The End of the Grand Road? The Stainer empire totters toward disintegration.
“In December 1985 about 30 of the 50 tenants at the Grand issued proceedings in the High Court against Mr. Stainer(pictured) (the defendant) in his capacity as landlord.”
So began the “History of the Proceedings” that form section 57 to 79 of the First Tier Tribunal Property Chamber’s (FTT) decision of July 5th 2018 (the FTT decision is at the end of the post). The applicant in this case was the Association of Residents in the Grand (AORG), represented by their chairperson, Peter Cobrin and the respondent, Hallam Estates Ltd, who were unrepresented as their directors and owner where absent throughout. The AORG application sought the appointment of a new Manager and the variation of the Management Order imposed in 2014 by the FTT. This followed the removal from direct responsibility for the management of the Grand’s residential areas of Michael Stainer and his agent, Roderick Baker of Fell Reynolds.
This could sound a dull and turgid “History” and an outsider could be forgiven at this point in this report to switch off and say, “enough of this Stainer nonsense”. It would be a shame though, because that is exactly what the FTT decision set out to do, after reviewing the evidence gathered both in the April hearing, the preceding 33 years, and in particular the conduct of Hallam Estates, Mr and Mrs Michael Stainer and general manager, Robert Richardson since 2014.
The Tribunal catalogued a series of events demonstrating a cavalier attitude towards the responsibility of a landlord to his building, his leaseholders and at times, even the law, on the part of Mr Stainer, his wife Doris Stainer and Robert Richardson (pictured). Proof as to how the FTT viewed this is by their including in their directions the highly unusual proposal “to attach a penal notice to the Order to ensure compliance by Hallam Estates and its officers.”
This is a controversial area and would not be considered unless there was a real concern as to the likelihood of non-compliance. The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, which gives the FTT its case management powers, do not provide for the making of penal orders. However, the County Court does have the power to enforce orders made in the First-tier Tribunal.
Either way, Hallam Estates and its employees are on notice as to their future behaviour, and on the basis of their past, they have along way to go. As we said, Hallam Estates were unrepresented and failed to file any submissions. Mr and Mrs Stainer, as officers of the company, and Peter Sarstedt as shareholder, were absent and silent. Nonetheless, through the Stainer’s personal solicitor, Andrew Duncan, strenuous efforts were made to delay proceedings on the basis of medical “evidence” relating to the alleged “assault” on Mr Stainer on January 26th. The FTT gave this very short shrift as the application wasn’t from Hallam Estates who were the respondents and unrepresented, although fully capable of securing representation. In fact, the FTT were thoroughly unclear as to who was instructing Mr Duncan, finding him “unhelpful and not compliant with their duties”. In the end, they refused the adjournment and in one significant sentence stated:
“The applications made by Mr Duncan on behalf of Mr and Mrs Stainer (pictured) were not transparent and designed to frustrate proper scrutiny of their merits.”
So, what did AORG seek to achieve in its application, and what did it get?
* The removal of the grossly unfair allocation of liability for service charges with the freeholder to bear a fair share of the financial burden for maintaining the Grand: evidence submitted showed that the leaseholders burden of the running costs had increased from around 82% to 97% — because Michael Stainer, in his own words in 2013, “was not able to raise sufficient funds from the commercial uses of the building to cover the shortfall”. As the FTT concluded, residential leaseholders were subsidising the commercial interests. These have been run for the last 8 years by Robert Richardson, and the various legal entities are either in liquidation or subject to liquidation proceedings. Richardson was a director of at least two of these companies at the time he was arrested in July 2015.
The FTT determined the landlord must pay 25%, around £50,000 per annum, on top of the residents’ contribution, a figure arrived at courtesy of Mr Stainer’s own admission that around 25% of the Grand was commercial. Perhaps even more persuasive were the drawings provided by Miriam Cobrin, a Grand resident and retired Chartered Architect, whose detailed drawing of the Grand formed the basis of the FTT’s assessment both of areas and their usage.
