Two years after the leaseholders at Canary Riverside thought that they had escaped from the clutches of freeholder John Christodoulou after they secured a court-appointed managing agent, the legal wrangling continues.
This week saw the 19th day in tribunal since Monaco-based freeholder John Christodoulou lost control of the site’s management in October 2016, when his related company Marathon Estates was ejected.
It was replaced by veteran property manager Alan Coates, a senior executive at HML Holdings plc (which is an LKP-accredited managing agent).
Mr Coates’s barrister told the tribunal that his role as the court-appointed manager is being frustrated by a series of legal stratagems including tribunal hearings racking up legal costs for the leaseholders.
On Monday, the leaseholders complained to the tribunal that:
“The landlord’s refusal to allow the manager/HML to utilise the offices, staff welfare, workroom and storage facilities located within the estate is to the detriment of good estate management and demonstrates that the landlord continues to put his own interests before those of the estate.”
These spaces of Canary Riverside were “designed to meet the operational management of the estate”, the leaseholders argued.
Instead, since the Section 24 ruling establishing Mr Coates’s appointment as the court-appointed manager, these spaces have been sublet by the freeholder, the tribunal was told.
The leaseholders claimed:
“The parties to whom the licenses have been granted are all companies related to the ultimate owner of Canary Riverside, Mr Christodoulou (Yianis). Residential leaseholders are therefore subsidising the landlord’s companies.”
Barrister Rebecca Cattermole, acting for Mr Coates, said:
“The manager is finding it extremely difficult to manage the estate properly. He doesn’t even have proper operational and office facilities.”
Ms Cattermole added that key parts of Canary Riverside were being “siphoned-off” in conduct “designed to ensure that the estate cannot be managed properly.”
She urged the tribunal to enable the manager to carry out the obligations of his court appointment.
“To ignore the interference with the management and simply to leave the management order as it is, you effectively bring about an end of this order.”
Why should we care about Section 24?
Court appointed management (section 24) is the only recourse for leaseholders where right to manage or enfranchisement are not possible. A S24 order should cut off a landlord’s access to the residential service charges.
The repeated litigation at Canary Riverside, a high-end mixed-use development that includes a hotel, demonstrates its shortcomings.
John Christodoulou’s barrister, Justin Bates, responded:
“This is not a matter for the tribunal. You are being drawn into the day-to-day management for which you are not suited.”
John Christodoulou, or rather his freehold owning and management entities Octagon Overseas Limited / Canary Riverside Estate Management Limited, said that Mr Coates “does not have a proprietary interest in the estate”.
“CREM (the freeholder) is perfectly within its right to grant subleases / licences to third parties, especially as it has an obligation under the terms of the [a] Santander loan to maximise income from the estate.”
Meanwhile, Mr Christodoulou was asking the tribunal that his costs for handing over the site to the court appointed manager, and his ongoing costs for complying with the court order, be paid by the leaseholders.
Judge A.M. Vance said: “I’d say I’ve never come across a provision in a management order a clause that allows the landlord to recover the costs of complying with the management order.”
The leaseholders, meanwhile, do not think that they should be paying the freeholder to address the failings of its own management.
“Unlike enfranchisement and RTM, S24 is fault-based. A landlord should not be compensated for costs it incurs as a result of its failure to meet its statutory obligations …
“CREM’s costs of compliance have arisen as a direct consequence of their serious breaches of the lease, RICS code and legislation.
“Leaseholders have already been penalised: they have had to pay £220,000 of CREM’s legal fees despite the fact CREM lost the s24 action, and they have also borne the considerable legal costs and management fees incurred by the manager in respect of CREM’s applications to vary the order.”
The leaseholders expressed their frustration at the freeholder’s conduct since the s24 order was made.
“In March 2017, CREM removed all the furniture and equipment within the estate offices … and literally dumped them in the residential lobby. This was not the actions of a reasonable landlord seeking to comply with the order.”
This allegation was not addressed in tribunal.
The leaseholders added:
“It is apparent that debts associated with the Yianis Group companies, which include the hotel and Mr Christodoulou (Yianis), are having a significant impact on the manager’s ability to provide estate services.
“This appears to be a tactic designed to frustrate Mr Coates’s management.
“It also demonstrates that CREM / Yianis is continuing to act in its own best interests and not in the best interest of the estate and its stakeholders.”
A tribunal ruling is expected before Christmas.
We know where you live … ‘Joe Bloggs’ forced to reveal real identity by judge
A leaseholder attending as a member of the public was forced to reveal his identity and address by Judge A.M. Vance.
For the hearing, the public had to give their names twice and the leaseholder had signed his name “J. Bloggs”.
But the alias was picked up by barrister Justin Bates, acting for freeholder John Christodoulou, in the courtroom: “Sir, we have checked the leases and there is no J. Bloggs.”
In 2016 more than 100 members of the Canary Riverside residents’ association were threatened with defamation proceedings after criticisms of the management of the site.
Defamation was also alleged against the chair of the residents’ association at West India Quay, where Mr Christodoulou is also the freeholder, in 2014 immediately before a tribunal hearing where it successfully acquired recognition.
Allegations of harassment against the leaseholders have been raised in tribunals and in Parliament.