Grand residents win costs award against their Landlord

Hallam Estates ‘unreasonable conduct … was of such seriousness and gravity…..”

In yet another defeat, Hallam Estates Ltd, the freeholder of the Grand, were ordered by the First Tier Property Tribunal (FTT) to pay the full costs of the April 2018 action brought by the Association of Residents in the Grand (AORG) against them.  (One can download a pdf of the decision at the end of this post.) The hearing took place in on June 20th, with new Hallam director, Robert Graham Moss having to represent Hallam.  Mr Michael Stainer was prevented from speaking as he was no longer a director of Hallam following his bankruptcy and therefore had had no standing in the proceedings. (Mr Stainer is NOT the owner of The Grand)

Win or lose, costs are not normally awarded in a Tribunal action unless the “conduct of the proceedings met the definition of unreasonable behaviour, and the Respondent had no reasonable explanation for the way it conducted the proceedings”, which is exactly what the Tribunal found in this case. In language of remarkable severity:

• “The Tribunal is satisfied that this conduct by Hallam Estates and its directors was symptomatic of their longstanding disregard of the leaseholders’ legitimate interests in The Grand and of their proclivity to abuse the legal process to block and harass leaseholder’s attempts to achieve a satisfactory resolution of their grievances .”

…concluding that:

• “The Tribunal holds that the nature of Hallam Estates’ unreasonable conduct of the proceedings for the variation of the management order was of such seriousness and gravity to justify an order of costs under section 13(1)(b) of the 2013 Rules.”

In the original action in April 2018, the Tribunal heard an application to vary the management order made in 2014. Hallam Estates did not participate in the proceedings, although Mr and Mrs Michael Stainer did file personal submissions.  This proved to be crucial in both the original action, the subsequent unsuccessful appeals, and in the costs hearing itself.

There were three key features in this 2018 decision that stood out and which Hallam continues to reject:

1. The attachment to the Order of a Penal Notice “to ensure compliance by Hallam Estates and its Officers with the order.”  This meant that the County Court could impose sanctions on Hallam for non-compliance, including fines and the seizure of assets.  This was done “to minimise the risk of Mrs Mooney being in the same situation as Mr. Hammond.”  The Tribunal had found that “the principal reason for the lack of progress made by Mr Hammond was the obstructive attitude adopted by Hallam Estates, Mr and Mrs Stainer and Mr Richardson in respect of his appointment.”  The Tribunal made specific mention of “the historic neglect of the maintenance of the building and the failure of the landlord and Mr and Mrs Stainer to meet their obligations to contribute towards the costs of maintaining the building”.

2. The Tribunal’s solution for the much-vexed question of the demarcation of residential from commercial areas “depended upon a clear identification of the residential areas including the common parts and the rights of way in respect of the external areas”.  The Tribunal accepted the drawing submitted by AORG and placed the residential areas within “the exclusive control of Mrs Mooney”. Subsequently, Hallam, and Mr Stainer, still speaking on behalf of Hallam, despite his bankruptcy, have claimed these drawings were falsified.  This claim was not made during the original case or the subsequent unsuccessful appeals, even though they had the drawings in their possession as early as March 15th 2018.

3. Lastly, and most challenging to Hallam, was the decision that they were liable to contribute 25% towards the maintenance of the Grand.  In 1998, Hallam’s liability was around 18.57%, reducing to 3.4% in 2018, as successive lease extensions saw leaseholders’ share of the overall cost move upwards.  The 25% contribution would be calculated on the annual budget in advance with an end-of-year adjustment and would amount to around £50,000 per annum, to be found, one assumes, from the commercial activities currently ‘managed’ by Mr Robert Richardson (pictured).

In its latest decision, the Tribunal focused on the key issue of Hallam’s absence from the original proceedings and the two successive High Court cases in which Hallam’s appeals were dismissed in no uncertain terms.

On 8 January 2019, Martin Rodger QC Deputy Chamber President said:

“No application for an adjournment of the hearing on 26 and 27 April was made by the applicant (Hallam Estates).  Nor did it respond to the application for the appointment of the new manager and the variation of the terms of the management order”.

On 15 March 2019 he again refused Hallam’s permission to appeal the Tribunal’s decision to postpone the linked unreasonable costs application saying:

“There is no realistic prospect of a successful appeal in this case………………….The grounds of appeal are said to be procedural irregularities and the appearance of bias ……….I am satisfied that the suggestion that a fair-minded observer would foresee a risk of bias in those circumstances is fanciful.  These are long running proceedings and not only is Judge Tildesley the Regional Judge, he has had the conduct of the proceedings throughout.”

Hallam were further handicapped when the costs hearing took place on June 20th 2019 because:

“Hallam Estates did not comply with the directions and failed to provide a statement of case and witness statements.  The Tribunal was not impressed with Hallam Estate’s reasons for not providing a statement of case. Hallam Estate’s decision to spurn the opportunity to call evidence undermined the credibility of its assertion that it had a reasonable explanation……………The Tribunal is satisfied that Hallam Estates made a deliberate decision not to co-operate with the Applicant and the Tribunal with the intention of frustrating the Applicant’s efforts to secure a management order fit for purpose.”

A final point which directly refuted Mr Stainer’s ongoing assertions that receipts presented to the Tribunal were falsified”

“The Tribunal is satisfied that the costs claimed were substantiated by receipts and ……the Tribunal notes that Mr Moss did not challenge the validity of the receipts.”

Mr Moss made this concession with the silenced Mr Stainer sitting alongside him.

Clearly this won’t be the end of the matter as Hallam will undoubtedly appeal, but one fact is clear.  Unlike Mr and Mrs Stainer who have evaded their £300,000 liability towards the service charge account thanks to their bankruptcy, this debt is against Hallam Estates, and when added to the other liabilities stacking up against the company, the future doesn’t look very encouraging.

FTT Decision AORG v Hallam Estates Ltd

The Shepwayvox Team

Dissent is NOT a Crime