Giving recognition to a residents’ association at the most exclusive apartment block in Canary Wharf posed the sort of “risks that you see with the trade unions”, the First-Tier Tribunal was told last Thursday.
The remark was made by the freeholder’s professional witness, chartered surveyor Bruce Maunder Taylor – and was greeted with guffaws of laughter in the packed London tribunal.
Mr Maunder Taylor made the observation as the leaseholders at West India Quay – which featured in the film Layer Cake – sought official recognition of their residents’ association.
But the flats at the top account for only 53 per cent of the building, and the rest is occupied by a Marriott Hotel. It would be unfairly disenfranchised, according to Mr Maunder Taylor.
The trade unions remark was the unintentional comic high point of a four-hour hearing.
Recognition of a residents’ association is normally uncontroversial as it has few formal powers.
At West India Quay, there is no prospect of right to manage or enfranchisement owing to the 47 per cent commercial element.
A residents’ association has existed since 2006, and now includes 131 of the 158 residential leaseholds on the site.
But it is not recognised by the freeholder. A recognised residents’ association (RTA) can appoint a chartered surveyor / auditor to examine the accounts of the management of the building and so obtain information which – arguably – the leaseholders should be entitled to in any case.
The accounts at West India Quay were last presented in June 2010, the tribunal was informed.
In the case, the residents were represented by Martin Boyd, co-director of the Leasehold Knowledge Partnership.
Against them, the freeholder deployed a heavy brigade including Edwin Johnson, QC, of Maitland Chambers; his assistant; Steven Hughes, partner at City solicitors Lorrells; Richard Paul, of block manager Marathon Estates, and Mr Maunder Taylor.
All were employed by the freeholder the Yianis group, which was named in Parliament last December. The group is owned by Cyprus-born and Monaco-based John Christodoulou, who was not personally named.
Jim Fitzpatrick, Labour MP for Poplar and Limehouse, whose constituency includes some of the richest and poorest leaseholders in the country, said after the hearing:
“I have been appalled by the amount of time, money and effort the landlord has been willing to spend to oppose the formation of a recognised leaseholders’ group.
“I fully support the residents and plan to raise the landlord’s actions with the housing minister in the strongest possible terms.”
The tribunal, chaired by chartered surveyor Aileen Hamilton-Farey, aided by Judge Tim Powell on the panel, was left in no doubt of the underlying ill-feeling at West India Quay.
The residents’ representative Jane Hewland, a distinguished TV producer and former controller of current affairs for London Weekend Television, told the tribunal that she had received a letter from solicitors representing the freeholder threatening libel proceedings immediately before the hearing. (see panel left)
The tribunal was also informed that, in spite of the manpower employed by the freeholder’s legal team, the 233-page joint bundle of documents concerning the case was only made available to Mr Boyd and the leaseholders two days before the hearing.
The two panel members noted this point, but proceeded with hearing the case.
The tribunal first heard from Mr Paul, of the managing agent Marathon Estates. This company only manages West India Quay and nearby Canary Riverside, where the freeholder is also Yianis, the tribunal was told. Mr Paul informed the tribunal in writing that he is the owner of the company.
Mr Paul said that the presence of the hotel added to the site’s complexity. “If we did not have the hotel, it would be easier to manage,” he said, adding that the residents and the hotel had “sometimes complementary interests and sometimes competing interests”.
Mr Paul also indicated that the hotel “had more sway” in the management of the building and that if there were breakdowns in the plant machinery it would have to be dealt with more quickly than if it only affected the leaseholders.
Mr Paul was challenged on this by the tribunal chairman: “Is it [the hotel] more complicated; you just said ‘more sway of the hotel’.”
Mr Paul simply replied that the hotel was more complicated, and the question of whether management prioritised the hotel over the residents was not explored further.
Mr Maunder Taylor similarly stressed that West India Quay was a uniquely complicated mixed-use site and guidelines on recognition of a residents’ association should not apply in this case.
“I have not come across anything like it nor am I aware of a similar case to have come before the tribunal.
“Both the residents and the hotel have interests and they are not going to be contingent. Sooner or later there will be a conflict of their interests.”
Mr Maunder Taylor said that the hotel was a substantial payer of the service charges and should be represented.
