|Peverel Action | sitemap | log in|
PRESS - CHARTER QUAY, ST GEORGE WHARF
(Reported by Sebastian O'Kelly of the Daily Mail / Mail on Sunday)
Property tycoon Vincent Tchenguiz and the property management group Peverel have been involved in a second massive defeat at a Leasehold Valuation Tribunal in as many months.
After the humiliation of a record £1 million pay-out to residents at ritzy St George’s Wharf in Vauxhall in September, last week Peverel’s legal team lost another £185,000 to leaseholders at Charter Quay in Kingston, Surrey.
The devastating Leasehold Valuation Tribunal ruling was unusual in the strength of language used to criticise managing agents County Estate Management, a Tchenguiz company of which Peverel took over operational control in summer 2008.
County Estate’s conduct was denounced as “disgraceful” for loading management fees, doling out contracts to other Tchenguiz-owned companies and loading the cost of insurance brokering.
Terms like “glaring failure” and “unacceptable behaviour” appear in the judgment.
The tribunal was astonished that between the Tchenguiz-owned landlord and the Tchenguiz-owned managing agents “there appears to have been no formal written contract appointing them at all”.
The tribunal contemptuously dismissed the obfuscated company ownership structure of the Tchenguiz family trust, with companies ultimately based in the British Virgin Islands. These were termed “quasi Biblical” in their length and complexity.
The pay-out to residents at Charter Quay, an upmarket riverside development of 239 flats and six town houses, is their third LVT victory.
In April 2010, the residents won a £65,000 ruling, which with further settlements rose to £240,000.
The latest LVT decision on November 22 piles on the woes for Peverel – which says although it had operational responsibility for County Estate Management, denies being involved in the negotiation of contracts at Charter Quay. Furthermore, it claims County Estate Management was never formally part of the Peverel group – although both were owned by Tchenguiz.
Last March, Peverel was placed in administration following the arrest of Vincent and Robert Tchenguiz by the Serious Fraud Squad. Neither has been charged.
It is now seeking a buyer, although two blue chip housebuilders appear to have abandoned the management company: Berkeley Group says it has no plans to use Peverel in the future, and Barratt is setting up its own management branch.
The involvement of Peverel in Barratt East London schemes has deterred UK buyers from completing purchases there, according to a senior Barratt executive.
As is the case in all LVT actions, the respondents in the Charter Quay case were the landlords, Charter Quay Ltd, which is still a Tchenguiz-owned company, as is County Estate Management.
Nonetheless, as Peverel had operational responsibility for County Estate its in-house lawyer Claire Banwell-Spencer contested the action and employed counsel, as she did at St George’s Wharf.
“This is entirely normal practice for companies within the same Group,” said Peverel.
The Charter Quay ruling applied to County Estate Management from 2007 to August 2009, when the residents rid themselves of their services.
The tribunal drastically reduced the inflated management fees.
“Looking at matters in the round, in our judgment a 50 per cent deduction in 2008 is appropriate and a 75 per cent deduction in 2009,” it ruled.
When it was sacked as managers in August 2009 County Estate, then managed by Peverel, made no attempt hand over accounts to the new managing agents.
“County Estate’s behaviour was disgraceful,” said the tribunal. “We strongly suspect that they made a deliberate decision to be unco-operative because of their dissatisfaction at being replaced by an LVT-appointed manager.”
The tribunal also deplored the practice of signing up other Tchenguiz-owned companies for services.
Property manager Beth Lancaster was singled out for criticism for contracting Interphone, the Tchenguiz-owned intercom, satellite TV and radio distribution system, without:
“In effect, she simply signed what Interphone put in front of her,” said the tribunal.
Mrs Lancaster claimed she did not know Interphone was a Tchenguiz company, “but it is clear that there were people at County Estate who did know that”.
“It is astonishing that County Estate had no system in place to warn employees that if they were going to enter into contracts with other Tchenguiz companies they needed to ensure that the terms were reasonable.
“The result of entering these contracts has been extremely damaging financially, because the break clauses are so onerous. .. The simple fact is, however, that in our judgment the 2007 and 2008 contracts should never have been entered on those terms.”
Similarly, an £84,000 insurance contract was placed through another Tchenguiz vehicle, Estates and Management Ltd, which charged a 23.5 per cent commission of the fee.
This was “excessive”, the LVT ruled, and the commission was reduced to 10 per cent.
“There is no evidence that any attempt was made to test the market for brokerage services,” the tibunal noted.
In conclusion, the tribunal stated that the landlords had not only lost the case, but had “substantially lost” the case, and were therefore not allowed to obtain their costs from service accounts.
But the victory has come at a price for the Charter Quays Residents’ Association. Their three cases have involved 15 days of LVT hearings and £20,000 in legal fees, with eight months preparation for each case.
“Given the complexity of the process and the costs involved, a retirement home or smaller development may find it impossible to undertake such a case,” said a spokesman.
“These were put in place before the Peverel Group was given operational responsibility for County Estate Management in the summer of 2008, by which time it was clear the relationship between CEM and the Charter Quay Residents’ Association had broken down.
In September residents in the landmark St George’s Wharf, in Vauxhall, central London, where penthouses have been sold for £7 million and service charges even for a two-bedroom flat start at £5,000 a year, accepted a record £1 million in settlement of an LVT action.
The respondents were assorted freehold companies, but the grievances surrounded Peverel’s management outfit for upmarket estates Consort. The bulk of the complaints in fact pre-dated the Tchenguiz takeover of Peverel in 2007.
The residents – who have included John Major and Chelsea Clinton – were bound by a confidentiality agreement, but I [Sebastian O'Kelly] gave it full exposure in the Mail on Sunday on September 18.
The article prompted the developer, Berkeley Group, to issue an unpredendented apology to residents.
“This should not have happened and the residents should not have had to fight this for four years. We should have admitted this earleir and publicly, and apologised to the residents,” said Rob Perrins, chief executive of the Berkeley Group.