure that her and her son are not made homeless or taken advantage of by this system and future constituents do not fall foul of a system stacked up against the individual leaseholder.”
LKP alerted Ian Byrne MP to the case last week, along with the MP co-chairs of the All-Party Parliamentary Group on leasehold and commonhold reform (Sir Peter Bottomley, Justin Madders and Daisy Cooper).
Ms Perry has been an unassisted litigant in person for much of this dispute and believes that she is a victim of an injustice. The loss of her home, which she thinks could be worth £220,00 although a valuation of £160,000 was given to the court, over a service charge dispute is excessive, she believes.
She took the decision to transfer the £11,000 to Dallas and Richardson Solicitors’ client account without advice, and in spite of the rulings of two judges in the district court. The open question now is whether the directors of Basil Grange Management Company Limited will accept it.
The case is unusual as it involves re-possession for debt rather than forfeiture of lease, which is the normal course for unpaid service charges.
The freehold at Basil Grange is in escheat owing to the absence of the freeholder. Forfeiture for the unpaid service charges was sought in the property tribunal by the Basil Grange Management Company Limited, according to Ms Perry, but the action subsequently became one of outstanding debt.
Ms Perry believes that this was procedurally incorrect, but the issue did transfer to the county court for debt.
District Judge Johnson in her ruling of 16 March 2021 specifically addressed this:
“I am not going to make any findings as to whether or not threats [of forfeiture] were made but, to the extent that any threat of that nature was made, it must be right to say that that threat was wrongfully made because, quite rightly, the management company does not have an entitlement under the lease to forfeit the lease.”
As well as wrongly withheld service charges, the dispute has personal and emotive elements, Ms Perry acknowledges.
It also illustrates the disastrous consequences of a litigant in person out of her depth in conflict with legal professionals: as well as Dallas and Richardson Solicitors, the Basil Grange Management Company Limited deployed counsel, Paul Sweeney – it is claimed the father of one of the instructing solicitors – which has, of course, added to the legal costs.
Dallas and Richardson Solicitors has informed LKP that: “Ms Perry’s nominated solicitors were instructed throughout the possession proceedings.”
District Judge Lampkin gave the Basil Grange Management Company Limited possession of the flat on 3 September 2020.
He added: “The property shall be sold without further reference to the court at a price of not less than £160,000 unless that figure is changed by further order of the court.”
The possession order was suspended until 1 March 2021 in order that Ms Perry raise the outstanding funds, at that point £20,132.30.
She did not do so. She says that she was struggling with the ill-health of her son, the Covid lockdown, her own depressive state and not enough money. The calling in of loans from friends, former boyfriends and family have also been complicated.
A subsequent hearing was held in front of District Judge Johnson on 16 March 2021, who confirmed the ruling.
She added that “costs are assessed as drawn, save for [the barrister] Mr Sweeney’s fee. It is £1,991 to be added to the amount to be paid by the defendant [Ms Perry]”.
Dallas and Richardson Solicitors has informed Ms Perry:
“As you did not make payment by the 1 March 2021 the position is you cannot simply now pay the amount standing to obtain re-possession of the property.”
Dallas and Richardson Solicitors has informed Ms Perry that the flat will be cleared of her possessions and the property prepared for sale.
Ms Perry has £111,000 mortgage on the flat, meaning that there is considerable equity in it as well, if it sells for the £220,000 she claims that it is worth.
The proceeds of the sale will pay for the outstanding service charges, legal and other costs relating to the case.
The notice of eviction:
The rulings of the district court and witness statements:
Without wishing to sound harsh, what the resident controlled management company is doing is what you have campaigned for as an alternative to forfeiture. i.e. The property being sold to pay off the debts with the equity going to the lessee
It would appear that the legal costs are somewhat on the high side
There are two sides to every story and then there is the truth – and I say that as the lessee has made no payment towards service charges to a company controlled by her neighbours and is bound to cause tension amongst everyone.
You have only been able to get one side to this story
Always interesting that the sector’s apologists assume every article is slanted to a ‘leasehold is evil’ narrative.
