June 28, 2017

Pensioners at Elim Court fail in third RTM attempt to escape Gurvits

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Scene of rebellion: the retirement complex of Elim Court in Plymouth was bought by North London landlords and managing agents 18 months ago. Now it wants RTM.

Scene of rebellion: the retirement complex of Elim Court in Plymouth was bought by North London landlords and managing agents 18 months ago. Now it wants RTM.

Pensioners in Plymouth have failed for the third time to break free from London freeholder and managing agent Joseph Gurvits, Carlex was informed yesterday.

Elim Court’s third right to manage application in the past 18 months was thrown out at the Leasehold Valuation Tribunal owing to a mistake in the application.

The decision is a bitterly disappointing set-back for the pensioners, who have been struggling to achieve right to manage since June 2011. Within months of Gurvits and his associate Israel Moskovitz buying the freehold through Avon Freeholds, and appointing themselves as the property’s managing agent through Y and Y Management, Elim Court residents have sought to exercise their right to manage.

Gurvits is better known to London leaseholders as the proprietor of the managing agents Eagerstates.

To achieve right to manage, the residents engaged the Right to Manage Federation, an RTM facilitator whose fees are paid for in the event of a successful RTM by commissions from the new incoming managing agent.

Justin Bates, landlord's barrister

Justin Bates, landlord’s barrister

The case was heard on December 11, and Gurvits employed for the task barrister Justin Bates, who unsuccessfully represented the freeholder against pensioners in the controversial Oakland Court case in Worthing last April. In the House of Commons, Sir Peter Bottomley condemned the legal stratagems involved as “legal torture”.

The Elim Court case illustrates the considerable difficulties pensioners in retirement developments face when trying to exercise their right to manage in the face of a freeholder determined to resist it.

Some of the original members of the RTM company have died, others have gone into care, and some have changed their minds and withdrawn from the application.

Bates argued against the RTM application on five grounds:

  1. The notice claims were signed by Dudley Joiner, of the RTMF, with the words “RTMF Secretarial, Company Secretary”, so the form was signed by a company on the applicant company’s behalf. Therefore, it was not validly signed.
  2. RTM notice was given too early to be valid as eight qualifying tenants had told the freeholder that they had withdrawn from the application.
  3. One flat was held on a long lease from ReAssure, which had not been given notice of the RTM application.
  4. The eight qualifying tenants were not members of the company (the complex argument is best read in the full LVT judgement below).
  5. Under the Companies Act, the memorandum of association and the articles of association needed to be open for inspection at a specified place in England or Wales for “periods of at least two hours on each of at least three days (including a Saturday or a Sunday or both) within the seven days beginning with the day following that on which the notice is given”.

On every point, Bates’s arguments failed except the fifth.

Here solicitor Margarita Madjirska-Mossop, representing the residents and employed by the RTMF, argued that because the words “Saturday or Sunday or both” were in brackets in the Companies Act, this provision was discretionary.

Bates tore this apart by pointing out that the Companies Act also states “specify a place (in England and Wales) at which the memorandum of association and articles of association may be inspected”.

Did this mean that England and Wales were an option, allowing inspection of a  company’s memorandum of association and articles of association “anywhere, even a foreign country”?

The tribunal agreed.

“The requirement relating to inspection provision is clearly mandatory and, equally clearly, it was not complied with, and for that reason alone the procedure adopted by the applicant did not follow the statutory requirements. Accordingly, the Applicant’s claim must necessarily fail.”

Elim Court and the Right to Manage Federation are now considering their options.

The open question is who will pay the freeholder’s legal costs, which will be several thousand pounds.

The full ruling can be read here: ElimCourtLVT

Comments

  1. Lesley Newnham says:

    How sad to read that Elim Court residents have failed for a third time to achieve RTM and on such a pathetic point of law!

    Somehow it seemed inevitable they would given Justin Bates knowledge (especially on pitfalls!) of RTM.

    I have wondered whether the leaseholders were ever offered the purchase of the freehold when it apparently changed hands 18 months ago as I believe they should have been?

