LVT - Leasehold Buildings Insurance challenge - possibly one for Andydd??

[Ed999]

The Rics code is approved by the Secretary of State and to disregard it's content would be unwise.

 

As Forcelux often attend LVT's with a MRICS they will be aware of the code.

 

 

It is, nevertheless, only binding on RICS members.

 

This is helpful if the managing agent is a Chartered Surveyor, or relies at a hearing on evidence from a Chartered Surveyor, as Forcelux do. But it may not be so in other cases, with other landlords.

[Ed999]

I see no reason why alternative insurance quotes have to be identical to the landlord's, surely they must meet the provisions of the lease and perhaps it is also now accepted that they include terrorism cover but apart from that they dont HAVE to be like for like.

 

 

You are overlooking a VERY long line of decided cases that say the comparative quotations are invalid if they are are not like-for-like.

 

The legal point is: a comparative quotation is not genuinely comparable unless it is for like-for-like cover, i.e. unless it is for identical cover.

 

You might read up on the leading cases. A summary of Berrycroft Management Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [Court of Appeal], and of Forcelux v Sweetman [2001] 2 EGLR 173 [Lands Tribunal] is here (in paragraph 6).

Edited June 6, 2011 by Ed999

[andydd]

I agree with the prinicipal but what if the landlords actual insurance is over-insured, what if the insured value is too high, what if there is a high or low excess, etc then surely the tenant only has to get alternative quotes to comply with the lease not to get quotes that exactly match the landlords existing insurance ?..........................................…

 

..The lease may stipulate a value or it may stipluate an excess but it may be totally silent on the issue except to say that the property must be insured, I dont believe the cases you mention really address this point,

 

I am especially aware of Sweetman as it appear to have been flogged to death and mentioned so many times (especially by my freeholder - Forcelux) despite it being a LT decision which isnt actually binding on LVT's and in recent months the same Eastern area tribunal would appear to have completely changed its position, as they would appear to have done in the LVT cases I listed in the spreadsheet, here > http://www.consumeractiongroup.co.uk/forum/showthread.php?218428-Freehold-Managers-PLC-forcing-me-to-buy-their-insurance/page3Andy

Edited June 6, 2011 by andydd

[legrun]

Hi

Forcelux v Sweetman was in 2001 under s19[2A] of LTA 1985 and the Lands Tribunal held that s.19[2A] was not concerned with whether costs were 'reasonable ' butwhether they were 'reasonably incurred'.

 

It was held that the landlords block policy had been competitively obtained with market rates and consequently the ins premiums were reasonably incurred.

 

The questions which should now be considerred are:

 

1 ] Does s.27A to LTA1985 which came into force in 2003 and enables aLVT to determine the reasonableness of a service charge and be now be applied to insurance premium matters and would have any effect?.

 

2] If only one bid is obtained due to other bidders declining to bid constitute 'competitively obtained '.

seems to me that full details of such deallings would be required to be convincing.

 

3] The market rates pertaining in 2001 are likely to be different today . Forcelux rates of £5+ per £1000 insured which may have been market rate in 2001 do not necessarily apply today. Market rates go up and down as a result of many considerations including competition,losses and claims etc.

 

Regarding Berrycroft v Sinclair there is merit in not accepting the lowest bid unless the enquiry document is 100% solid which is unlikely.

 

For example Groupama and probably others exclude cover for any damage which started before they insured the building [except susidence for which special arrangements seem to be in existance]. This can result in problems with claims.There is merit in continuity.

legrun

 

The matter of over insurance has been remarked upon at several LVT's as gold-plated requirements but as far as I can see did not result in a reduction in premium.

 

Regarding RVA [reinstatement value] this was discussed at some length at a LVT hearing in London [ applicant was a S.Steiner and Lady Wilson was the chair] a couple of years back.

 

But the broker or landlord needs to explain where in the valuations are the risks incorporated to cover the high risk tenants together with allowances for future increases in cost [ look-out for double dipping].

 

So it's not just a matter of referring to the red book and BICS.

 

Westleigh have tended to include emergency cover in their policy at a cost of about £35 per lessee although this is not required by the lease.

 

At a couple of LVT's an arrangement between Westleigh and AXA has been disclosed whereby W can carry out repairs without having to wait for AXA approval up to a value of £10,000.

 

This also nullifies any need for emergency cover. [ see Inverness Ave some 3 or so ago.]

legrun

[andydd]

Just read the local April LVT case involving my freeholder Forcelux, interesting reading... http://www.lease-advice.org/decisions/other/pdf/5894.pdf.Andy

[legrun]

Hi

I have just read that Force lux decision [ hearing date 1st April 2011] and is the first time that I recall that the premium has been reduced for a forcelux property.

