The admonition delivered to FirstPort for attempting to sell off house managers’ flats has not satisfied complainant Alex Ellison.
“I am, of course, pleased that you upheld my complaint and that you have imposed disciplinary sanctions on FirstPort,” she has written to the ARMA regulator Keith Hill.
“… However, disciplinary sanctions alone do not seem to adequately address the seriousness of what took place.”
Mrs Ellison complained that FirstPort Peverel was encouraging elderly residents at Mere Court in Knutsford to agree to ending the in-house manager service specified in their leases.
Peverel / FirstPort wrongly told the residents that the house manager’s flat belonged to the freeholder (one of the myriad companies owned by the Tchenguiz Family Trust based in the British Virgin Islands).
In fact, it unaccountably belonged to Peverel / FirstPort itself, and its local staff were to receive a commission once the residents had been won over and the flat sold.
After the arrest of Vincent and Robert Tchenguiz in March 2011, on wrong evidence for which they won a judicial review, Peverel – which they owned and which managed the Tchenguiz retirement and prime London freeholds – was pitched into administration.
In 2009 hundreds of leases were issued to house managers’ flats, which as communal parts to the retirements sites hitherto did not have leases at all.
In the meltdown of the Tchenguiz empire this portfolio of house managers’ flats ended up in the hands of Peverel, now FirstPort.
Indeed, these assets were key to RBS and other banks lending to the company, which came out of administration in 2012.
What has never been explained is why Peverel / FirstPort owns these assets at all.
According to Mrs Ellison, Keith Howell, the FirstPort CEO, referring to ‘probably less than a hundred’ sales of these house managers’ flats.
In any event, selling them where possible appears to be the policy of FirstPort, and it remunerates its local staff for their powers of persuasion with the elderly residents in pulling off the deals.
Mrs Ellison says: “ARMA was supposed to address the deficiencies of failing self-regulation in the sector. I am left feeling it didn’t rise to the challenge.”
Mrs Ellison’s full letter to Keith Hill is below (Keith Hill is in fact Mr Hill, having declined a knighthood in 2010). Mrs Ellison asserts that the Serious Fraud Office felt that a fraud may have occurred. That is not our understanding, and no fraud has been established.
27th June 2016
Re: Publication of Disciplinary Decision of ARMA Independent Regulator and Regulatory Panel
Dear Sir Keith,
Thank you for sending me a copy of the above report dated 21st June 2016, following the hearing into my complaint against Peverel/Firstport. I am of course pleased that you upheld my complaint and that you have imposed disciplinary sanctions on Firstport. As you know, I have spent since 2014 trying to bring Firstport to account for its wrongdoing at Mere Court in Knutsford.
However disciplinary sanctions alone do not seem to me to adequately address the seriousness of what took place. Mere Court was but one of many developments where Peverel tried to gain control of the house manager’s flat. In the case of Mere Court, the company was thwarted by the residents when they realised they had been lied to, but there have been many other developments where the house manager’s flat was acquired without questions being asked.
Leaving aside the matter of whether these ‘created’ leases are actually legal (as you know the Serious Fraud Office believed fraudulent activity may have occurred) , the fact was that when residents were persuaded by Peverel/Firstport into giving up their resident manager, the company paid a ‘non-negotiable’ £10,000 into the contingency fund and thereafter sold the flats off for a huge profit. At the hearing Firstport directors did not fully answer how many flats have been subsequently sold on, Keith [Nigel] Howell referred to ‘probably less than a hundred’, but even this small fraction represents tens of millions of pounds which has been gained from elderly people who were naive if not misinformed.
It will never be known how many developments were targeted with the same strategy as at Mere Court , but the Knutsford development surely wasn’t unique. The Peverel managers of Mere Court involved themselves in every step of the way in their attempt to gain possession of the flat, from the attempt to stop the formation of a Residents Association to the use of school playground bully tactics for anyone who asked too many questions, to intimidating behaviour and deceipt. That this behaviour was against elderly vulnerable people makes it an appalling offence.
With the Mere Court case proved, surely Firstport should have been required to make compensation to the developments where they have acquired the HM flat for such a paltry sum. When Peverel admitted to the Cirrhus [Cirrus] price fixing it made compensation to the 65 developments the OFT found had been victims of the scandal.
The actual legality of these ‘created’ leases is still under dispute. The leases belonging to the residents in developments where the HM flat has been given up have not been changed to take account of changed responsibilities which is unsatisfactory from a legal perspective. With this matter still so resolved Firstport should not have been given permission to now apply for ARMA-Q membership.
