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You are here: Home / News / Wellcome Trust spends £114,000 on lawyers to defeat Onslow Square leaseholder in £6,000 dispute

Wellcome Trust spends £114,000 on lawyers to defeat Onslow Square leaseholder in £6,000 dispute

March 15, 2018 //  by Sebastian O'Kelly

Onslow Square, part of the lucrative 58-acre estate of prime London property, where freeholds are owned by the second biggest charity in the world, the Wellcome Trust

The Wellcome Trust spent £114,000 to defeat a leaseholder in Onslow Square in Kensington over a £6,000 dispute – which came down from £8,247 originally demanded.

The gargantuan bill includes VAT.

The case means that the woman leaseholder will have to sell her home, it is claimed, but the Wellcome Trust has not to date pressed for forfeiture.

The Wellcome Trust – the world’s second largest charity ($27 billion) after the Bill and Melinda Gates Foundation – tells LKP that it is “working to resolve this matter”, adding: “We are not in a position to make any further comment as we are bound by a non-disclosure agreement.”

The Wellcome Trusts legal bills were racked up at a property tribunal that ruled in September 2016, although the dispute is still smouldering on, with LKP copied in to correspondence over this matter.

These are also directed at the Wellcome Trust chair Eliza Manningham-Buller, the former director general of the internal intelligence service MI5.

The case was yet another leaseholder car crash in the property tribunal.

LKP repeatedly urges leaseholders: Pay first. Fight second, to avoid precisely these bills if you do not win.

The leaseholder was a litigant in person, while the Wellcome Trust Limited deployed a barrister with a case prepared by leading solicitors CMS Cameron McKenna LLP. Knight Frank managed the building, and there were other professional witnesses.

The hearing was scheduled for one-day, but stretched to four separate days.

The Wellcome Trust was one of the parties in the recent Mundy case, where the existing freeholder-friendly lease extension regime was upheld in the courts

The tribunal noted in its ruling:

“The respondent [the Wellcome Trust] was concerned about the potential costs of these proceedings and wished to retain a one-day listing … “However, the respondent’s cross-examination of the applicant (which remained relevant to the points in issue) lasted for the whole of the first day …”

In total, the tribunal pondered the case for four separate days, racking up the costs that are to be paid by the defeated leaseholder.

On the other hand, the tribunal noted:

“At the applicant’s request, the evidence and submissions were carefully timed. The parties were given an identical amount of time in which to present their cases.”

It is perhaps likely that a barrister, a first-rank City solicitor and professional witnesses made better use of the time than a litigant in person.

The leaseholder relied upon estates agents’ sales particulars in nearby properties to argue that the service charges were too high.

The ruling notes:

“Accordingly, the Tribunal accepts the respondent’s [the Wellcome Trust] submission that the claim that the service charge is generally “too high” is not precise enough to amount to a prima facie case.”

A curiosity of the case is that the leaseholder obtained a management fee quote from LKP accredited managing agent Urang of £300 per flat against Knight Frank’s £700.

“The respondent asserts that Knight Frank’s management is of a “far higher level” to that which Urang would provide.

The tribunal noted:

“The Tribunal is not satisfied that it has been established on the evidence that the management provided by Knight Frank is of a “far higher level” than that which Urang would be able to provide.”

We understand that the site is now managed by Savills.

The Wellcome Trust was also a party in the Mundy case disputing current lease extension methodologies, although it did not participate in the recent Court of Appeal case.

The Wellcome Trust became a prime central London residential landlord in the 1990s when it took over 58 acres of Kensington’s “stucco ghetto” from the Henry Smith Estate.

It is among the most valuable residential property in the world.

Statement from the Wellcome Trust

Wellcome Trust’s investment portfolio includes the freeholds on approximately 1,200 properties in South Kensington in west London. We manage this estate professionally and have good relationships with the majority of our leaseholders. We are always sad when disputes occasionally arise and we have a rigorous complaints process which does lead to a resolution in most cases.

It is particularly difficult for us where, as with Ms Christie, the dispute runs over several years.  We have tried hard to resolve the dispute, including a mediation with Ms Christie in 2014, which we hoped would reset our relationship more positively.

Unfortunately this did not happen and Ms Christie decided to challenge her service charge before the tribunal in 2016.  We felt that the service charge was reasonable and that it was wrong to allow Ms Christie to avoid paying when other leaseholders were paying their fair share, so we defended this challenge.  The tribunal found in our favour that the service charge was reasonable. 

We tried to minimise the costs of the tribunal hearing, for example most of the work was done by a junior lawyer and the hearing was led by junior counsel. 

However, the tribunal hearing took four days (rather than the one day that we had wanted) and involved a large amount of material, much of it material that Ms Christie wanted to put forward.  Despite our efforts, this resulted in us spending a significant amount on costs.  As the tribunal found in our favour, we are now asking Ms Christie to reimburse us for those costs.