Clarity over who had managerial responsibility for residential and commercial areas: the blurring of what constituted commercial and what were residential areas had led to endless squabbles over CCTV and accusations of ‘spying’, noticeboards, access control etc. with the Grand’s general manager, Robert Richardson, claiming authority over all residential common parts and access ways, as well as sole control over the CCTV.
Based on Miriam Cobrin’s drawings, the FTT has identified the residential area, its common parts and access ways and put them under the sole control of the new manager who will also take over all the surveillance systems, noticeboards and access control – a long-running source of concern simply dealt with.
The capacity to deal with breaches of the leases: evidence submitted by residents complained of the nuisance of having holiday lets in the midst of a residential building in breach of their leases, some being used for overtly commercial interests such as the Ershamstar School of Clairvoyance.
The FTT has given the manager the right put such breaches before the FTT for further guidance and action which could include lease forfeiture.
Ensuring maintaining the commercial areas were not a financial burden on residents
The FTT was offered a lengthy guided tour of the commercial areas by Robert Richardson in January in which he showed the detailed improvements and high levels of maintenance. As a result, the FTT had made it 100% clear that the service charge fund shall not contribute to any such works, especially the Palm Court glazed area. Nice one, Robert!
Sorting out the refuse: to the external observer, the idea that disposing of refuse could be a source a dispute lasting over 5 years seems an absurdity, especially when the obligation of this landlord, Hallam Estates, is embedded both in legislation and in lease obligations. However, the general manager Robert Richardson thought otherwise, first withdrawing the provision of garages historically used for refuse storage, then seeking to charge for them at 4 times the going rate, and then interfering in a negotiation between leaseholders and Shepway Council with fake emails in the name of William Lang, a so-called local resident.
The FTT decided that the two garages should be provided without charge to residents.
Getting a notice board for residents: the noticeboard historically used by residents was taken over by Robert Richardson for the benefit of holiday-let users and self-aggrandisement.
The FTT has required that there should be a noticeboard for the use of residents – trivial but symbolic of the end a regime in which Richardson personally had to approve any notice.
Finally, don’t forget that the Stainers still have an ongoing personal liability for the service charges on 19 flats and an unpaid judgement debt for arrears of £276,000, this on top of their personal insolvency proceedings. And that just last week Mr Stainer had bankruptcy proceedings on Tuesday 3rd July at Canterbury County Court and the next day at the High Court in London.
So what did AORG seek in its application that it didn’t get?
And the Stainers have now been hit with a £27,000 costs bill due to their unreasonable behaviour during the action against them for non-payment of services charges:
“The Tribunal is satisfied that its conclusion on Mr and Mrs Stainer’s conduct of the proceedings met the definition of unreasonable behaviour, nameiy conduct which was vexatious and designed to harass the other side rather than advance the resolution of the case. In the Tribunal’s view, Mr and Mrs Stainer had no reasonable explanation for the way they conducted the proceedings”
Irrespective of the Stainers’ conduct, have the tenants considered that they will become homeless should the Stainers be bankrupted and be forced to relinquish the Grand? Who is to say that a buyer is hovering in the background, eager to take on contentious tenants and a crumbling building?.
I would suggest that a buyer, should there be one, would wish to develop, within the core building, something of a High-end Hotel without the encumberance of sitting tenants.
Further attempts at compromise appear to be advisable.
“Further attempts at compromise appear to be advisable.”
How could anyone compromise with people who appear to have made non-payment into an art form?
Is this a serious comment? The protection afforded to long leaseholders under various acts of Parliament are substantial and well-tested. There is no risk of homelessness for leaseholders and such scare-mongering is unworthy and I question the motives of the writer. Only bankrupts need fear homelessness.
Asial: People who live (or run) in glass houses shouldn’t throw stones!!! They should also learn to spell —— on behalf of encumbrances of the Grand. Shameful scaremongering.
