But will landlord try to dump its legal costs on the non-participating leaseholders?
Leaseholders at St David’s Square, a prime site in London’s Docklands, have won their two-year service charge dispute against FirstPort and the landlord it serves.
Having already shaved off £100,000 in insurance commissions on the eve of the hearing in January, the leaseholders are likely to receive repayment of a similar sum for a leasing arrangement of an electronic door entry system that was installed at the site 23 years ago.
The tribunal declared itself “flabbergasted” at the incompetence displayed by FirstPort over the issue.
“It was like chipping away at a rock,” said Liam Spender, the City solicitor and LKP trustee who organised the challenge. “We issued proceedings in August 2021 and have had to wait until now for a result. I am hugely thankful for the moral support that I have received.”
A paper ruling will determine the precise amount to be repaid for the door entry system, but participating leaseholders should see several hundred pounds re-payed for each of the three years 2018, 2019 and 2020.
As so often in leasehold, it is an open question whether the 335 non-participating leaseholders will end up picking up the landlord’s bill.
And of the 101 leaseholders who took part in the action, some only joined the section 20C application to limit the landlord’s legal costs and won’t see a payout on the overcharging. They will have to initiate their own action in order to benefit from the ruling.
In spite of these peculiarities of leasehold litigation, bringing this case to a successful conclusion was a huge achievement.
Leaseholders at the prime site have every reason to be grateful to Mr Spender, whose time freely given on this case would have been costed out at a six-figure sum at his day-job. The four days of hearing in January came out of his annual holiday allowance.
Even before the case began, FirstPort and the landlord, FIT Nominee Limited and FIT Nominee 2 Limited, both subsidiaries of the NatWest Group plc, threw in the towel over £100,000 of insurance commissions:
The main dispute focussed on the “eye-wateringly expensive” leasing of the electronic door entry system and gate management from Essex-based Countryside Contracts.
This had first been put in place by developer Berkeley Group in the year 2000, but it was still managing to cost £590,721.43 between 2018 and 2020. An entirely new replacement system may have cost as little as £268,000, the tribunal was told.
The tribunal heard from Angela Jezzard, a leaseholder at neighbouring Canary Riverside, which had a similar door entry system of similar age, where the costs were 29 times less than those of St David Square.
The tribunal ruled the charges for Countryside Contracts door system were unreasonable.
“The rental arrangement made by the developer in 2000 was short sighted and paid no heed to the leaseholders who were foisted with what was on any account a bad deal for them.”
It described Robert Williams, FirstPort’s most senior manager at St David’s Square, as “an unsatisfactory witness”.
The tribunal said:
“The tribunal accepts that there were mistakes made in the management of the estate. It was unimpressed by the evidence of Mr. Williams. There were mistakes made in the accounting systems. Mr Williams failed to keep tabs on the Countryside Contracts and didn’t even have copies of the contracts during the relevant time, which is flabbergasting.
“He appeared unaware of his responsibilities as a manager and was defensive when asked questions about his role in the decisions made. In light of these deficiencies in management, the tribunal would impose at 10% deduction in the charges for each year.”
A curious aspect of the case concerned a disabled leaseholder, Mr Atkinson, who was awarded damages in the county court for disability discrimination concerning the use of the swimming pool and disrepair to his flat.
In January the tribunal heard that not only were the £8,625.75 landlord’s legal costs put through the service charge, despite the county court making a cost ruling against the landlord, but so were about £8,000 in costs and damages for disability discrimination awarded to the leaseholder.
A further £13,000 paid under a settlement agreement to the same disabled leaseholder was also put through the service charge. The landlord conceded the last £5,028 of this part of the claim only on the first morning of the hearing, almost four years after the charges were first billed to leaseholders.
The tribunal agreed with Mr Spender’s challenge over the issue of recruitment commissions for temporary and permanent staff, winning back £21,951.19 for leaseholders.
Management fees were reduced by 10% for 2018, 2019 and 2020; while accounting fees were reduced by 20%, although both issues may be appealed and the same for a reduction in the cost of replacement fire doors to £1,000 each from a demanded £2,500.
Although 85% of the landlord’s buildings insurance commission was conceded before the hearing, FirstPort’s were not proven to have increased, even though Lisa Amy, FirstPort’s director of insurance, did not attend the hearing although “there were a number of questions that Mr Spender would have liked to have asked Lisa Amy but was unable to ask”.
The ruling will result in the participating leaseholders receiving back several hundred pounds for 2018, 2019 and 2020, with around £300 each per flat for the Countryside Communications charges alone.
Excellent article from a very talented journalist:
In recent months, Michael Gove has been upsetting not only the house-building industry but its defenders, too. The Levelling-up Secretary has been accused of ‘blackmail’ by online newspaper Cap X, which compared his actions to ‘Putin’s Russia or Erdogan’s Turkey’.