We do not recognise the figures referred to in relation to the increase in service charge.  The service charge for flat 2A Onslow Square was £2,935 in 2013 and £2,341 in 2015. We believe that Knight Frank have appropriate processes to ensure that spending is cost-effective and carried out in accordance with the statutory processes for amounts to be incurred through service charge. 

We continue to hope that it is possible to resolve all of the issues with Ms Christie and find a productive way forward that will avoid further disputes, consistent with Wellcome’s role as landlord on the estate.  We have said to Ms Christie that we would be willing to meet, with a mediator, to see how we can achieve that.

The tribunal ruling is here:
HanaChristieDecision

CMS Cameron McKenna LLP claims costs were £114,000:
06 CMS demand for 95K

Related posts:

Wellcome Trust ‘wrong’ over exploiting the lease extension racket in its property portfolio, Bottomley tells The Times Lawyers offer pro bono aid to leaseholder facing QC in £24,000 dispute in Upper Tribunal forfeiture by neighbourNeighbour forfeits leaseholder’s £600,000 London maisonette for putting in a new bathroom Trust Property Management fails to find a buyer John Lewis Partnership Pensions Trust tells leaseholder it will ‘disinvest’ in doubling ground rents

Category: Advice Case Study Disasters, HomeSlider, Latest News, News, NewsSliderTag: Eliza Manningham-Buller, Knight Frank, Onslow Square, Urang, Wellcome Trust

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Reader Interactions

Comments

  1. stephen

    March 15, 2018 at 6:31 pm

    Why was not mediation sought be either party??

    It would have saved an enormous amount of costs

  2. Michael Epstein

    March 15, 2018 at 10:01 pm

    Please, Please, Please.
    Pay and dispute. Not the other way round. That way you are not in breach of your lease and you put the freeholder/managing agent on the defensive.

  3. H

    March 19, 2018 at 7:42 pm

    it is not as simple as that as once service charge was paid (1) it will be extremely difficult to get the service charge refunded from the freeholders/their agets and (2) once a leadoholder has made a payment the freeholder can (and is very likely to) argue that the leadeholder has accepted the service charge by paying it and that such ‘accepted’ service charge cannot be disputed.

  4. Michael Epstein

    March 20, 2018 at 9:03 am

    H, I appreciate what you say, but to do anything else and the dice are loaded against the leaseholder.
    A court will judge only on the limited issue as to whether a leaseholder is in breach of lease by not paying their service charges. Any other issue will be sent to the tribunal.
    Regrettably I have seen to many leaseholders lose at the tribunal and too often for the same reasons.
    Leaseholders must forget any notion that the tribunal works in the way a small claims court does.
    Fees are not fixed or limited. So many leaseholders go into battle believing their costs are limited to £500. This is very wrong. The freeholder/managing agent can and does employ expensive legal teams to defend their position,and win or lose claim these costs back from the leaseholder. Remember Denis Jackson at Plantation Wharf? A dispute over £8,000 of service charges (which he substantially won at the tribunal) led to costs of over £80,000. Only the intervention of LKP(who were banned from a court case deciding his fate) stopped his £850,000 flat being forfeited.
    The small claims court is more akin to an arbitrator in that it is less formal and less confrontational than a tribunal is. The Judge will listen to both sides of the story and will come to a conclusion based on the evidence he has heard and on the basis of “probabilities”. The judge will make allowances for an individual who has never been in any court before who is up against a highly trained legal representative.
    Leaseholders assume that a similar allowance is made by the tribunal. this is absolutely not the case. If anything the reverse is true. The highly trained legal representative tends to be favoured over the the individual.
    The leaseholder tries to please the tribunal and hopes this will garner sympathy.
    One common mistake they make is that the freeholder/managing agent will present documents at the last minute and in order to “please” the tribunal they do not ask for an adjournment, which plays into the freeholder/managing agents hand.
    Leaseholders generally appear at a tribunal with no knowledge of the law and thus tend to put forward fatally flawed arguments.
    One of the hardest things to prove at a tribunal is to establish if a charge was “reasonably incurred?”
    Sadly that is what most leaseholders go on and equally sadly it is the easiest one for freeholders/managing agents to defend?
    A job done badly or at too high a cost is subjective. At best the tribunal may award a percentage to be deducted from the service charges.
    But if leaseholders arguments were more specific that would be an entirely different matter?
    So for example a charge for work that was not done or a charge for work that no invoice could be produced is much firmer ground for a leaseholder to fight on.
    Another “winner” is if the service charge demand is flawed?
    Check carefully? Has the service charge demand been issued in the name of the correct freeholder/landlord? has the managing agent given their correct company number?
    If any of these details are wrong the service charge is not payable..
    Challenge the fundamentals of the case not the trivia?
    So if for example you are up against Firstport (don’t know why they came to mind!) take nothing for granted. Demand that Firstport show the tribunal the evidence that they are contracted to represent the freeholder
    In the case of Estates & Management you should insist on the same and then show the tribunal evidence that “other than directors E&M have no employees”. You could reasonably ask as to who at E&M you are being challenged by if they have no employees?
    If evidence cannot be produced in regard to contracts than it follows that any costs could not have been reasonably occurred? So the leaseholders case is won at that point.
    At the tribunal “less is more”.