The lessees at that hearing made a good presentation and I dont think the chair was too happy with the element of harassment which Forcelux had apparently demonstrated.

Such a pity about the s20 business allowing Jakob and Gibb to recover costs from the lessees.I suspect that will come to the best part of £2000!!

legrun

[andydd]

indeed..and I had a 'chat' with him and his solicitor outside of court recently and I told them of at least 5 or 6 local decisions where the insurance had been vastly reduced and they dismissed it all but this was just after the above decision so they must of been well aware of this case !..and at the time I was unaware of it otherwise I would of mentioned it.

 

I was under the impression that the S20 bit meant that the tribunal concluded that the lease DIDNT allow recovery of legal costs so they didnt bother with S20 application, that certainly should be the result because my lease has the identical "All other expenses wording.." and the tribunal concluded that legal costs were not recoverable (but allowed the S20 anyway.)

 

Andy

Edited June 24, 2018 by dx100uk
quote

[legrun]

Hi

Re the April 1st Focelux case ,I think you are right about the s20C order.I misread the concluding para and I'm having some problem with the Wordpad document from Cambridge. It is common for a decision to clearly state that the landlord cannot charge in addition to pointing out that the lease doesn't allow it so there is no doubt.

It will be interesting to see if Mr Jakob risks an appeal to the Upper [Lands]Tribunal. To do so and lose would mean that most other of his lessees would have a better chance of a 20% reduction and that would mean a big reduction in income for the whole operation involving Forceluxand the broker.

 

Mr Sinclair ,the chair at that hearing ,is a barrister and is very much against bullying tactics.This was well illustrated by a hearing in Nov 2008 where Mr Sinclair recorded that BLR were threatening, bullying,menacing and incompetent and that the landlord had been badly served as I recall. But the landlord didn't fire BLR at that time .It wasn't untill BLR stated at a later tribunal [26th March 2009 ,Lewisham] that Westleigh had instructed them not to comply with s47 that coincided with their subsequent termination as Man.Agents without notice according to Gateway.

legrun

[Ed999]

what if the landlords actual insurance is over-insured, what if the insured value is too high, what if there is a high or low excess, etc then surely the tenant only has to get alternative quotes to comply with the lease not to get quotes that exactly match the landlords existing insurance

 

 

Your argument sounds superficially reasonable, but it overlooks the entire line of legal authorities which I have mentioned.

 

The argument ('the tenant only has to get alternative quotes to comply with the lease') has in fact been rejected in all those cases.

 

 

The fallacy you are labouring under is that in challenging the insurance quotation you can rely on the wording in your lease.That is the wrong approach, because the basis for challenge is in the statute, not in the contract. What your application is governed by - restricted by - is the Act under which you are objecting, i.e. the 1985 Act.

 

The wording of your lease/contract is not the basis for the objection to the amount of the premium, because the lease typically imposes no contractual upper limit on the amount.

Edited June 8, 2011 by Ed999

[Ed999]

http://www.lease-advice.org/decisions/other/pdf/5894.pdf

 

This is the final judgement in Forcelux Ltd v Wilkinson and Scott, decided in the LVT.

 

Although not binding, even on the LVT itself, it contains a very helpful summary of the law on challenging a service charge, in paragraphs 12 to 21.

 

 

The insurance issues are dealt with in paragraphs 43 to 49 of the judgement.

 

To a degree, that part of the judgement is favourable to the tenants, treating the landlord as a trustee and thus as one who may NOT make a secret profit; and attacking the so-called discount paid to the landlord of 18.75% for doing claims handling, as the landlord, not being a firm that is regulated by the Financial Services Authority, is not authorised to do that.

 

The amazing part is that in paragraph 49, the LVT fudges frantically, giving no reasons whatever, and plumping - without any attempt to justify doing so - for the £400 figure contained in the comparative quotes obtained by the tenant.

 

Thus, in breach of all the decided cases, it effectively approved the comparative quotes supplied by the tenant, which had boiled out at £370 (across a range of £320 to £420 per flat) - the very thing which the Court of Appeal in Berrycroft had forbidden.

 

 

Given such a flagrant flouting of the binding Court of Appeal authority, it is not surprising that the judgement contains no rigorous - or even cursory - consideration of the relevent legal principles regarding the insurance element of a service charge.

 

The case thus provides no basis for a legal challenge in any other case. It does not even suggest a useable line of legal argument.

