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.
The full ruling can be read here
Excellent article from a very talented journalist:
Why developers deserve to pay for the cladding crisis
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’.
Is there any reason why all the leaseholders did not join the FTT as it was not going to cost them anything so could only have been a win situation?
Surely all the other leaseholders can use the findings of the FTT and just represent them.
Under what circumstances can Firstport recharge costs to non participating leaseholders,?
Did Firstport freely give up all invoices, audit trails etc?
Would like to know as I’m anticipating taking Firstport to FTT.
Hi Jacqueline, I will put you in touch with Liam, but he is now taking a well deserved holiday, and back after Easter.
I understand: some leaseholders did not take part because they did not care much, or were investors who just pass these charges onto their tenants. Others took part, but only in the Section 20C legal costs application, so that they did not get hit. FirstPort might be expected to try to mitigate these losses, but it knows it is facing pretty motivated leaseholders at St David’s Square. and, yes, one would expect other actions to follow so the non-participating leaseholders benefit.
Here’s an example of ill-feeling when leaseholders fail in major litigation and the cost is dumped on all leaseholders: https://www.leaseholdknowledge.com/chelsea-harbour/
It may be worth sorting a Zoom with your group of FirstPort leaseholders so that the knowledge acquired is shared as widely as possible.
Unfortunately, getting a group of people to do anything without squabbling or, even more common, just standing aside uncommitted, is very difficult.
It requires exceptional individuals or groups to make a stand, like Liam here and our chair Martin Boyd, at Charter Quay – which is the most valuable enfranchised site in the country.
I will copy this to your Facebook group. All the best, S
“Under what circumstances can Firstport recharge costs to non participating leaseholders,?”
Under all circumstances. If the lease allows. It’s a cost the landlord will probably pass on as part of the service charge. Only those people in the case have their costs limited by a S20C
To makes things worse if a non participating leaseholder now wants to claim the same reductions they would have to bring another case and pay a new set of court fees – yes the tribunal would have to make same decisions IF they argued the same points but they would still not be entitled to the s20C decision in the main case and may find the landlord passing on more costs for having to defend a second hearing
Moral of the story decide not to participate in a S27A case you will not avoid any risks of landlords costs. you will not get the benefit of any gains all you will achieve is limiting the budget of your own side -assuming there is a budget
As the landlord conceded on insurance commissions before the hearing at least all leaseholders should get the benefit of that decision but at I found out some years ago Peverel managed to “accidentally” apportion counsels costs subject to a s20C order in our first case to “maintenance” the next years accounts so we had to get that one removed in a second challenge
Mr Stephen Burns
I congratulate Mr. Spender on another hard won victory at St. David’s Square and for LKP taking the time and effort to explain the legal technicality’s of what victory actually means in respect of this archaic feudal leasehold law, my mind boggles trying to digest the logical explanation provided by Mr Boyd and Mr O’Kelly.
“”We have received the latest service charge invoice from the Managing Agent of our choice, Home Management Group Limited for the financial Year 01.04.2023 to 31.03.2024 – since going RTM we have saved £ 936.27 per Apartment per annum or more than a – 39% service charge reduction in about twelve Months.
The RTM Company recently decided to award the Development Manager a + 10% salary increase in recognition of her valuable contribution to this Company during the past twelve Months. I confirm that the Company’s reserve funds have increased since going RTM and that we have adhered to all terms and conditions contained within the Lease and much, much more.
The above was achieved despite record inflation and soaring electrical costs, by Shareholders managing their own property with the help, guidance and assistance of a quality Managing Agent, they are not all bad!! “I am aware that certain MA would not pass the Bernard Manning school of property management remedial certificate” They are not all the same you just need to shop around.
The capacity for abuse of leaseholders by Freeholders and Managing Agents never fails to horrify me. The fact that even if the leaseholders win their case, they may still have to fund the costs of the other party. Surely, if this was any other sort of contract rather than a lease, would this not come under “ unfair contract terms” and be challengeable, as some financial contracts were?
The retirement development I live in has recently emerged from eighteen months of hell when a residential development manager was put in place who was abusive to residents, had frequent rages, touched residents inappropriately, entered their homes using the passkey without authorisation, stole our money and engaged in illegal drug related activity. We tried to get help from our FirstPort Area Manager and we’re ignored because he was a black person and he told her that we were all racists! She believed him without any investigation and left us, all over 60s, to suffer.
We were saved only when a new to the FirstPort organisation Area Manager who had widespread experience in HR caught him red handed and undertook immediate appropriate action resulting in his dismissal.
We had to write to our MP to get any sort of acknowledgement, a verbal apology, from FirstPort for what we had suffered and a written apology from E&M.
We asked for a rebate on the management fees for that period but nothing is forthcoming, we were told that the interim period when a manager was not in place will yield an underspend and we should take that as the equivalent! We have also been forced by E&M to have another residential manager, ( we needed a 75% vote, which we got despite many empty flats, but two votes were disallowed) despite the dangers suffered previously and the fact that there is no benefit to the residents from paying for accommodation for someone who only works office hours and will not usually come out to help otherwise.
FirstPort look upon their management fees, paid to them six monthly in advance as just their dues. They have no feeling that they should safeguard the residents, include the residents in anyway or deliver value for money. Their only interest is in the property. They know if we all die tomorrow it wouldn’t matter, their income is guaranteed, as our heirs would have to pay the. Management fees, we are irrelevant..
We have a good community spirit and this has seen us through but we feel that we are in the hands of rogues and can hardly believe that this leasehold situation is considered legal when residents have so few rights and are constantly threatened not to raise any legal arguments because the costs would be ruinous.
It is hardly credible that in this day and age leaseholders are held to such unreasonable and unfair conditions.
What you have described is a real ongoing horror story that in all likely hood is being replicated in dozens and dozens of other apartment blocks the length and breadth of the land.
I personally find it disgusting despite all the major changes already achieved, that this “archaic feudal Freehold – Leasehold racket is still in place.” The sooner commonhold is the norm the better.
Please consider making enquiries about going Right to Manage it is relatively inexpensive and could reduce your service charge significantly. We achieved RTM just over a Year ago and have seen a reduction in service charge of – 39.43%. We have increased the reserve fund value and maintained our home inline with the terms of the Lease and much, much more.
I strongly suggest you “Google” Right to Manage and shop around for a potential new Managing Agent of your choice, the firm that we employ have provided a quality service and value for money.
I am aware that certain Managing Agents react badly if they believe an apartment block is going to consider going Right to Manage. In a nutshell, going RTM means you decide who you ,want to manage your home and not the Freeholder, that’s it, northing more you are essentially replacing your current Managing Agent with one of your own choice.
Certain Managing Agents have told Residents that if you go Right to Manage “You will be responsible for taking out the corpses of you deceased neighbours” or “You will all be responsible for cleaning the building, cutting the grass and cleaning the windows, etc, etc” those statements are complete and utter rubbish and designed to frighten you into not going Right to Manage. The Managing Agent of you choice will simply take over all the responsibility’s of the former Managing Agent.
I’m new to #FirstPort and its been pretty awful so far. Does anyone know how to speak to them? They are impossible to deal with!
I’m the owner of a flat with service charges payable to #FirstPort and have been so since last September. I’ve never received a service charge bill from them and I’m terrified it will impact on my credit rating.
It turns out that I can’t get a bill and I can’t register on their online portal because I’m not down on their records as the owner. They’ve told me it can take up 12 months to change a name!
I’m on hold with their property team while I type this. In fact, I’ve now been on hold now for two and a quarter hours and I’m still waiting to speak to them. How long does it take to answer a call #FirstPort? Really?