Campaign against retirement leasehold exploitation / LKP has serious concerns about events at Elim Court in Plymouth, whose right to manage application failed on appeal last month.
The application is being handled for the residents by the Right To Manage Federation, headed by Dudley Joiner, which has repeatedly stated that it is assuming all legal costs in the matter.
The RTMF now proposes to take this application, which has failed twice, on to the Court of Appeal, it stated on its website yesterday.
The residents are to meet with Mr Joiner next Wednesday to decide whether to approve this course.
At this point Campaign against retirement leasehold exploitation has to ask: is continuing this action in the best interests of the residents?
Or, is the action being continued because the RTMF is facing significant legal costs from the freeholder – which we roughly estimate at £25,000 – for the two failed court actions? Only by winning will it avoid the costs.
Should this gamble be taking place, with the risk of serious consequences for the RTM members of Elim Court (in fact, all the leaseholders) – explained below – who with the freeholder are the other party in the dispute?
It is painful for Campaign against retirement leasehold exploitation to raise these questions: the RTMF has taken 70 retirement sites to right to manage and around 250 in total. We have in the past recommended that leaseholders use its services, most recently at Brixton Hill Court which won right to manage thanks to the RTMF after the first effort was an expensive failure.
Hundreds of leaseholders have cause to be grateful to the RTMF Limited, which with RTMF Services Limited and Team property management forms part of Mr Joiner’s interests in leasehold.
At Elim Court, what began as a right to manage application in the lower tribunal now risks becoming major-scale litigation where the costs could be open-ended.
Costs for actions in the Court of Appeal can start at around £20,000 for each side and could escalate. It would be a big bill if the leaseholders are unsuccessful. Then there is the possibility that they win, but the freeholder takes the matter on to the Supreme Court and is finally successful.
Campaign against retirement leasehold exploitation does not dispute the good intentions of the RTMF in taking up Elim Court’s right to manage application at minimal upfront cost (it receives more substantial payment when RTM is successful from the new incoming managing agent in the form of commission).
Campaign against retirement leasehold exploitation also fully shares the outrage of most fair-minded people that a simple right to manage application can be successfully frustrated on the most trifling grounds. The RTMF made mistakes in the Elim application, but there is no doubt that the majority of the leaseholders living there want the right to manage that Parliament gave them.
The choices the Elim residents face are these
Drop the action
This means accepting defeat and paying Avon Freehold’s costs. These were £12,600 in the lower tribunal and are unlikely to be any lower for the upper tribunal.
These costs of roughly £25,000 might be reduced a bit by a court, but they will have to be paid.
The RTMF has said it will pay all the legal costs in this action. But if the leaseholders reject its advice to take the matter on to the Court of Appeal, will it still feel an obligation to do so?
We do not know and the agreement is imprecise.
Mr Joiner criticised Campaign against retirement leasehold exploitation for raising this issue on October 12 in a comment on our website. Campaign against retirement leasehold exploitation had “raised unnecessary fears in the minds of Elim residents who have already been given assurances the costs will be paid by RTMF”, he said.
We do not agree. If the RTMF expects residents to support its continuing litigation, the conditions on which they do so must be clearly understood, drafted by an independent lawyer, involve secured cash or property (see below) and be legally binding.
Carry on litigating, as the RTMF advises
The possibility of further defeat and more costs has been addressed, as has the possibility of victory and eventual defeat in the Supreme Court.
Of course, it is equally possible that the RTM is eventually won.
That would be a very desirable result for all of us who campaign on leasehold issues, with senior judges at last addressing the issues surrounding right to manage.
But it is far less clear that this is in the interests of the residents of Elim Court.
Had they scrapped this flawed right to manage application after it failed the first time in January 2013, they could have started another – or, perhaps better in this case, asked for a court-appointed managing agent – and they could have been rid of their freeholder’s management a year ago.
Curiously, the Court of Appeal is shortly to consider “90 Broomfield Road” right to manage, which is being fought on the issue of a multi-block site qualifying for RTM. But this is a battle over an important point of law. At Elim Court the appeal would be an attempt to reverse a decision on a right to manage application that two tribunals have agreed has basic flaws.
In the event of failure, the freeholder’s legal bill will be first directed to the directors and members of the Elim Court RTM Co Limited, which has no assets.
It will be their liability. It is not a concern of the freeholder, or the court, that an agreement exists for the RTMF to pick up the other side’s legal bill on behalf of the residents.