 

 

There are not likely to be many comparable cases, since it will be rare for a firm that is not authorised to conduct claims handling by the FSA to claim admin costs for doing just that without legal authorisation!

 

 

Although the judgement is unclear, the annual insurance premium demanded appears to have been £521 per flat (see paragraph 24); and the tenant submitted 4 comparative quotes, each between £321 and £421 per flat (see paragraph 35); and the judgement was for a premium of £400 per flat (see paragraph 5).

Edited June 8, 2011 by Ed999

[andydd]

Yes..The decisions so far have been rather bizarre and swing one way to the other, previous appeals certainly favoured the landlords and would appear to have set precedents BUT recent LVT decisions swing the other way as to favour the tenant.

 

I shall be using the above decision as evidence in my struggles with Forcelux, both Eddington & Sinclair (Eastern area LVT chairmen) have now come down quite strongly in the tenants favour in a number of inmsurance related LVT decisions recently so thats good for me, I'm well aware they LVT's (like ?) to contradict previous LVT's/LT's and even High Court cases but I find it unlikley they would want to contradict themselves.

 

Anyway, as Forcelux have mangaged to cock up the LVT application (thrown out for non-paymant of fees) it may well be some time before/If it goes to an LVT. The rate of £400 would appear to be reasonable, other decisions have put it at about the £300 mark, compared to the £650+ Im asked to pay, all these relate to very similar properties in the Southend area of approx £100k in value.

 

Interestly the LVT's views on the 18.75% commission were along the same lines I was thinking, I was going to ask how much in total was raised, was there a full time employee doing claims, etc and point out RICS code dislike of perecentage based fees.

 

Andy

[andydd]

Your argument sounds superficially reasonable, but it overlooks the entire line of legal authorities which I have mentioned.

 

The argument ('the tenant only has to get alternative quotes to comply with the lease') has in fact been rejected in all those cases.

 

 

The fallacy you are labouring under is that in challenging the insurance quotation you can rely on the wording in your lease.That is the wrong approach, because the basis for challenge is in the statute, not in the contract. What your application is governed by - restricted by - is the Act under which you are objecting, i.e. the 1985 Act.

 

The wording of your lease/contract is not the basis for the objection to the amount of the premium, because the lease typically imposes no contractual upper limit on the amount.

 

Well..thats not that important becuase Ive managed to get plenty of (lower) quotes but I would point out to an LVT the difficulty of getting exact like-for-like quotes.

 

Andy

[legrun]

Hi

I'm not sure that Lvt 's always have to justify their decisions.Sometimes they will say that they are ''an expert panel and from their knowledge and experience etc''.

Whilst one expects the decision to be based on the evidence presented it is apparent that other factors have some influence .

For example LVT panels seem not to like any suggestion of aggression or even over-assertiveness by either party. In the absence of evidence the testimony may assume major influence ,not only content but style of presentation.

I recommend a couple of points for consideration by anybody at a hearing:-

1] Think twice before arguing on a point of principle; principles can be very expensive.

2] There is an old saying which goes something like :- ''After food and s*x man's greatest drive is telling the other fellow how to do his job''. LVT's seem sensitive to anybody trying to do this to them [they are not alone in such matters]

legrun

[andydd]

I agree, I came away from my LVT with the panel telling me that I was the one behaving unreasonably which i just couldnt understand, the panel found in favour of a lot of my items, they appeared to agree with me on all my hypothetical questions I put forward (altthough strangely did add a rather odd proviso to each one).

 

Yet this is the same freeholder who has been severely critiszed in other LVT's and they way they operate and the wording of the leases would appear to be the same in all cases.

 

My 'crime' that apperared to have influenced the LVT was that the mortgage co.

 

stepped in and paid the amounts on 2 occasions but I felt that I didnt pay because the demands were invalid (by being sent in advance), also the tribunal appeared to be strongly influenced by a claim that I still owed service charges (this was suddenly bought up at the hearing with no proof and I had little oppurtunity to defend myself).

 

 

Andy

[Ed999]

I'm not sure that Lvt 's always have to justify their decisions.Sometimes they will say that they are ''an expert panel and from their knowledge and experience etc''.

 

 

I think we are going to disagree fundamentally.

 

The LVT is a legal tribunal. It has a duty to uphold the law. Part of that duty is to apply the law, and part is to give reasons for its decisions - the same duty that ALL courts of law are bound by.

 

I, too, have heard LVT chairmen claim to be above the law - this lie about their being an 'expert', not a judicial body. It is simply unacceptable.

