Holiday home boss John Hick loses court battle

This is The West Country: Holiday home boss John Hick loses court battle Holiday home boss John Hick loses court battle

A judge has ruled that owners of holiday cottages managed by Falmouth businessman John Hick have been wrongly paying service charges for eight years.

Mr Hick, 74, father of Falmouth MP Sarah Newton, who owns Pendra Loweth, at Maen Valley near Goldenbank, could now be forced to repay the money if holiday cottage owners successfully win a second hearing.

Mr Mr Hick is also chairman of the Falmouth Business Improvement District and of the Falmouth Tall Ships Association.

Pendra Loweth is made up of 116 holiday cottages, leased by a mixture of local people and others from around the UK.

Action was brought against him and the site’s management company by the Pendra Loweth Leaseholders Group, made up of a number of the cottage owners who were unhappy about the service charges they had paid. They first began challenging the accounts back in 2007.

A tribunal judge in Plymouth has now agreed that the service charges for 2006 through to 2013 inclusive are not payable under the terms of the lease.

However, leaseholders wanting to claim back the money already paid will have to do so in a separate action.

Solicitors acting on behalf of the leaseholders group claim that if successful each leaseholder is owed more than £16,500 – a total of around £1.9 million if every cottage owner makes a claim.

It was also pointed out by the judge that if the service charges were reissued under the correct terms of the lease then some of the charges would be applicable.

The tribunal heard that no audit of the service charge accounts was made – a requirement of the lease.

The leaseholders’ solicitor Mr C Knapper argued that as landlord Mr Hick and his company had “not addressed what was required by the lease, but had simply issued a demand for ‘maintenance’.”

However, Mr Hick’s solicitor Mr M Selway responded that this term was used and understood to mean service charge – something that was accepted by the judge, who said as such the charge should not be limited to items of actual maintenance.

Mr Knapper said the demand for maintenance was accompanied by a set of accounts for Pendra Loweth Management Limited rather than individual service charge accounts.

He stated that these management company accounts included wages, advertising costs and even the bill for taking an accountant out for an Indian meal – expenditures of which there was no reference within the lease.

The judge later said: “Apart from not using the terms used by the lease, there must be a real question as to whether the company was a business aiming to make a profit from the lessees or otherwise, rather than a company standing in the shoes of the landlord to maintain the property in accordance with the requirements of the lease.”

He said the demands for service charges were “defective in terms of the requirements of the lease” because estimates were based on “polluted” company accounts, and there was never any audit that “could have disentangled the service charge elements.”

“There was, in short, no realisation that the company accounts could not...be also the service charge accounts,” he added.

He also stated: “There is no suggestion here that anybody has acted in an untoward manner, rather that there is a significant level of ignorance as to what is required for the protection of the rights of tenants.”

Mr Hick’s solicitors Preston Goldburn also came under severe scrutiny from the judge, who said: “Here is a real conundrum, a situation where the solicitors draft a lease, the terms of which in relation to the service charge comply with statutory requirements and with the RICS guidance, but where those same solicitors go onto argue that the terms of the lease should not be applied.”

He referred to “some quite startling statements” from the solicitors in 2008, in which they said the management company did not produce audited accounts and “it was not necessary”, adding it was “also because of cost that they were not produced,” according to the judge.

He also claimed the solicitors had suggested the leaseholders could “always challenge the fairness of the certificate” if they believed there had been overcharging.

The judge went on to add: “It is crystal clear that the solicitors who produced a lease in a form compliant with statute and the RICS code had no real understanding of what the lease actually required.”

Similarly, the judge said a statement from Mr Hick’s Michael Godden “muddies the water even further” because he described how the company accounts were “effectively ‘fudged’”.

Mr Godden then “shows his apparent ignorance” of the both the lease and recommended best practice when he wrote in his statement that there would have been little or no benefit if the tenants had the accounts audited, said the judge.

Comments (7)

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8:03am Thu 27 Mar 14

juwhite says...

If Mr Hicks has any integrity he would get proper accounts done and refund the leaseholders any overpayments but I think I might be dreaming. He is an intelligent person and I cannot believe he or his solicitors did not realise they were doing wrong!! He is the figurehead of so many things eg Falmouth BID and Tall Ships yet how can we be expected to trust him now? If you want people to be involved in these things I suggest you resign now Mr Hicks.
If Mr Hicks has any integrity he would get proper accounts done and refund the leaseholders any overpayments but I think I might be dreaming. He is an intelligent person and I cannot believe he or his solicitors did not realise they were doing wrong!! He is the figurehead of so many things eg Falmouth BID and Tall Ships yet how can we be expected to trust him now? If you want people to be involved in these things I suggest you resign now Mr Hicks. juwhite
  • Score: 20

10:14am Thu 27 Mar 14

mervynhughes says...

"However, leaseholders wanting to claim back the money already paid will have to do so in a separate action. "

That will take a long time, be costly with no guarantee of a similar result. In the meantime the leaseholders properties will be practically unmarketable for sale with the prospect of more litigation? I don't think that they have thought this through?
"However, leaseholders wanting to claim back the money already paid will have to do so in a separate action. " That will take a long time, be costly with no guarantee of a similar result. In the meantime the leaseholders properties will be practically unmarketable for sale with the prospect of more litigation? I don't think that they have thought this through? mervynhughes
  • Score: 8

7:24am Fri 28 Mar 14

Downtime says...