But what if the legal bill is so large that the RTMF goes into liquidation?
What if the RTMF ceases to exist for any other reason when this matter is concluded?
Campaign against retirement leasehold exploitation’s concerns about the RTMF’s repeated, breezy undertaking to pay the legal costs – no matter how high – first surfaced in January 2013, after Elim Court lost its case in the lower tribunal and it was resolved to continue that application with an appeal.
Campaign against retirement leasehold exploitation offered to try to obtain free barrister assistance through sympathetic MPs, as at Oakland Court in Worthing. But the RTMF rejected this as it was confident of eventual victory and it was “our case”.
Campaign against retirement leasehold exploitation / LKP has sought advice on the dilemma facing the Elim residents, and offers these thoughts:
1/ They should not agree to continue this litigation at the open meeting on Wednesday, but to insist on time to consider the issue carefully. A week, or even two, is required.
2/ If this legal action continues, the residents should insist on a legally enforceable agreement with the RTMF, drawn up by lawyers.
3/ It is very important that this should include the RTMF putting forward a substantial secured sum of money, or asset, sufficient to pay all the legal costs of both sides in this case.
4/ The meeting on Wednesday should include all leaseholders, not solely the members of the RTM. If the nightmare scenario occurs – the freeholder wins, the RTMF goes under – the Elim Court RTM Co Ltd will also fold as it has no assets. It is very likely that a freeholder, in these circumstances, would be able to obtain its legal costs from all the leaseholders.
5/ The directors of the Elim Court RTM need to consider their position carefully, if they decide to continue this action.
It is easy to see why leaseholders have turned to the RTMF – and similar “free” or low-cost right to manage facilitators – who offer a simple right to manage service that appears to be free of risk.
But behind these offers is the assumption that the right to manage application will always win.
And most are won. Only a small minority of RTM applications actually involve court action. Of these, most have eventually ended in victory for the residents.
But at Elim Court the RTMF’s luck has run out.
The case also demonstrates the downside of using these supposedly low-cost services against a freeholder determined to resist right to manage.
Left to their own devices, the Elim residents could have hit the brakes after the first application had failed, paid the freeholder’s legal costs and started again.
If they do decide to follow the RTMF’s advice to fight on to the Court of Appeal and (possibly) beyond, then it is Campaign against retirement leasehold exploitation’s duty to alert them to the potential risks of doing so.
The full ruling on the Elim Court RTM can be read here
http://www.landstribunal.gov.uk/judgmentfiles/j1072/LRX-25%2081%20%2087-2013.pdf
Related posts:
Israel Moskovitz loses epic Elim Court right to manage battle in landmark Court of Appeal decision
LKP managing agent Jones Associates wins right to manage for retirement site
Pensioners lose leasehold right to manage application for the third time
Israel Moskovitz fails – again – to appeal against the Regent Court right to manage
Retirement site loses right to manage appeal after three years. Now what’s the cost?
Three MPs are patrons as LKP applies to register as formal charity
I have read Sebastian’s article and I am in despair. It is so full of inaccuracies and distortions that once again I am compelled to take up valuable time to reply.
The article says that the RTMF now proposes to take Elim’s case on to the Court of Appeal. That is untrue. No such proposal has been made; no such decision has been made.
Campaign against retirement leasehold exploitation and LKP are interfering in a complex legal situation and the public reporting of the matter at this point in time is not in Elim leaseholders’ interests. To do so while it is live before the court is potentially damaging as will become clear to leaseholders at the meeting next week. It is for situations similar to this that we have sub judice laws in this country.
Exactly the same issues were raised when Regent Court, Plymouth sought RTM away from the same landlord. In that case the tribunal upheld the RTM claim despite the landlord’s tenuous objection that two leaseholders had not been served a notice inviting participation. The two leaseholders were the sons of a former resident who was deceased. The sons did not live at the flat. The flat was known to be empty. So the RTMF chose to send the notice to the sons’ home address rather than an empty flat. The Tribunal sensibly agreed that no prejudice had been caused and the technical failure should not be fatal to the claim.
When the landlord appealed, some doubters questioned the wisdom of continuing as opposed to withdrawing the claim and starting again. The judgment the RTMF made at that time was that Avon Estates was a litigious landlord and if a fresh claim was issued in all likelihood Avon would pay its lawyers to find other loopholes though which it could obstruct leaseholder’s entitlement to RTM.
