April 23, 2017

Israel Moskovitz humiliated as Elim Court wins right to manage in Court of Appeal

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The leaseholders of Elim Court have at last won their right to manage action in the Court of Appeal. The leaseholders first mobilised to achieve this 2011

Elim Court, a retirement site in Plymouth, learned today that it had won its epic battle for right to manage in the Court of Appeal against its landlord Israel Moskovitz.

His Avon Freeholds Limited managed the site through Y and Y Management, run by business associate Joseph Gurvits. Y and Y is a management company accredited to ARMA, but was rebuked by the regulator for “intemperate and unprofessional language” in June 2014.

ARMA tells Y and Y Management to mind its manners and hold its temper

Elim Court’s battle for right to manage has been reported extensively on Carlex since it began in July 2012.

London-based freehold investor Mr Moskovitz, believed to be a Canadian citizen, bought five retirement sites in the west country in 2011, and most have been highly controversial.

Regent Court, also in Plymouth, won its right to manage in July 2013 after years of frustration that saw the case appealed to the Upper Tribunal.

Israel Moskovitz fails – again – to appeal against the Regent Court right to manage

But Elim Court was always the greater concern, its right to manage having failed at the lower and upper tribunals, with Israel Moskovitz’s legal costs escalating.

The residents had employed the services of Dudley Joiner’s Right To Manage Federation, which is not a federation but a private company of which he is the sole director, to achieve right to manage.

Mr Joiner said that it would pick up the legal bill, including Mr Moskovitz’s, for the action. However, with assets of just over £4,000, the RTMF’s resources were alarmingly small to cover a failed action in the Court of Appeal.

As a result, Carlex repeatedly urged caution on the residents.

But all is now vindicated with victory, for which congratulations must go to barrister Winston Jacobs, of Lamb Chambers, instructed by the Bar Pro Bono Unit (IE he did the job for free, and his CV is rightly enhanced).

The victory also marked defeat for barrister Justin Bates, the Mr Fixit for any freeholder seeking to thwart a right to manage application by leaseholders.

The Court of Appeal, headed by Lord Justice Lewison with Lady Justice Arden and Mrs Justice Proudman, noted Mr Bates’s expertise in this unfashionable corner of the law.

Lord Justice Lewison wrote that Mr Bates was “a seasoned warrior in the trench warfare over the right to manage” and his argument was described as “technical in the extreme”.

The opening sentence of the ruling acknowledged that errors had been made:

“It is a melancholy fact that whenever Parliament lays down a detailed procedure for exercising a statutory right, people get the procedure wrong. This is one such case.”

Nonetheless, the leaseholders of Elim Court have won their right to manage.

They can now send Mr Gurvits and Y and Y Management packing and choose a property management company of their choice and answerable to themselves.

The ruling from Lord Justice Lewison also says:

“I have drawn attention to the Government’s policy that the procedures should be as simple as possible to reduce the potential for challenge by an obstructive landlord.

“That policy has not been implemented by the current procedures which still contain traps for the unwary.

“This is, we were told, the third attempt by the RTM company to acquire the right to manage Elim Court.

“The Government may wish to consider simplifying the procedure further, or to grant the FTT [the lower tribunal of the property chamber] a power to relieve against a failure to comply with the requirements if it is just and equitable to do so.

“Otherwise I fear that objections based on technical points which are of no significant consequence to the objector will continue to bedevil the acquisition of the right to manage.”

The ruling can be read in full here

Professor James Driscoll’s analysis of the case can be reader on the Leasehold Knowledge Partnership website here

Comments

  1. Software companies have to provide regular updates whenever their software users experiences technical problems dues to defective procedures or attacks by external virus.

    Likewise Parliament is the provider of Leasehold legislation and must provide updates to remove freeholder companies which operate like external viruses.

    Parliament gave leaseholders the legal right to take control their service charge account by setting up a RTM Company under the Commonhold and Leasehold Reform Act 2002 .

    Housing Minister should update the Act by removing the right of freeholder to object to setting RTM . The money in the service charge account comes from the leaseholders, not from the freeholder.

  2. Ollie,
    Nice to see you posting again, and talking so much sense.

    Who should we ask – why several Housing Ministers have allowed this situation to continue?

  3. Chas ,

    The problem is caused by Housing Ministers having the wrong mindset . MPs are elected by local residents in their constituency and MPs have the mindset to act for their voter’s interests .

    But when MPs become Housing Minister, they take on the mindset of Government Policy which acts to support rule of law ( including upholding commercial agreements regardless if the lease was written on unfair terms for the buyer.) .

    The way to stop Developers selling unfair leases is by making sale of “freehold title” more profitable than a “leasehold title with annual ground rent payment” .

    At present HMRC treats “freehold title” and ” leasehold title” as equal products and offer NIL VAT for first time registration. of both titles. But sale of freehold means sale of legal ownership whilst sale of leasehold is sale of a long term rental agreement + a 100 years financial burden for leaseholder.

    The APPG should approach HMRC to change the VAT charge for first registration of property :

    1. Leasehold title sold with ground rent demand shall be charged at 20% VAT rate ( calculated on the First Premium + 80 years ground rent ) on first registration .
    .
    2. Leasehold title with peppercorn ground rent, Freehold title and Commonhold title shall be 0% VAT on first registration. .

  4. Ollie,
    I agree entirely with your common sense views.
    Do you believe the recent sale of leasehold housing will be the death knell for Freeholders?

    How will the industry recover when in the North and East Midlands where many sites seen yesterday in Leicester and Derby where none mention Leaseholder on the very large advertising boards?

  5. omhostage says:

    Software is an interesting analogy for legislation. There’s just one problem: no software is as old as leasehold. Most of it is younger than most readers of this web site.

    It gets patched and updated only if there’s a continuing market or demand for it. Most of it dies and is completely replaced because the hardware it runs on is replaced.

    As it happens, parliament is falling to pieces and needs a major hardware upgrade.