    One thing is for sure nothing will really be resolved until leasehold is abolished forever!!

  2. Yes ,its sad to read the Elim Court RTM failed again to achieve RTM .

    The Notice of Claim should have been signed by a Director of the RTM Company and the supporting sheet bearing the signatures of the leaseholders should have been signed by 2/3rds of the total leaseholders.

    It was the intention of Parliament to give leaseholders the chance to set up a RTM company which can take control of their service charge account and how their service charge money is spent. It makes no sense to leave your service charge funds in the custody of whoever buys the freehold of the block.

    Leaving control of the service charge account in the hands of the freeholder is often rather like allowing some stranger to have access to your wallet.

  3. It is very irritating that the majority of leaseholders at Elm’s Court are in effect being denied what you would think would be their democratic right to choose their own managing agent,the legal wrangles should not stop them–OUTRAGEOUS.
    Will the Leaseholders be appealing to the Land Tribunal; they have sixteen days to do, so I believe?

  4. Dudley Joiner says:

    I need to correct some errors in the above post and the replies…

    Firstly the residents RTM application was not exactly ‘thrown out’. All the issues were considered in depth and the Tribunal took its time to explain its decisions in detail. The Landlord gave 5 grounds for objection to the Claim and lost 4 of the 5. The ground of objection that was upheld was a ‘technicality’ that caused no party any prejudice and it should not have caused the claim to fail.

    It is NOT correct to say the claim failed due to a mistake in the application. There was no mistake in the Application. The Tribunal rejected all claims that the Claim Notice was defective.

    It is incorrect to state that the RTMF is paid a ‘commission’ by the selected managing agent. The RTMF does not take commissions and our template management agreement contains a clause to ensure this cannot happen. In order to save the leaseholders paying the cost of RTM themselves, with their consent we seek an agreement with the managing agent they democratically choose, that the managing agent will pay the cost on leaseholders behalf. This is paid by the managing agent out of its own funds and is not charged back to leaseholders or the service charge. The RTMF then refunds all leaseholders the fees paid to the RTMF (currently £40 each). This enables retired lessees to achieve RTM cost free to themselves.
    It is also incorrect to say some leaseholders at Regent Court have changed their minds and withdrawn their application. For the most part leaseholders at Elim Court are strong in their resolve to continue with their claim and the RTMF will stand by them for as long as it takes.
    The post says there is “an open question” about who will pay the legal costs. There is no uncertainty over this. The RTMF has said it will pay all legal costs and has already paid out substantial sums for legal costs to date. The suggestion that costs for the last hearing will run to several thousand is purely speculative. Costs will take in to account the fact the Landlord lost on nearly all of the legal objections it raised.

    The comment by Ollie above is incorrect. As the Tribunal confirmed the Notice of Claim did not need to be signed by a Director of the RTM Company. Further there is no requirement for the Claim to be accompanies by a supporting sheet bearing the signatures of leaseholders.

    To clarify the right of appeal, leaseholders have 21 days in which to make an appeal to the Upper Tribunal.

  5. 369 Upland Road RTM Co Ltd ( Dulwich London SE22 0DR ) is another RTM claim which failed at the LVT Hearing ( see LVT ref : LON/00BE/LRM/2012/0004 ) .
    http://www.residential-property.judiciary.gov.uk/Files/2012/June/LON_00BE_LRM_2012_4_11_Jun_2012_15_27_28.pdf

    The freeholder is Assethold Ltd represented by Eagerstates Ltd and Conway &Co Solicitors and Mr Dudley Joiner is mentioned in the report as being a witness for the applicant. ( Presumably Mr Joiner served the claim notice )

    The LVT decided this RTM claim did not specify precisely the “address of all the properties covered by the claim” and the Tribunal judged the RTM claim must fail. So the claim notice really needs an attached supporting sheet listing all the flats in the block with Land Registry Title Nos and showing the signatures by a majority of leaseholder to make it bullet proof.