Furthermore, in the Regent Court case there was an important and fundamental issue of law at stake that was of wider public interest and could potentially affect all other RTM claims. This issue, the key issue of the appeal, was whether a failure to comply with a statutory requirement is automatically fatal to an RTM claim. When it came before the Upper Tribunal, the President, Sir Keith Lindblom agreed with RTMF solicitor Margarita Mossop that this was not Parliament’s intention. In the face of persuasive jurisprudence including the Court of Appeal Decision in an immigration case known as Jeyeanthan, the President dismissed the appeal in favor of Regent Court leaseholders, who are now free from their landlords monopoly and enjoy life under a new management company of their own choosing.
The President’s decision on this issue of law in the Regent Court / Avon Freeholds case was called into question and effectively reversed through the Elim Court appeal hearing. As recorded in the Judgment, ‘Mr Radley-Gardner (for the landlord) mounted a sustained challenge to the assumption underlining the Tribunal’s Decision in Avon Freeholds’. Whereas the President had determined, on the basis of Jeyeanthan, that a failure to follow RTM procedure to the letter was not necessarily fatal, the Judge in Elim, Deputy President Martin Roger, indicated early in the hearing that he did not agree or that the Jeyeanthan case was of general application. Throughout the hearing the Judge demonstrated clear bias and it was obvious he had already formed a contrary view. This was confirmed in the Judge’s written Decision. (The RTMF has filed a formal complaint about the Judge’s conduct of the hearing).
As a consequence we now have two contradictory Decisions in the Upper Tribunal. Regent Court, where the President applied Jeyeanthan and a conflicting view in Elim Court, in which the Deputy President said Jeyeanthan did not apply. This leaves RTM practitioners and the First Tier Tribunals in a state of uncertainty. Where there is a deviation from procedure for common sense reasons, as in the Regent Court case, or due to an inadvertent failure due to ambiguity as in Elim, what course should be taken? The answer to this question is now left wide open until or unless the Court of Appeal finally determines it.
The article asks ‘should this gamble be taking place?’ – The RTMF does not gamble. We make calculated judgments based on legal advice and our 10 years experience in handling right to manage. It is not a question of luck or a case of our luck running out, as the article alleges. That is insulting.
If our business is operated in the cavalier fashion implied by the article why has Campaign against retirement leasehold exploitation/LKP recommended our services to leaseholders? Earlier in the year Sebastian referred the frantic leaseholders of Brixton Hill Court to the RTMF. Advised by a reputable local solicitor their RTM claim had repeatedly failed. They had incurred costs of over £20,000 and were desperate. When the RTMF became involved last August leaseholders were on their 12th RTM claim, which was also heading for failure.
The RTMF agreed to take the Brixton Hill Case without any payment from leaseholders. It was not taken on as a gamble. It was taken on because in our professional judgment and on the basis of legal advice we believed the case could be made to succeed if the evidence was reassembled and properly presented. This calculated judgment proved correct and on 27th October 2014 Brixton Hill Court RTM Company finally acquired its right to manage and will soon be freed from their landlord’s voracious management monopoly. The managing agent Brixton leaseholders select will be asked to pay the RTMF fee of around £14,000 and these funds will go towards financing other ongoing claims including Elim Court.
It is also relevant to mention that earlier in the year RTMF was approached by another retirement estate in Devon, Milton House, Newton Abbot. Milton House is also managed by Avon freeholds and unsurprisingly residents claimed poor service and overcharging as the reason for seeking RTM. We anticipated at the time we agreed to take on this case that it was likely to result in a contested claim before the tribunal. Despite the fact that we were unlikely to make any money from the case we agreed to take it on as a matter of principle.
The Milton House RTM Claim Notice was served in April 2014, with 97% of leaseholders in support. True to form Avon Freeholds served a Counter-Notice alleging numerous procedural failures that it claimed prevented RTM, including a new allegation that the membership consent forms signed by residents were invalid because they had been signed before the company was incorporated. Fortunately the Tribunal saw through this cynical submission by Avon’s barrister Oliver Radley-Gardner, calling it ‘churlish’ and Milton House was granted the right to manage.
The Campaign against retirement leasehold exploitation/LKP article says ‘The RTMF made ‘careless mistakes’ in the (Elim) application’. That statement is false and defamatory and I call upon Sebastian to withdraw it and apologize.
