I am in dispute with our freeholder over a service charge on a long leasehold property. - 1st claim dismissed. now used another court - Vex?

[MrShed]

It is different, you are right, but the principles SHOULD remain the same.

 

Aequitas is the expert in this area, I'm sure he will pop along in due course or of course you could PM him to draw his attention.

[AnimalMagic]

Many Thanks

 

I'll PM Aequitas

[caro]

What do the Particulars of Claim say?

[AnimalMagic]

What do the Particulars of Claim say?

 

Does that make a difference???

 

Brief Details of claim:

The Claimant owns the freehold of (amongst other things) three blocks of apartments known collectively as ---. The claim is for a contribution, payable to the Claimant by the Defendant, towards the Claimant's expenses for the period 1 July 2007 to 31 December 2008

 

PARTICULARS OF CLAIM

I. The Claimant was incorporated on --- in order to acquire the freehold of the properties known as --- situated at --- ("the Property") together with the freehold of the garages at the Property. and to hold the same as an investment for the benefit of the Claimant's members.

 

2. At all material times the Defendant has been a member of the Claimant.

 

3. The Claimant's other obligations are to

(a) manage and administer the Property and garages for the benefit of all owners of dwellings and garages within the Property and insure and manage the same and maintain the same in good repair and renew and improve and add to as necessary, as described in the leases held by dwelling holders, the buildings, forecourts, driveways, paths, passageways, walls and fences surrounding or belonging to the Property and garages, and other parts thereof and any other facilities provided in the future

(b) generally to look after the Property for the benefit of its members; and

© to perform the Landlord's covenants in the leases.

 

4. Each owner of a dwelling, in the Property, owns a share in the Claimant and should pay to it a service charge (otherwise known as a contribution) to cover their part of the Claimant's expenses incurred in the performance of its duties.

 

5. The Defendant is a member of the Claimant and the owner of a long lease of --- ("the Lease") forming part of the Property.

 

6. The Claimant has made demands on the Defendant for the payment of service charges (otherwise contributions) in relation to the following periods:

(a) 1 July - 31 December 2007 in the sum of £1,193.99

(b) 1 January - 30 June 2008 in the sum of £1,181.00

© 1 July - 31 December 2008 in the sum of £1,181.00

 

7, The Defendant has failed to pay any of the outstanding amounts, that total £3,555.99, contrary to the terms of the Lease.

 

8, The Claimant is entitled to, and does claim, interest on the amounts outstanding pursuant to section 69 of the County Courts Act 1984 to today's date as follows:-

(a) On the sum of £1,193.99 at the rate of 8% per annum or £0.26 per day from 1 July 2007 to date (431 days) making a total of £112.06

(b) On the sum of £1,181.00 at the rate of 8% per annum or £0.26 per day from. 1 January 2008 to date (247 days) making a total of £64.22

© On the sum of £1,181.00 at the rate of 8% per annum of £0.26 per day from I July 2008 to date (66 days) making a total of £17.16

 

9. The Claimant also claims interest under the Act at the said rate of 8% per annum on the sum of £3,555.99 at the rate of £0.78 per day from the date hereof until judgment or sooner payment.

 

AND the Claimant claims:

(1) £3,555.19

(2) Interest thereon, as pleaded, up to today's date in the amount of £193.44

(3) Further interest as pleaded from today until judgment or sooner payment

(4) Costs

 

DATED this 4th day of September 2008

 

STATEMENT OF TRUTH

I believe that the facts stated in these Particulars of Claim are true. I am duly authorised by the Claimant to sign this Statement.

[caro]

It helps to know what exactly is being claimed to know how to defend it, yes. You should also check your lease to see if there is anything in there which is relevant to their claim, and to your defence.

Edited September 29, 2008 by caro

[AnimalMagic]

Fair enough...

 

The issue is that there has been no consultation and the management will not answer questions regarding expenditure.

 

However the thrust of my defence is their failure under s47 L&T 1987 - landlord's address not on invoices, s48 L&T 1987 - notification of Landlord's address for service of legal notices and s153 C&LR 2002 - summary of rights and obligations included with invoice. Failure of each of these the service charges '…shall be treated for all purposes as not being due from the tenant to the landlord…'.

[caro]

Section 20 of the Act includes this:

 

 

(1) For the purposes of section 1 an overriding lease shall be a new tenancy only if the relevant tenancy is a new tenancy.