There will be a further hearing in the insolvency proceedings in the High Court at 12.30 on July 31st 2018 “dealing with the companies as well as the Stainers,” according to the Insolvency Litigation Unit (Technical Team) at the Solicitor’s Office and Legal Services of HM Revenue and Customs.
Assuming that the wheels do fall off for the Stainers – then what is the likely outcome for the Grand?
I presume that the Official Receiver would be involved in sorting out assets etc., but what of the Stainers – what would their position be?
In personal bankruptcy, all personal assets, including the family home, valuables, cars etc will be sold to pay off creditors. All that can be left is work items and essential household items — furniture and clothes.
At the company insolvency level, assets will be sold to meet creditors. This happened in 1996 when the Grand was sold by the Insolvency Practitioners to Hallam Estates Ltd without leaseholders knowing who thi company was. They soon found out!
During the insolvency procedure liquidators, administrators and receivers are required to conduct a thorough investigation of the company’s affairs and the directors’ conduct to ensure there has been no wrongful trading, misconduct or any breaches of the law.
If a director’s conduct is deemed unsatisfactory , he or she will receive an adverse report which is sent to the Department for Business who will conduct further investigations and have the powers to disqualify directors for a period up to 15 years. If it’s found that criminal offences have taken place, then the inevitable happens……………………
Thank you Peter – it is a truly complicated..(at least to me it is)
I’m a bit confused to how all this affects Hallam Estates Ltd.. Is this company on the list of “winding ups”?
And am I correct is assuming that as the Stainer’s are directors of Hallam Estates Ltd which you say owns the Grand – then does it follow that the assets of Hallam Estates are a “Stainer asset” that the Insolvency Practitioner can get his hands on to pay creditors off..
Does that mean that the Stainers then have to leave the Grand?
The directors of a limited company are “mere employees” to quote Mr Stainer. They are only owners if they have shares and the Stainers do not. Hallam Estates has but one shareholder, the Hanover businessman, Peter Sarstedt. In fact, the Stainers own no shares in any of the companies facing or in liquidation.
It would appear that the only Stainer-directed companies with assets of worth are Eastons Management Ltd which owns the garage complex of around 50 units reach rented out for, I believe, around £1000 per annum, and the freehold of the Grand, owned by Hallam Estates Ltd. Neither of these are involved in any proceedings to date. However it would be fair to assume that given the HMRC debts, and the need to realise assets, that HMRC will move heaven and earth to get their hands on them. This is where directorial misconduct might come into play, though given that Mr Stainer is a chartered accountant, I am sure he wouldn’t fall into that trap………. mind you, you should read the reports of the various tax tribunals.
All of the above is separate from the proceedings against the Stainers personally, although the HMRC debt is common to both, and to this you have to add the recent Tribunal judgement of £167,000 plus interest for service charge arrears — around £276,000. At this point, the 19 holiday flats come into play.
Last note: July 31st at 12.30 in the High Courts of Justice, Rolls Building, London will see the next act in the various corporate and personal bankruptcy proceedings. Convenient timing as one can travel on the off-peak HS1.
Thanks Peter… Does that mean you could still have the Stainers as neighbours?
Hallam Estates have filed an appeal drafted by Kerry Bretherton QC “on the basis of the papers available to me and the instructions received from Mr and Mrs Stainer, through Mr Duncan, rather than through any personal knowledge of the history of proceedings or events.” This might explain one of several curiosities, one of which relates the the “assault” on Mr Stainer, which was Mrs Stainer’s “belief (whether that belief was correct or entirely incorrect) that the assault had been by someone with sufficient interest in the broader dispute involving the freeholder and leaseholders of The Grand [and] that the individual had been present at an earlier hearing of this case.” No evidence to this effect has ever been presented, nor has any enquiry in this regard been made of any resident who was in Court. Nonetheless, Ms Bretherton has seen fit to extend the implications of this innuendo to imply a conspiracy of sorts..
Big day on July 31st at 12.30 as HMRC tighten the net. Check it out at https://www.justice.gov.uk/courts/court-lists/list-cause-rolls2#Insolvency