If it was RTMF policy to take cavalier gambles for financial gain it is unlikely to have acquired RTM for 84 retirement blocks (not 70 as the article states) or achieved RTM for over 6,000 properties in England and Wales, including the biggest ever RTM case comprising 967 apartments. These successes are the result of diligence and attention to detail.
The Claim against Elim Court is not the consequence of a ‘careless error’. We interpreted the statute in a way that we thought was correct. Another expert Tribunal had decided in another case that s.78(5) of the Commonhold & Leasehold Reform Act was ambiguous and chose to interpret s.78(5) in exactly the same was as did the RTMF. To choose one interpretation over another is not ‘a careless mistake’, it is a professional judgment one has to make. The reason we pursue the determination of such issues through the Tribunals is so that uncertainties and ambiguities in the law can be clarified for the benefit of all subsequent leaseholders seeking RTM who might otherwise face the same pitfalls.
The Campaign against retirement leasehold exploitation/LKP article refers to another RTM issue that is going to the Court of Appeal. That is the issue of whether or not one RTM company can manage multiple blocks (the ‘Broomfield Road’ case). It is suggested that this issue is in some way different or of greater significance than issues we have been facing at Elim Court and Regent Court. It is not. All these issues are of equal significance. Admittedly the Broomfield case might be the ‘Beechers Brook’ of fences but horses can just as easily fall at any of the lesser fences and frequently do. Our mission is to remove all obstacles and uncertainties in the RTM process, big and small, in order to make it easier for all leaseholders to attain RTM as Parliament clearly intended. That is one of the stated goals of Campaign against retirement leasehold exploitation/LKP and it is disingenuous for Sebastian to criticize the RTMF’s faithful pursuit of the same objective.
The Article states that a further appeal ‘would be an attempt to reverse a decision on a right to manage application that two tribunal’s have agreed has basic flaws’. This is a gross distortion of the facts. Out of 5 issues before the first Elim Tribunal we succeeded in 4. The 5th issue was not about a basic flaw. It was as I have said a matter of statutory interpretation.
Campaign against retirement leasehold exploitation says it offered to get ‘free barrister assistance’ for the RTMF. This implies it lacked confidence in the RTMF’s legal ability. It therefore begs the question ‘Why has Campaign against retirement leasehold exploitation/LKP subsequently recommended the services of the RTMF in difficult RTM cases such as Brixton Hill Court if it lacks confidence in the RTMF and has such legal services at its disposal? Why has it stated that RTMF solicitor Margarita Mossop is a match for any barrister? Campaign against retirement leasehold exploitation/LKP says it has sought advice on the dilemma facing Elim Court? From what source is this advice and why is it not disclosed?
It is relevant, particularly to costs, that the recent hearing before the Upper Tribunal did not only involve Elim Court. There were 5 RTM cases heard jointly to save costs and as a consequence of the same appeal hearing, leaseholders of 369 Upland Road and 65 Canadian Avenue have at last acquired RTM and freedom from the landlord company Assethold Limited, believed to be an associate company of Avon Freeholds. Furthermore, whatever the costs implications, they have to be shared by all parties, not just Elim Court.
The article concludes by saying that it is Campaign against retirement leasehold exploitation’s ‘duty’ to alert leaseholders to the potential risks. How exactly does this duty arise? I am not aware of any relationship between Campaign against retirement leasehold exploitation and Elim leaseholders that gives rise to such a duty.
On the other hand, the RTMF does have a duty to Elim Court and it takes this very seriously indeed. Unlike LKP/Campaign against retirement leasehold exploitation, the RTMF acts from an informed position. It does not give impulsive advice and in every decision it makes it puts the interests of leaseholders and RTM members first. To suggest that we are wavering from our mission in order to avoid paying costs is bordering on defamatory.
The predominant duty that Sebastian/Campaign against retirement leasehold exploitation/LKP do have is the overriding duty to report the facts fairly, accurately and without distortion; and in this instance I regret to say they have failed miserably in that duty.
Dudley Joiner
Director
RTMF
Dear Mr Joiner,
You appear to take up a lot of your “valuable time” in this reply in order not to address the concerns now facing the residents of Elim Court.
You also decline to identify the abundant “inaccuracies and distortions” that you claim exist in the Campaign against retirement leasehold exploitation / LKP article.