I am sure the leaseholders who instigated the action didn't do so in order to receive a refund of all their service charges. Charges will be due anyway, but they want to ensure that in future the accounts are audited properly and everyone is quite clear where the various charges arise. Also it seems fair that the leaseholders do have a voice in who provides the services they are paying for.
In the end it should mean some sort of reduction in service charges, which can only be good for the leaaseholders and any prospective buyers.
I am sure the leaseholders who instigated the action didn't do so in order to receive a refund of all their service charges. Charges will be due anyway, but they want to ensure that in future the accounts are audited properly and everyone is quite clear where the various charges arise. Also it seems fair that the leaseholders do have a voice in who provides the services they are paying for. In the end it should mean some sort of reduction in service charges, which can only be good for the leaaseholders and any prospective buyers. Downtime
  • Score: 11

3:03pm Fri 28 Mar 14

ANormalPerson says...

One wonders about Mr Hick's suitability to be part of the Falmouth Business Improvement District if he cannot legally manage his own business. Mind you - from what the Judge has said, Mr Hick may not have been best served by his legal advisers or his accountant. This case is not a good advert for any of their professional ability.
All of this must be difficult for the majority of leaseholders who not (yet) taken any action. As noted above, the uncertainty will be damaging them. Mr Hick should put his affairs in order and give the leaseholders a professional service.
One wonders about Mr Hick's suitability to be part of the Falmouth Business Improvement District if he cannot legally manage his own business. Mind you - from what the Judge has said, Mr Hick may not have been best served by his legal advisers or his accountant. This case is not a good advert for any of their professional ability. All of this must be difficult for the majority of leaseholders who not (yet) taken any action. As noted above, the uncertainty will be damaging them. Mr Hick should put his affairs in order and give the leaseholders a professional service. ANormalPerson
  • Score: 15

9:32am Sun 30 Mar 14

ges18111941 says...

MR John hick MBE . owns at least 5 cottages at Pendra Loweth is family own several too , so they all must be pretty well off , so why should he then overcharge all the rest of the leaseholders ,Mr Hick should hand back is MBE. step down from the chairman of Falmouth Bid and Chairman of the tall ships . It is Mr Hick that instructed is solicitors and accountants , there is no excuse .
MR John hick MBE . owns at least 5 cottages at Pendra Loweth is family own several too , so they all must be pretty well off , so why should he then overcharge all the rest of the leaseholders ,Mr Hick should hand back is MBE. step down from the chairman of Falmouth Bid and Chairman of the tall ships . It is Mr Hick that instructed is solicitors and accountants , there is no excuse . ges18111941
  • Score: 9

9:57am Sun 30 Mar 14

ges18111941 says...

Not only as John Hick disgraced himself , he brought shame to his family too, especially, his daughter Sarah Hick MP for Falmouth & Truro , Sarah Hick also owns cottage/s at Pendra Loweth she too as siblings that have cottages there too .Wonder if John Hick as ripped is own Daughter off ,or do all is Daughters get special treatment , at the cost of other owners.
Not only as John Hick disgraced himself , he brought shame to his family too, especially, his daughter Sarah Hick MP for Falmouth & Truro , Sarah Hick also owns cottage/s at Pendra Loweth she too as siblings that have cottages there too .Wonder if John Hick as ripped is own Daughter off ,or do all is Daughters get special treatment , at the cost of other owners. ges18111941
  • Score: 11

6:58am Tue 8 Apr 14

ANormalPerson says...

ANormalPerson wrote:
One wonders about Mr Hick's suitability to be part of the Falmouth Business Improvement District if he cannot legally manage his own business. Mind you - from what the Judge has said, Mr Hick may not have been best served by his legal advisers or his accountant. This case is not a good advert for any of their professional ability.
All of this must be difficult for the majority of leaseholders who not (yet) taken any action. As noted above, the uncertainty will be damaging them. Mr Hick should put his affairs in order and give the leaseholders a professional service.
On reflection, I recognise that I know nothing about the details and background of this case, or of Mr Hick's business affairs and their history. My earlier comments were inappropriate and unnecessary, and I apologise unreservedly for any offence they may have unwittingly caused.
[quote][p][bold]ANormalPerson[/bold] wrote: One wonders about Mr Hick's suitability to be part of the Falmouth Business Improvement District if he cannot legally manage his own business. Mind you - from what the Judge has said, Mr Hick may not have been best served by his legal advisers or his accountant. This case is not a good advert for any of their professional ability. All of this must be difficult for the majority of leaseholders who not (yet) taken any action. As noted above, the uncertainty will be damaging them. Mr Hick should put his affairs in order and give the leaseholders a professional service.[/p][/quote]On reflection, I recognise that I know nothing about the details and background of this case, or of Mr Hick's business affairs and their history. My earlier comments were inappropriate and unnecessary, and I apologise unreservedly for any offence they may have unwittingly caused. ANormalPerson
  • Score: -2

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