 

 

Lobby your MP: http://www.writetothem.com

 

The LVT urgently needs abolishing. We need to return to the former state of affairs, in which the County Court decided all cases.

Edited June 10, 2011 by Ed999

[Ed999]

.My 'crime' that apperared to have influenced the LVT was that the mortgage co. stepped in and paid the amounts on 2 occasions but I felt that I didnt pay because the demands were invalid (by being sent in advance), also the tribunal appeared to be strongly influenced by a claim that I still owed service charges (this was suddenly bought up at the hearing with no proof and I had little oppurtunity to defend myself).

 

 

No one ever claimed that the LVT was competent.

[legrun]

Hi

I haven't heard any LVT chairmen claim to be above the law.

As I understand the situation a major problem with the LVT system is that there is no formal procedure for the LVT to refer matters which are outside their authority to an appropriate body for action. For example if an Agent is shown to be demanding monies to which he is knowingly not entitled with threat [ having been rebuked at previous LVT's for the same conduct] then such matters are not taken up by a higher authority and the improper conduct is repeated.

Your MP may be able to do something about that.

legrun

[Ed999]

I haven't heard any LVT chairmen claim to be above the law.

 

 

Well, with respect, you said -

 

I'm not sure that Lvt 's always have to justify their decisions.Sometimes they will say that they are ''an expert panel and from their knowledge and experience etc''.

 

 

This claim to be an 'expert', not a member of a judicial body - what is that if it is not a claim to be above the law?

 

Seems to me that you were spot-on when you said it's a claim that he has no need to justify his decision. He is saying, quite blatently, "You'll get no reasons from me, mate!"

 

 

It makes individual cases a lottery, as to whether the LVT sides with the landlord or with the tenant.

 

This makes a mockery of the leasehold laws. The law is supposed to provide certainty, so that landlords and tenants know where they stand when they sign a lease. But the LVT has turned the law into a farce, where no one knows where they stand.

[legrun]

Hi

This is getting a bit too 'crusty' for me so i'll sign off.

I sent Andy a couple of e-mails but having received no reply I guess the system isn't working.

legrun

[andydd]

Ha..have you, havnt received any on here, you can mail at [email protected]

Edited June 24, 2018 by dx100uk
quote

[legrun]

Hi

I've just noticed that Gateway

[ managing agent for Westleigh Properties ] has stated that they do not read the lease when taking over the management of a property

[ see LVT on Avenue Road for April 2011]

 

and The panel regarded this practice as 'reckless'.

 

It appears that they send in the surveyors at the drop of a hat looking for work and with so many old properties it is not surprising if they can find something that they consider needs to be done.

 

Also the continued failure of the managing agents for Westleigh Properties to comply with s47 of the '87 act was noted .

 

Interesting that Gateway testified at the LVT for 76a Pall Mall that the previous agent [bLR] complied with s47 although they knew that was not true! and the panel believed them!!

Legrun

Edited June 24, 2018 by dx100uk
spacing

[andydd]

I recall reading that one too, they operate like my freeholder (Forcelux) in that they try it on and seek to recover all sorts of costs whether or not the lease allows,

 

in my case I have been charged advanced costs, admin fees, interest, etc..proper inspection of the lease doesnt allow any of these, the trouble is that a freeholder has nothing to lose by trying it on, even if and for most its a big 'if' a case goes to an LVT the worst that can happen is a slap on the wrist by the tribunal.

 

Andy

[legrun]

Hi

I understand that a new bribery law came into effect last week and I wonder if it will apply to those payments received by landlords or associated parties in respect of the buildings insurance .

 

Although the 'b' word is not used in this connection as preferring a selection from ''commission,contingent commission ,bonus ,discount ,referral fee etc.'' one can't help but detect a similarity.

 

Also as this culture of payments to landlords is admitted for the insurance one should ask whether the same applies to managing agents.Whilst not applicable to Forcelux as they are effectively their own managing agent the question needs to be asked for Regis/Countrywide and Westleigh/Gateway.

 

This might account for the difference in fees charged by Forcelux/EFS [ apprx £125 per unit /yr] and the other two [approx £200 per unit /yr].

legrun

Edited June 24, 2018 by dx100uk
spacing

[Ed999]

• Bribery Act 2010 in force from July 1

Edited July 4, 2011 by Ed999

[legrun]

Hi

As previously noted there has been no process available to the LVT to refer any improper conduct to a higher legal authority for an appropriate sanction. Maybe the recent transfer of the RPTS to the Ministry of Justice will provide the necessary facility.

legrun