Liquidation Looms as Stainer and Hallam Estates Humiliated in the High Court – Again!

Hallam Estates, owners of the freehold of the Grand (Folkestone, Kent), lost yet another High Court battle in the Insolvency and Companies Court on February 21st. Hallam were seeking to set aside two Statutory Demands for debt, which if allowed to proceed, would lead to the liquidation of Hallam. In what must be seen as a serious threat to the survival of the company, the twin applications were unceremoniously dismissed by Deputy District Judge Stuart Frith.

In his oral determination, delivered at the end of the hearing, Judge Frith dismissed both applications, and in the case of the second one, aimed at the Statutory Demand issued by the Association of Residents in the Grand (AORG), described Hallam’s application as “totally without merit”. This is the second time a High Court Judge has used this phrase in regard to Hallam. One more usage would see Hallam subject to a civil restraint order, barring them from further litigation without prior court permission.

The debts in question were demanded of Hallam in October 2019 in two Statutory Demands resulting from massive unpaid service charges at the Grand, and the costs awarded to AORG in July 2019. Failure to set aside these injunctions now opens the door for liquidation, which would inevitably follow if Hallam failed to pay the full amount.

These debts originated from the decision of the First Tier Property Tribunal (FTT) in July 5th 2018 to vary the terms of the Management Order governing the administration of the residential parts of the Grand. This Order made Hallam Estates (the Freeholder) liable for 25% of the shared costs of building maintenance at the Grand. Previously their liability was 3.48%. This 3.48% is now the direct liability of the Michael & Doris Stainer personally under the Management Order and lies outside their historic bankruptcy liabilities. This could therefore be subject to fresh insolvency proceedings.

The second debt arose out of the decision of the FTT in July 2019 to make Hallam pay the costs of £9,624 incurred by AORG in this earlier case, because of Hallam’s “unreasonable behaviour in the conduct of proceedings”.

Judge Frith was fully aware that Hallam had already made numerous appeals challenging the July 5th 2018 decision, and that these appeals had failed. He quoted from Judge Karen Walden Smith’s words in September 2019 in dismissing Hallam’s request for a Judicial Review of the previous failed appeal:

• “This attempt to judicially review the Upper Tribunal for refusing to give permission to appeal the decision of the FTT is totally without merit. “

Judge Frith went on to refer to

• “…the history of obstruction and frustration of the original management order”.

Despite no longer being either an employee or director of Hallam, their case was presented by Michael Stainer. Sitting alongside him was the totally silent current director, Robert Moss, of whom more later. Stainer made six points which took almost an hour to present. Following Stainer’s presentation, Judge Frith turned to Ryan Hocking*, of Hardwicke Chambers, representing the Manager of the service charge account at the Grand, Mrs Alison Mooney, and asked him if maybe he could assist in summarising Hallam’s case succinctly:

• “It would assist me greatly if I could understand what the FTT has decided………..the powers are slightly difficult to understand in the terms by which they were presented. …. Please explain to me from the start the basis on which we got to where we are today”.

Mr Hocking explained that Hallam’s claim:

• Was that they didn’t accept the original FTT decision

• It was still under further appeal

• They refused to accept the financial calculations underpinning the service charge demand itself

• That the service charge accounts were historically flawed

• That there were substantial amounts owing to Hallam Estates for, among other things, the monitoring of the fire alarm system and ground rent

Two reoccurring themes which irritated the Judge during the Stainer submission was his repeated use of the phrase “as the law” says. Judge Frith dealt with this very firmly:

• “There is no point saying there is no basis in law if you can’t point me to either a statutory provision or a case in law…………I am not here unfortunately to listen to assertions without either evidence or case law that is actually referred to”.

The second irritant was Stainer’s repeated attempts to revisit the original FTT decision and Judge Frith firmly reminded Stainer that the original FTT decision stood:

• “This court will not go behind an order of another court …..it has no jurisdiction to go behind an order that has been made by a court of competent jurisdiction……………I’m not entitled to go behind the order”.

He pointed out at the very beginning of Stainer’s submission that the current ‘appeal’ had no value unless a stay of proceedings had been granted, and Stainer was twice forced reluctantly to concede that there was neither a stay nor even permission to appeal. The argument regarding the financial calculations was swiftly dealt with by reference to the simple words of the management order which placed the 25% liability on Hallam Estates, when served with invoices by the Manager, Mrs Mooney.

In dismissing Hallam’s primary application with costs – due for payment on March 6th by 16.00 — Judge Frith stated:

• “It is plain from the evidence that this is the latest in a long line of disputes between Hallam Estates and Mr and Mrs Stainer and the managers of the residential………………..The order is clear that there is a duty to pay the 25% towards the shared building costs…. which now amount to some £77,000 ………It is difficult to understand with all due respect to Mr Stainer on what basis he refuses to pay”.

He concluded:

• “I do not accept there has been sufficient evidence provided to me to grant the order that has been applied for and it is not appropriate in my judgement for the Court to exercise its equitable jurisdiction to make the order for an injunction”.

Finally, in what was almost an afterthought, Hallam’s application to defeat AORG’s claim for their costs claim was thrown out as Hallam had failed to file any submissions. Stainer claimed that he knew nothing of this part of the proceedings:

• “I am absolutely in the dark”.

Judge Frith was clearly unconvinced. In a final parting shot for Stainer, in response to a request from Mr Hocking in regard to AORG’s Statutory Demand, Judge Frith said:

• “Yes, I will say it [the application from Hallam] is totally without merit”.

Hallam have the right to appeal the February 21st decision, but we can be sure that in opposing it, Mr Hocking will seek that third “totally without merit”.

So, as it stands today, Hallam is facing a variety of “unchallengeable” financial claims, from the service charge account at the Grand for 25% of the shared building costs dating from January 1st 2019 to December 31st 2020; two sets of court costs for this failed application and a separate prior one to prevent security upgrades to the building totally £10,200 and the AORG costs of £9,624, all payable within 14 days.

No wonder Mr Moss sat there in total silence, probably wishing that Stainer had been similarly silent.

The fourteen days to pay have elapsed and there has been no payment by Michael or Doris Stainer or Hallam Estates.

• “It is difficult to understand with all due respect to Mr Stainer on what basis he refuses to pay”.

It’s a Grand life………

* Mr Hocking was instructed by Giles Peaker, of Anthony Gold and Partners acting for Alison Mooney.