Mr Boyd noted that recognised residents’ associations operate harmoniously in other sites with a high proportion of commercial property, such as Charter Quay in Kingston.
At West India Quay the freeholder ultimately controlled the commercial portion, but had chosen to rent it out to a hotel, and he should not be a party to the residents’ association.
Questioned by Mr Johnson, QC, Jane Hewland, the residents’ association secretary, told the tribunal that relations with the hotel were excellent and there was frequent dialogue between it and the residents. For example, over re-cycling issues.
There was a further moment of hilarity when Mr Johnson, QC, complained to the panel: “I cannot cross-examine Ms Hewland with Mr Boyd looking at me.”
This prompted open laughter and muttered comments of “Poor diddums”.
Ms Hewland said the residents, who have £100 million invested in the building, wanted to create a community at the site. The residents’ association had been instrumental in upgrading the fibre-optic cabling that had benefited the entire area.
Ms Hewland emphasised that the residents wanted to work with the freeholder and the hotel to ensure that West India Quay was a success.
Relations had been better with previous managing agents before the appointment of Marathon Estates.
Questioned by Judge Powell about risks of a worsening relationship with the hotel if a residents’ association were recognised, Ms Hewland: “That’s like saying nobody should get married because it might end in divorce.”
Judge Powell also asked her about communication with the freeholder, which she said was unsatisfactory: the residents had repeatedly asked about bills and the running of the building and had received no information.
“We constantly get the reply that ‘we will consult and revert’, but they do not revert.
“All we want to know is the costs of things that we pay for.”
Mr Johnson, QC, said that the application for recognition of a residents’ association was based on a misconception. One had existed since 2006.
“Jane Hewland says she needs recognition to get information but those rights exist anyway,” he said. “They have not used those rights.”
Again Judge Powell intervened, asking Mr Johnson, QC: “But what do you do if a landlord refuses to comply? There is no civil legal remedy to force a landlord to comply. It would have to be a criminal action.”
There followed a discussion on this aspect between Mr Powell and Mr Johnson, QC, with Ms Hamilton-Farey noting: “There is very little sanction if landlords do not comply with the law. Rights do exist but you can see that people do not exercise them.”
There was mention of only one occasion when the threat of criminal proceedings had been adopted to ensure a freeholder provided leaseholders with information.
Mr Johnson then got to the main concern of the freeholder: a recognised residents’ association would have the right to appoint a surveyor to inspect documents and these could be wider in scope than those concerned with the service charges.
The surveyor had “a very wide remit”, Mr Johnson, QC, said. “He could ask to see the commercially sensitive management agreement with the hotel, for example”.
Mr Johnson, QC, then gave three grounds to refuse recognition.
1/ “Granting recognition will be granting the upper [residential] half of the building powers over the lower [the hotel]. We do not think it is right that a representative of the upper half should be given rights to the whole of the building. That was not what was intended by the law.”
2/ “The tenants are only ever going to be able to reach 53 per cent. There is no point in having a recognised tenants association if it does not have the right to speak for the whole of the building.
“This building cannot ever represent the hotel.”
“The 60 per representation [the guideline for RTA recognition] cannot be achieved in this building.”
“The guidelines were not drawn up with West India Quay in mind.”
3/ Mr Johnson was very concerned by a single investor East Tower, which owned 42 flats. “Our concern is that East Tower is a commercial operation and that it can interfere with the operation of the Marriott.”
Mr Boyd concluded by saying that the law for a recognised tenants’ association was very straightforward.
“Recognition of an RTA would prevent the need for the leaseholders to take other costly forms of redress.”
“There have been no accounts since June 2010.”
“The landlord’s position is that the law should say something that it does not. He wishes you to reinterpret it to incorporate the commercial element of the site. He argues that if recognition were granted, the commercial element would be disenfranchised.
“But legally the only other persons involved in the site are the respondents [the freeholder]. The fact that they have a separate commercial contract with a third party sits outside anything that this act seeks to address.”
Mr Boyd pointed out that the freeholder owns 47 per cent of the building and enjoyed a “raft of rights”.
“But the residents seek an RTA which has only one main right: the right to appoint a surveyor to examine the accounts that impact on their part of the service charges.”