(2) Every overriding lease shall state—

(a) that it is a lease granted under section 19, and

(b) whether it is or is not a new tenancy for the purposes of section 1;

and any such statement shall comply with such requirements as may be prescribed by rules made in pursuance of section 144 of the [1925 c. 21.] Land Registration Act 1925 (power to make general rules).

 

It would appear that there may be exclusions from a quick glance at S20 of the Act.

 

Landlord and Tenant (Covenants) Act 1995 (c. 30)

[AnimalMagic]

Sorry, I don't understand what you're getting at there...

 

Leases were granted in 1984, Company was formed in 2002 to purchase the freehold. Leases remained, though they were altered to remove ground rent.

 

I have previous LVT decisions which demonstrate that the L&T applies to Lessee owned companies, but it's if the clause in the articles ousts the requirements of the L&T that I'm unsure of.

[caro]

That is the point I'm trying to make. I'm wondering if that clause may be what the ROMco are basing their assertions on. I suggest that you ask the ROMco on what grounds they are claiming the lease overrides the law. Are everyone's leases exactly the same or are they specific to each tenant? eg anyone who moved in after the ROMco was formed would have a new lease which wouldn't include ground rent.

 

Just playing devil's advocate here. Sorry if it's not particularly helpful, but if you can see where they are coming from, it will make it easier to defend yourself IMO.

[AnimalMagic]

The leases are all the same and when a flat is sold, the existing lease is transferred to the new owner.

 

I did ask the management to clarify and they simply stated that the L&T didn't apply as they were asking for the money under the Articles of the Company.

 

Previous LVT judgements apply the L&T to ROMco, but state that they do not consider company law, so there is no absolute resolution to the Articles vs L&T argument that I have been able to find.

 

I do find it interesting that they have not mentioned clause 24 of the Articles in their claim...

[AnimalMagic]

So, nobody knows?

 

Here is the defence:

 

In the xx County Court

Between

 

xxx Claimant - and – Animal Defendant

 

Defence

 

1. The management structure at --- consists of two companies which both employ the same professional Managing Agent.

a. --- (referred to as 'A', or the Claimant) owns the freehold of the apartments at ---. There are 44 flat owners, who are all Shareholders of A.

b. --- (referred to as 'B') owns the freehold of the grounds and common facilities at ---. There are 9 freehold houses which have rights to use the grounds and facilities. The Shareholders consist of the 44 flat owners and the 9 freehold house owners.

c. The Directors of A also sit on the board of B. B has an additional director representing the nine freehold houses. There have been four different boards since Jan 2003.

d. C is employed to manage the property. C is not a member of any professional organisation such as RICS or ARMA.

e. The Claimant (A) is trustee to over £100,000 p.a. of Lessees' money based on accounts for 2008. B is trustee to a further £70,000 of Lessees' money based on accounts for 2008.

 

2. Since the freehold was purchased by the Lessees in 2002, the Claimant has not consulted with Lessees in accordance with statutory requirements Furthermore, despite the Defendant’s repeated requests, the Claimant has failed to supply information relating to previously paid service charges and expenditure and failed to justify certain items. The Claimant’s lack of transparency makes it difficult to establish the truth regarding the use of Lessees’ money. It also makes it impossible for the Shareholders to make a properly informed decision about the performance of the Directors.

 

3. The Lease Advisory Service has advised the Defendant that all leases are subject to the Landlord and Tenant Act, without exception. The Claimant has demanded the charges under Clause 24 of the Company’s Articles, while failing to observe the obligations of the Landlord and Tenant Act and subsequent amendments. Lessee owned management companies have not been excluded from the requirements of the legislation indicating that the legislators intended the protection to apply to members of such companies. Therefore, the Defendant asserts that Clause 24 of the Articles does not oust the requirements and consequences of the Legislation.

 

4. The Defendant denies liability for any Service Charges since the company was formed because the Claimant has not complied with statutory requirements. The legislation imposes an obligation on the Claimant to adhere to the following regulations, otherwise the service charges '…shall be treated for all purposes as not being due from the tenant to the landlord…’

a. Section 47, Landlord and Tenant Act 1987 requires the Landlord's name and address to be on the invoice. In the case of a company, it must be the registered office of the company . All invoices since the company was created are missing the registered office address of the company.

b. Section 48, Landlord and Tenant Act 1987 requires a notification of the Landlord’s name and address for the service of legal notices. The Defendant has no record of ever having received such a notification.

c. Section 153, Commonhold and Leasehold Reform Act 2002, commenced in Oct 2007, obliges the Landlord to provide a summary of rights and obligations to be included with the service charge invoice. The Claimant has not complied with this regulation.