  5. Leaseholder

    March 22, 2018 at 12:03 am

    Unfortunately in this case, even very specific arguments made by leaseholder did work. So for example the leaseholder has argued that there are many thousands of sinking fund money not accounted for/missing and that the missing unaccounted sinking fund money should be refunded to lessees.

    The Wellcome Trust managing agents have claimed they have made an ‘innocent error’ and ‘forgotten’ to include in the court bundle the invoices evidencing expenditure from the sinking fund.

    The lessee has lost this point as the Tribunal has decided to believe the managing agents and held in favour of the Wellcome Trust by deciding that there are no sinking fund money missing/unaccounted.

  6. Michael Epstein

    March 22, 2018 at 7:50 am

    Service charge trust funds are supposed to be protected. If Wellcome Trust cannot even account for those service charges, how can they be protected?

  7. Leaseholder

    March 22, 2018 at 12:42 pm

    In addition to the unaccounted/missing thousands from the external redecoration sinking fund, the Tribunal has let Wellcome Trust to get away also with a £48,000 loan which was made by the Wellcome Trust’s managing agents from the external redecoration sinking fund..

  8. George Lees

    March 24, 2018 at 8:55 am

    It’s clear reading the case that the Residential Tribunal is not a neutral Court. Everything the Landlord said was taken as fact without any need for evidence. The Judge seemed to have made no attempt to allow the litigant to develop her case and allowed the Landlord’s lawyers to make all the running. I presume the Landlord’s lawyers are in the Tribunal all the time and know how to work the system and for these low level Judges these lawyers are very persuasive. It’s a failed system that needs abolition.

  9. WT Leaseholder

    March 29, 2018 at 1:43 pm

    Wellcome Trust cannot be trusted

    Wellcome Trust has on a number of occasions refused to answer Leasehold Knowledges Partnership’s/ journalist’s questions about this case claiming that there is a non-disclosure agreement. Now Wellcome Trust have confirmed in writing that there is no such non-disclosure agreement. Of course such behaviour does not inspire trust in the Wellcome Trust. Such behaviour is also not fair and or reasonable – two adjectives that Wellcome Trust often use when describing themselves.

  10. Leaseholder

    April 1, 2018 at 9:44 pm

    Wellcome Trust cannot also be trusted for example because:

    – They have made/allowed to be made £48,000 loan from sinking fund. Making loans from sinking fund is prohibited by law. Despite this Wellcome Trust’s lawyers and managing agents have managed to convince the tribunal that all is just fine as the loan will be repaid by the Wellcome Trust and based on this representation the Tribunal has decided this point in favour of the Wellcome Trust. Now two years later Lessees are still waiting to receive a trustworthy evidence such as audited account showing that Wellcome Trust has repaid the loan in full as they said they will.

    – Wellcome Trust managing agents have claimed in front of the Tribunlal that they have made an innocent mistake and because of the innocent mistake not included £24,884 worth of receipts to evidence external redecoration expenditure in the tribunal bundle. The team of managing agents and lawyers representing Wellcome Trust then went on to say that the fact that evidence for the expenditure is no in included in the bundle is not an issue as the receipts evidencing the expenditure will be promptly provided to lessees. Based on what the Wellcome Trust’s agents and lawyers have said to the tribunal the tribunal has decided also this point in favour of the Wellcome Trust. However, now two years later lessees have still not received the evidence for the £24,884 external redecoration expenditure. As Wellcome has failed to evidence where the £24,884 for which lessees were charged went, lessees are waiting for the Wellcome Trust to refund to lessees the £24,884.

    – Wellcome Trust has in order to evidence garden service charge expenditure presented to the tribunal £14,470 worth of homemade invoices. These homemade invoices have very little written on them usually just date, name of a company and amount. They do not look like normal invoices which will have much more information on them such as VAT number, VAT amount, information on how to pay, details about what is the invoice for and by when it is payable, company house number etc. When challenged on this point, Wellcome Trust’s managing agents have said that they make such invoices while they are waiting for the companies to issue invoices. As you have by now guessed, Wellcome Trust lawyers and managing agents have convinced the tribunal that they will provide lessees with receipts evidencing where is the £14,470 is gone and the tribunal has decided also this point also in favour of the Wellcome Trust. Now almost two years later, Wellcome Trust has failed to provide lessees with receipts evidencing where the £14,470 is gone therefore in absence of the receipts to evidence the £14,479 expenditure lessees waiting for the £14,470 to be reimbursed to them by the Wellcome Trust.

    – That is of course not all, more to come.

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