This is a sad, cautionary account of the district court’s decisions. That’s it.
What’s sad here is that her so called neighbours took advantage of the forfeiture clause. We are always used to the big bad freeholder being the one to watch out for.
If you actually read the article you will see that forfeiture was not sought but the sale of the property with the equity after costs being paid over to her
“It also illustrates the disastrous consequences of a litigant in person out of her depth in conflict with legal professionals”. Ms Perry has made mistakes, the biggest one trying to tangle with the system, most probably because she erroneously believed that common sense and decency would prevail. It would help if we knew what the dispute was relating to service charge?
The whole thing sickens me, including her mother having to resort to an equity release deal in an attempt to resolve the situation.
Unable to comment on the case itself as I`m not legally qualified to do so, the one I can make is thank goodness that there are lawyers willing to act on a pro bono basis to highlight injustices where legal aid has been decimated and the once important doctrine of equality in arms has gone to the wall in cost cutting exercises that have little to no regard for the less well off. Thank goodness also, that the LKP has the courage to reveal the implications.
As a participant in an RTM company, I welcome this legal outcome. The reality is every residential block development suffers from a handful of long-term non-paying leaseholders who think they can milk the system. I am not saying this particular case is one, but generally there is a problem.
Most RTM’s came into existence following dispute with a freeholder. In our case, it was necessary following extortionate demands via the service charge (e..g quadrupled buildings insurance premiums etc), Even today, our annual insurance cost is c. £10,000 p.a. less than that demanded in 2002 – 19 yrs ago! With historical experiences like this, RTM’s are more often prone to keep a freeholder at arms length.
And this is therefore why we desperately await Leasehold Reform -held up since the Law Commission began its consultation in 2017. Since then we have been offput by the Referendum, Theresa May elections, Brexit etc.
We look to Michael Gove to enact now the proposals of the Law Commission, The Parliamentary Housing Committee, and the Competition and Marketing Authority.
And it is for Michael Gove to do the deed in this parliamentary session without further procrastination or obfuscation.
In the meantime, RTM Co’s should not be in a position that because they cannot apply for forfeiture (reserved for the freeholder) they cannot seek legal redress to recoup unpaid service charges. The ability to apply for a judgement debt is a step forward,
And a suitably worded legal letter to this effect may work wonders.
Note: Seb- you will recall the meeting for RTM;s with the Law Commission. At this meeting, I expressed the view that RTM’s should have professional (regulated) managing agents to manage on their behalf.
This is a point in question. We should not view RTM’s as simply “a company of neighbours”. RTM’ are a legal entity and should enjoy the same rights as all other legal entities with right of access to these rights via professional bodies acting on their behalf.
And until Michael Gove does his job this should include the right to apply for a judgement debt.
You are almost certainly right to welcome a judgement of this kind when it relates to leaseholders milking the system, but we do not know the nature of the dispute with Ms Perry. You, yourself, say “I am not saying this particular case is one (milking the system)”. What I do not like about this case is the spiraling of a £4000 debt to over £20,000 due to fat boy legal professional involvement. As Sebastian has said, it is a cautionary tale.
Once more I ask, what exactly is the dispute over the service charge?
Much has been said about exploitative and abusing freeholders, not enough has been said about all of the other professionals – particularly the legal profession – who simply love leasehold for the filthy lucre it provides them with.
It’s concerning as she clearly couldn’t afford legal representation and then received pro bono support after. It’s finding the legal fees to fight your case which is the problem. More funding needed in this area.
I would be very interested to know how the Service Charge was calculated and whether it was in accordance with the RICS Service Charge Residential Management Code. Obviously some service charge expenditure must be expected but amongst other questions is the outstanding amount because it suddenly increased without proper explanation or justification. What was the previous amount of the service charge and was any attempt made to pay this on some form of ‘without prejudice’ basis pending clarification as to why any increase. When the apartment was first purchased what advice was given by the solicitors as to the liability to pay a service charge and the constitution of the management committee.