ARMA was set up to address the deficiencies of a failed self-regulation system in the leasehold sector. I cannot believe that simple disciplinary sanctions will prevent any further wrongdoing in the future.
Yours sincerely,
Alex Ellison
Alex, we at Ashbrook Court were give similar information by the Area/Regional Manager. After the vote in 2012/13, the residents decided to replace the RHM with a Part Time Manager. The RHMF to be used as an office, the flat was to be sold, we were not offered £10,000?
Four years on the RHMF is not sold after the residents challenged the sale, after it appeared that the flat was in fact owned by Meridian a Peverel Company that was in fact our Landlord.
After a new AM started, he stated that the flat was to be sold and we would probably receive £10,000. He was then removed shortly after.
We have been informed now, nothing will now happen before the end of August this year.
The response from ARMA is similar to the response from the SFO and the OFT.
We know that leases were created for house managers flats that gifted value to Peverel/Firstport.
In part the reason could have been to create an asset that could be utilised in the spin off of Peverel/Firstport integral to the Mcarthy & Stone rescue package.
We know, that Peverel/Firstport mortgaged the house managers flats.
What is not certain though is if when mortgaging the house managers flats, is if in every case those flats were declared as having a restriction on them, which would have dramatically reduced the value of them?
Let us not forget the other less than subtle act of persuasion in that residents were also told that the House Manager’s flats were in need of expensive renovations which could be avoided if they agreed to the sale of the flat?
This fact the Expensive Renovations was used by Regional Manager – Peter whalley and Roger Cooper – Area Manager when they set up a meeting, to inform us we had a choice of keeping the Residential House Manager Position or changing to a Part Time House Manager, saving £6,000 a year.
They stated if we agreed to the Part Time House Manager, e would not have to pay any monies towards the House Managers Flat which was used by the RHM.
They would then sell the flat and the Service Charge would be divided between 29 instead of 28 flats which we all would benefit from.
We now understand that the flat is of communal value to the development and not owned by the Freeholer as we were informed, but by another hidden silent Dormant Peverel Group Company?
That the service charge would be divided by 29 instead of 28 does initially sound attractive.On a 4,000 pounds annual service charge, the leaseholder would have the potential to save around 10 pounds per month. That is assuming of course, that Firstport don’t increase their fees?
However, given that leaseholders contribute to house manager’s flats service charges this must have been provided for in the terms of the lease.
Therefore, it cannot simply be a matter of changing the division of service charges.
Surely a change of lease is required as well?
Otherwise any purchaser of the house manager’s flat must have a defective lease.
In such a circumstance, there could be no enforcement if the purchaser refused to pay the service charge.
Or, if a new lease is created for the purchaser, that would lead to opposing leaseholds, in that one lease provides for a service charge on a division of 29, whilst the other leases have a provision for a division of 28?
Why if it is the case that if a house manager’s flat is sold a change of lease is required did Peverel/Firstport simply not do it?
They have a legal department, so it would neither be difficult or expensive to do.
Possibly the reason they didn’t do it was because a change to a lease requires a much higher majority vote to go through. Instead of a simple majority, the requirement to sell a house manager’s flat would be 75% in favour, but crucially not more than 10% against.
So in a development of 30 flats, 4 residents could stop the sale.
A heavily indebted Peverel/Firstport could not take the risk.
Don’t panic Mr Editor!
I am going to mention Sir Philip Green and Lord Grabiner, but knowing the law, will be very careful as to what what I write.
Sir Philip Green as we are all aware owned BHS. Lord Grabiner is the chairman of Arcadia Group, Master of Clare College, Cambridge, governor of St Pauls School, former chairman of the London School of Economics and to cap it all a Deputy high Court Judge.
So, clearly Lord Grabiner is a man to be respected.
According to the recent Parliamentary select committee report into the collapse of BHS it took the view that Lord Grabiner provided a “veneer of establishment credibility” to a firm that Green treated as” his own personal empire”
Of course, I make no assertions on either Sir Philip Green or Lord Grabiner.
But, if we change the names from BHS to Peverel/Firstport, Sir Philip Green to Vincent Tchenguiz and Lord Grabiner to ARMA, could it not be argued that ARMA are providing a “veneer of establishment credibility” to Peverel/Firstport, who have yet to repay the funds they took from residents in the price fixing scandal?