“The surveyor would only be looking at the lower part of the building [the hotel] in relation to charges paid by the leaseholders.
Mr Boyd concluded: “The powers of a recognised tenants’ association are limited and if those powers are abused it is in the tribunal’s power to remove that certificate.”
The tribunal will make a ruling in three-four weeks’ time.
West India Quay defeats £74,560 legal onslaught …
… and wins the right to a recognised residents’ association
The residents at West India Quay in London’s Docklands have won their epic battle to have a recognised residents’ association.
Represented for free by Martin Boyd, a co-director of the Leasehold Knowledge Partnership, the residents faced a legal onslaught headed by Edwin Johnson, QC.
This added up to £74,560 in costs for an afternoon hearing at the London tribunal on March 27.
It was extraordinary that freeholder the Yianis group, owned by Monaco-based John Christodoulou, was prepared to exert such legal muscle. Johnson is regarded as one of the leading property barristers in the country, described as “commanding and extremely effective” by Legal 500.
To lose a case to a lay advocate is unlikely to go unnoticed among his “learned friends”.
Although the issue seems minor, a recognised residents’ association does have one very important power: the right to appoint a surveyor to examine the accounts.
These were last presented to the residents in June 2010, the tribunal was told.
The ruling (below) by chartered surveyor Aileen Hamilton-Farey, assisted by Judge Tim Powell, who heads the London region of the property tribunal, is a humiliation for the freeholder and his army of legal advisors.
As well as a QC (£30,120 inc VAT), this included grade A solicitor Stephen Hughes, of Lorrells LLP (£31,950), and chartered surveyor Bruce Maunder-Taylor (£5,850) as a professional witness. The breakdown of costs submitted to the tribunal is published below.
The fanciest residential block in Docklands, West India Quay is divided into 158 flats and a 12-storey Marriott hotel, which accounts for 47 per cent of the building.
Mr Johnson, QC, argued that the appointment of a surveyor by the residents would allow “unlimited access to documents that might be of confidential nature” concerning the freeholder’s relationship with the Marriott.
“We disagree,” the tribunal states.
“It is our view that any surveyor would only be entitled to view documents and make enquiries relating to service charges payable by the long leaseholders and not to any other extent.”
Furthermore, the tribunal said it was satisfied by the evidence of Jane Hewland, the residents’ representative, that
“Their [the residents’] desire is to ensure that they are able to exercise their rights in relation to service charges and nothing further.”
In issuing a certificate of recognition for the residents’ association, the tribunal ruled that they could not have access to the management agreement between the freeholder and the Marriott hotel.
Any inspection of the service charge accounts would similarly be restricted to the residential portion of West India Quay.
The tribunal also found in favour of the residents over legal costs:
“… we have found in favour of the Applicants in this matter and therefore make an order that none of the costs incurred by the Respondents are considered to be service charges and are therefore not chargeable to the Applicants.”
However, the tribunal disagree with residents who felt the freeholder was unreasonable in defending the action.
“The Respondents, given the confidentiality issues, were entitled to defend the matter and were entitled to use professionals to do so. We find that each party should therefore bear its own costs in this matter.”
Jane Hewland, a former television journalist, said: “We are so grateful to Martin Boyd and the Leasehold Knowledge Partnership for all their help in what has been a nine-month battle. They beat one of the top property QCs in the country.
“We simply could not have won this without their help. We just hope the landlord leaves it here and does not appeal.”
But Hewland is indignant at the unfair allocation of costs in leasehold tribunal cases.
“If the landlord had won he could have added his costs to our service charges. We did win, and we still do not get awarded our costs. This does not seem fair.”
The obvious injustice in this approach to costs is to be taken up by LKP in June when it meets Judge Siobhan McGrath, who heads the property chamber.
The full costs demanded by the freeholder’s team can be read here: LegalTeam’scosts
Also Edwin Johnson, QC, made a curiously splenetic plea for costs to the tribunal, in which he names Martin Boyd 15 times and talks of “mud-slinging”, “too outrageous and/or too misconceived”, “self evidently absurd”, “quite absurd”, “lack common courtesy”, “self-evidently absurd” (again) and “absolute nonsense”.