 

5. The Defendant further denies liability because the Claimant has failed to consult in accordance with s20, Landlord and Tenant Act 1985 . The Defendant has identified approx £4,983 overpaid to the Claimant and Park in previously paid Service Charges for which the Defendant’s liability is limited due to lack of consultation. Without prejudice to his right to make a future claim, the Defendant declines to make a counterclaim for the overpaid amounts, at this time. However, the amount overpaid to the Claimant exceeds the amount being claimed.

 

6. The Defendant further denies liability for the following specific items within the Service Charge demand:

a. Compensation was ordered to be paid by the Claimant to the Defendant in 2006 . The compensation forms part of the Service Charge that the Claimant expects the Defendant to pay. The Defendant contends that the Directors were in breach of duty 'to perform the Landlord's covenants in the Lease' and thus it is not the Defendant, or the other Shareholders who should pay the compensation and associated legal fees.

b. The Claimant imposed two penalty charges on the Defendant in 2005 and 2006. The Claimant has failed to justify either of these penalties. The Defendant contends that the Claimant did not have the authority to apply these penalties.

 

7. The Defendant denies any liability for interest charges for the following reasons:

a. If the Service Charges 'shall be treated for all purposes as not being due from the tenant to the landlord', interest is not applicable.

b. The Defendant believes there is no provision in the Lease for interest to be charged.

c. Although the Defendant requested clarification, the Claimant failed to substantiate their claim that the Landlord and Tenant Act does not apply to the claimed Service Charges.

 

8. The Defendant seeks a judgement under S20c Landlord and Tenant Act 1985 to determine if the Claimant’s costs for these proceedings may be charged to the Lessees.

 

9. The Defendant seeks costs at the discretion of the courts.

Note 6b the management imposed two penalties (interest) for failure to pay service charge. The first went through court in a previous action. We did not oppose it as it was in the resident's handbook. Subsequently we found out that there was no provision in the lease for penalties.

 

The second was imposed after judgement. The second was for unpaid service charges which came due just prior to the issue of the previous claim, but was not included in the claim. They did offer an unsigned cheque to refund this, but did not refund the earlier one.

 

Questions.

 

1. If anyone can suggest better wording for para 3 as that is the paragraph I am mosty concerned about. Does it make sense to the legal minds

 

Regards

Edited October 9, 2008 by AnimalMagic
Updated defence, included para 5

[AnimalMagic]

The silence is deafening!

[Aequitas]

Only opened your PM today.

 

This one had me scratching my head! My initial reaction is that it cannot be that easy to get round the statutory provisions.

 

I think there are two questions here:

 

1. Can contractual obligations of this sort be imposed in a company's constitution?

 

2. If so, do they override the statutory provisions?

 

As to the first question I have sent an email to a co/co lawyer I know and will let you know his response if and when I get it. As to the second I'll have look at the relevant legislation and report back.

[AnimalMagic]

Thanks Aequitas,

 

This one had me scratching my head! My initial reaction is that it cannot be that easy to get round the statutory provisions.

 

That is my thought, but I would like to be reassured and have an authority to quote to the judge

[AnimalMagic]

I've updated the defence again to change some wording.

 

The date for service was 8th Sept, so I assuming I have until 4pm on 6th Oct to submit this. I have acknowledged service.

[AnimalMagic]

Defence was submitted on Monday and I've received the allocation questionaire today. Quite suprised at their efficiancy! Thought I might have a break from it for a few weeks...

 

It asks if there is any reason to transfer to another court. I think I would prefer it transferred to another local court, just because it is easier to get to and cheaper parking. The actual mileage difference is 15 miles vs 16 miles. Is convenience a valid reason to change courts?

[AnimalMagic]

I have been told elsewhere that the articles of association of a company govern the relationship between the shareholders and the company and deal with matters such as voting rights, meetings and transferring shares. They cannot be used to impose an obligation such as that proposed in the above clause.

