Judge Backs Leaseholders in Vive Tussle
HUGH SULLIVAN
Leaseholders of the 97 residential flats at 44 Havelock Road, formerly the Vive Hotel, gained a significant victory in the High Court in London last Thursday. After two hours of legal argument, an insolvency judge, Sir Anthony Mann, dismissed applications made by the administrators of the superior landlord companies, Havelock Property Limited and Havelock 1 Limited, for a possession order in respect of the common parts of the building, as well as for an injunction to prevent trespass by ‘persons unknown’.
The former Vive Hotel, empty and barred to leasehold owners
Costs were awarded in favour of the leaseholders, who were not formal parties to the applications but were represented in court by counsel Alex Adamou. The judge agreed that their interests would have been potentially compromised by the form of order which the administrators were seeking.
The companies are already in actual possession of the common parts of the building, including its entrance lobby. As soon as they declared insolvency in May last year, the administrators installed security guards to control access. From that point on, the majority of leaseholders, being investors who have never set foot in Hastings but bought the studio flats for renting out (initially through the Vive Hotel or otherwise), have had their access cut off.
Even those few who are owner-occupiers or who installed assured shorthold sub-tenants have had access barred since January this year on the grounds of alleged fire risk. East Sussex Fire and Rescue Service served a notice in that month stating that there had been no formal risk assessment and no alarms in place.
The administrators have also cut off water and electricity, so that the flats are in practice uninhabitable.
However, a consortium of 86 leaseholders was last month given leave to apply to take over management of the building through an RTM (Right to Manage) company which it controls. A hearing has been scheduled in May at which these leaseholders will pursue their own claims to restore full rights of access, both to the common parts of the building and to individual flats, and to force the companies in administration to delegate maintenance and repairs to the RTM company.
COURT EXCHANGES
In court on Thursday, counsel representing the companies in administration told the judge that prior to February there had been three separate instances of “intruders” gaining entry to the building (despite the presence of security guards), though it was not clear what their intentions had been. There was no evidence that they had any ‘squatting’ or similar purpose, and the judge suggested that they were more likely to be “opportunistic” entrants into a derelict building. An injunction against ‘unknown persons’ to prevent such incursions was an exceptional remedy (generally used against organised groups of travellers or protest campaigners who might be dissuaded by a threat of contempt for breach), and not appropriate in this case.
The judge also saw no justification for imposing limitations over the leaseholders’ access to the common parts of the building.
Counsel for the companies told the judge that the administrators’ overall purpose remains to sell their reversionary interest in the building 44 Havelock Road and to recover claimed service charges from the leaseholders on behalf of the creditors whom they represent. However, it seemed to be accepted that the building is not saleable in its current derelict state, while the repairs and maintenance required to restore it could only be funded on the administrators’ side, if at all, after long-winded pursuit of service charge demands which are in dispute.
On the other hand, the leaseholders’ RTM company can, and presumably will, raise their own funds to undertake the repairs and maintenance.
In these circumstances, and given the scepticism which the judge showed towards the administrators’ concerns – which he described as “overblown” – they and the leaseholders would seem to have a common interest in co-operating so as to get the building back into habitable use as soon as practicable.
One of the two co-administrators, Ian Goodhew, told HIP after the hearing that the companies “are not restricting the RTM company”, though he did not explain why it took them four months (from service of a notice of claim last October) to concede in principle its right to manage.
Mr Goodhew also said: “From the outset, dialogue was entered into with the leaseholders and an invite given to them for the purchase of the premises. No offers have been forthcoming.”
44 Havelock Road – Property Rights Explained
The building at 44 Havelock Road was formerly used as a telephone exchange, and the freehold is still owned by the BT Group. Havelock Property Limited has a lease of the whole building for a term of 131 years from 2003; the whole of the beneficial interest in this lease is held by an associated company, Havelock 1 Limited. Sub-leases of individual studio flats have been granted for a term in excess of 100 years to each of 97 individual leaseholders.
The companies were placed in insolvent administration in May last year but remain the superior landlords of the leaseholders.
In December the joint administrators filed a progress report stating that their aim was to realise the value of the superior leasehold interest for the benefit of creditors, including collection of alleged service charge arrears from the leaseholders. For their part the leaseholders have set up an RTM (Right to Manage) company with a view to managing the building themselves in future.
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You describe the leaseholdedrs thus ” the majority of leaseholders, being investors who have never set foot in Hastings but bought the studio flats for renting out”. It seems a waste of a building but have any actual tenants of these flats been affected at any time?