You say it is untrue for us to claim that the RTMF proposes to take this case to the Court of Appeal, but your own RTMF website says: “The case is now heading to the Court of Appeal.”
It would appear that the RTMF has decided to take this matter on to further litigation before consulting the residents of Elim Court.
It is certainly not sub judice for Campaign against retirement leasehold exploitation / LKP to discuss this issue, although I can well understand that you do not welcome the scrutiny.
You also question why Campaign against retirement leasehold exploitation feels it has a duty to point out the risks of further litigation to the elderly and vulnerable residents of Elim Court. I suspect that this is a minority view.
Although you name me repeatedly, it would be wrong to believe that this issue was not discussed before publication by the Campaign against retirement leasehold exploitation / LKP directors, and more widely.
I note your statement: “Our mission is to remove all obstacles and uncertainties in the RTM process, big and small, in order to make it easier for all leaseholders to attain RTM as Parliament clearly intended.”
Fine. But you should do that at your own risk and expense, rather than appealing a flawed RTM application for a retirement site which could backfire with very serious consequences.
Yours sincerely,
Sebastian O’Kelly
Campaign against retirement leasehold exploitation / LKP
In 2010, I was there as Campaign against retirement leasehold exploitation and gave the very first introduction to RTM presentation at Elim Court one morning, the very same day that I gave the same RTM presentation at another nearby block in the afternoon. Both of these blocks were at the time managed by Peverel and rising service charges were unsurprisingly of real concern. I introduced Dudley Joiner of the RTMF to both sets of residents who were very interested in the possibilities, but the two developments would go on to very different outcomes.
For the residents of Elim Court this process, which they were told would be straightforward, transparent and would happen in manageable stages, must now seem to be never ending, anything but straightforward and could possibly cost a fortune if the wrong result materialises.
There is a real possibility that if the appeal is lost the costs will escalate to such a level that the RTMF’s financial stability could be severely compromised. Taking the sensible advice previously offered by Campaign against retirement leasehold exploitation with regard to obtaining the services of a Pro Bono barrister would have been very wise. At one stage the Elim Court residents also had the chance to buy their freehold – in hindsight they probably realise this was an opportunity missed which has had serious repercussions.
It is a great shame that the RTMF did not handle the initial application with their usual attention to detail, especially as there were some residents who were very nervous of proceeding despite the very difficult situation regarding the managing agents and the freeholder. However, the majority, quite rightly, were confident that achieving the RTM would substantially improve their financial circumstances.
There is no doubt that obtaining the Right to Manage puts the financial reins firmly in the hands of the residents, and allows them to take control of the expenditure and control of funds raised via service charges. This is as long as they constitute the board members of the new RTM company, and do not allow it to be controlled by the new Managing Agent. This has happened in some developments as residents have withdrawn on the basis that they do not wish to take responsibility on behalf of others in their building. Indeed in one development, Dudley Joiner of TEAM Management (the RTMF’s other arm), is now running the RTM company of the block single handed as the other directors have all resigned.
Have Elim Court considered bringing in a new RTM advisor (bearing in mind the fact that the 5 figure costs are mounting), to get a second opinion as to whether the appeal might succeed or fail, and what the outcome might be if the other side appeal against an RTMF winning appeal decision? In any event this is going to be a very drawn out affair and I feel great sympathy for the residents of Elim Court and their relatives who came forward to help with the whole RTM issue.
Dudley Joiner,
I accept there are two sides to every story. I neither work for the RTMF or Campaign against retirement leasehold exploitation, so I have no inside knowledge as to what the truth is.
That said, in giving your version you do yourself no favours by referring to your valuable time to reply.
You mention sub-judice laws in situations “similar to this”. This matter is not sub-judice, as is the implication from your statement. While Campaign against retirement leasehold exploitation may not have a legal duty to raise these issues, they do have a moral duty (something very lacking in leasehold).
I note your statement does not say that RTMF will pick up the bill if the action fails in High Court.
I trust Elim Court leaseholders have made note of that as well.
“The case is now heading to the Court of Appeal” is a direct quote from RTMF’s website. Does this not imply they have already made their mind up!?
In his long and often rambling defence of his actions, Dudley Joiner does not mention picking up the tabs for the appeal or the financial situation of his company or why his company accounts are often very late. Elim residents have a right to know these things.
I am also confused about the 87 “successful” RTM claims for retirement estates. I counted 57 on his web site.