 

This makes sense as the articles can be changed by 75% agreement, so an individual would have an obligation imposed by majority which he/she may not be in agreement with. I understand that, legally, an obligation can only be imposed by specific agreement (or by statute).

 

I just wish I had a statute to quote

[susan1]

I just wish I had a statute to quote

 

http://www.pglaw.co.uk/pdf/articles/Commonhold-and-Leasehold-Reform-Act-Services-charges.pdf

 

bit on service charge consultation:

 

'A landlord may apply to the leasehold valuation tribunal that he may dispense with all or any of the consultation requirements. The tribunal may make the determination if it is reasonable to do so.'

 

Speaking as a fellow lessee in the broader sense and also involved with freehold purchase but not a lawyer, my advice would be keep it simple and low key and don't get involved in the legalese which then becomes a competition amongst people who probably don't understand the law anyway, so it all gets terribly out of hand and ends up in court, unnecessarily.

 

Has the ROMCo applied to the LVT to dispense with S20? If not I guess it will have to do so.

 

Also maybe the Mem & Arts of the ROMCo are inappropriate for the role it plays because these are in conflict with L&T law and so may need amending.

 

Also whatever its Mem & Arts say, the ROMCo cannot ignore relevant legislation. Your lease is governed by L&T 1987 S20 et al.

 

Cheers

[AnimalMagic]

1. Lessee attempts to get information out of freeholder regarding previously paid services charges.

2. Freeholder refuses information, so Lessee puts service charge in dispute.

3. Freeholder takes legal action.

4. Lessee defends action using previous LVT decisions to show no liability due to freeholder failing to observe L&T act requirements.

5. Freeholder withdraws action, citing same reason given in defence.

6. Freeholder then writes to mortgage company claiming lessee owes service charge.

7. Lessee writes to mortgage company explaining court action withdrawn by freeholder and that lessee has no liability for charges.

8. Regardless, mortgage company pays service charge and adds to lessee's account, along with a hefty admin fee.

 

Reading both the 2006 act and the CPS guidance this seems to fit with sec 2, false representation, in that the freeholder has admitted, by withdrawing the case, that the money was not owed, yet has falsely claimed it is.

 

Also, what action can Lessee take against mortgage company to have sum removed? Is this a county court action? Can Lessee claim compensation of any sort?

 

Any helpful opinions?

Edited April 17, 2010 by AnimalMagic

[sequenci]

Have you been back to the LVT?

[AnimalMagic]

A while back I remember seeing something about where a mortgage company had paid service charges on behalf of a mortgagee, even though the mortgagee had asked them not to. Mortgagee took mortgage co to court over it. Can't remember any other detail, but if it rings any bells with anyone, I'd be grateful for details

[AnimalMagic]

No. A new action will have to be started, but there is no doubt that the money is not owed...

 

The defence quoted s47 of the Landlord and Tenant Act 1987 which requires the landlord's name and address to be on the invoice. None of the invoices have this information. In addition s20B was quoted showing that the service charge was unrecoverable as all invoices were older than 18 months. The landlord's discontinuance notice quoted the invalid invoices as the reason showing that he was aware that the money was not owed.

 

Subsequently he claims the money is owed... Is that not fraud?

[AnimalMagic]

Would be grateful...

 

I seem to remember damages were awarded to the mortgagee as there was no prospect of forfeiture and the mortgagor was not legally able to impose a liability which the court could not.

[AnimalMagic]

I am in dispute with our freeholder over a service charge on a long leasehold property. The SC was put in dispute in July 2007 and the freeholder bought a legal action against me in 2008, which I defended. The freeholder had not and still does not comply with the statutory requirements for SC demands. Further there has been no consultation on major works in the whole 9 years the feeholder has owned the property. There has been expenditure which is not in accordance with the lease. The freeholder has passed a compensation payment to one of the lessees back to the lessees through the SC!!!!

 

When I defended the 2008 case the freeholder withdrew citing 'procedural inadequacies in the invoices' - part of my defence. The freeholder has now started a new claim in a different Court.

 

Can anyone advise on the wording of a defence of a vexatious claim and a request to have the claim struck out? Is it necessary or desirable to include, in the initial response/defence, copies of the letter showing they withdrew from the previous case? Any other evidence I should include?

 

Thanks for any help...

[AnimalMagic]

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