"Arbitration clause" - conflict of interest other LH is also FH

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    "Arbitration clause" - conflict of interest other LH is also FH

    I am a LH of one of two flats within a house conversion. The LH of the other flat within the property simultaneously owns the freehold on the building. There is a substantial amount of structural damage to the property demised to me which I believe has been caused by the consistent negligence to maintenance of parts of the premises demised to the owner of the other flat (who is also the FH). I have had an expert structural engineer assess and provide an opinion on the probable causes of the damage - and I've been lead to believe that although the lease is very poorly written and hopelessly ambiguous in many respects, the evidence is largely on my side with respect to what the likely causes of the disrepair are.

    I have also been working with a team of solicitors who have been excellent. We've stated our case to the other LH / FH and provided heaps of evidence to back it up. The cases has been dragging on for several years and to date I am disappointed to say that the FH has not at all been co-operative and in fact downright obstructive, largely ignoring us throughout this process, and I find myself now several thousand pounds out of pocket with still no end in sight (and unable to sell the property due to the unresolved dispute). In addition, repairing all the areas relating to the dispute will likely cost several tens of thousands of pounds at least, hence why I am so desperate to ensure the person who caused this damage faces the consequences.

    The case was referred to a barrister who recently picked up a clause in my lease which appears to have either previously been overlooked or interpreted in a different way. The clause is:
    If at any time during the said term any dispute shall arise between the Tenant and the owner or occupier of the other part or parts of the Building relating to the Demised Premises or the other part or parts of the Building or to the party or other walls fences paths gardens gutters passageways sewers drains pipes or other easements rights or appurtenances whatsoever relating or belonging thereto or relating to any repairs thereto or any contributions hereinbefore provided or any nuisance or annoyance arising therefrom then and in any such case dispute shall be referred to the determination of the Landlord or (if the Landlord so directs) the Landlord's Surveyor whose award shall be final and binding on the Tenant and other such owners or occupiers.

    As mentioned, to date, the FH has been uncooperative and hence I felt my only recourse was to litigate. I am desperate to resolve this. The FH employed a surveyor who claims trees almost 20 meters away are the cause of the structural damage, never-mind the fact that structures much closer to the trees are not showing any signs of damage. We've spent almost a year gathering the evidence and detail required for a Court case, and suddenly the recent advice is that this is a damning clause and any Court would simply throw out my case because there is an arbitration clause and despite the evidence I've gathered to demonstrate the extreme negligence of the FH.

    I have the leases for both flats, which were drawn up on the same date several decades ago. When the leases were drawn up, the FH was actually a 3rd party, so I am wondering if it could be argued that the clause above actually envisaged that the leaseholds and freehold would be held in separate hands. Now that this isn't the case, it leads to a clear conflict of interest here - i.e.: that the lease states that any determination made by the FHs surveyor is binding on all tenants (there is no way, it appears to challenge this) - yet it is the FH (in their capacity as second LH) whose negligence has resulted in the extreme disrepair to my property!

    The barrister is saying my best course of action is to go back to mediation, however this has been a waste of time so far. How can it be that the FH may rely on the clause above when there is such an obvious conflict of interest? What options do I have?


    Any advice or feedback most gratefully received, thank you so much once again for your help.

    #2
    The lease presumably does not state that you completely forfeit your rights to sue or seek FTT determination under all circumstances -- and if it did that would not be tenable in a lease.

    Arbitration and mediation (which you also mention) are very different things.

    If I were you I would:

    a) Get rid of all the lawyers and barristers for now -- they are wasting your time and money.
    b) Apply to the FTT under their route for appointment of a manager after first submitting the relevant notices to the freeholder (as freeholder not as fellow lessee) -- (do it yourself)
    c) Once the notice expires make the application to the Tribunal (do it yourself)
    d) At the same time, to show your full intent to cooperate - get a private firm of mediators and try to press FH into mediation and document any refusal. Under no circumstances agree to any form of binding arbitration. We are talking a few hundred pounds here - not "teams" of lawyers. Reject any proposal from the other side that do not correct all matters in your S20 notice.
    e) Await the FTT outcome.

    An alternative to FTT would be to sue in County Court for disrepair - more complex in my view.

    Comment


      #3
      And I cannot see the relevance of the "tree" issue - regardless of the cause the FH is bound to repair (presuming the disrepair are things the lease says he is obliged to repair) -- and you are obliged to pay your share of those repairs (presumably 50%).

      Is it the case that you don't want to pay because you think the FH should recoup all the money from the other lessee (himself)???? - if you want to go that route you will have a rough ride and the problem will never be resolved from what I can see of your scenario.

      In short - forget for now the *cause* of the disrepair - and concentrate on the obligation to repair (whatever the cause).

      Comment


        #4
        Andrew thank you for your helpful response.

        Originally posted by AndrewDod View Post
        Arbitration and mediation (which you also mention) are very different things.
        My solicitor believes that the FHs solicitor has not yet understood the significance of the arbitration clause and hence has suggested mediation again (which is what we have been doing, to very little effect)

        Originally posted by AndrewDod View Post
        d) At the same time, to show your full intent to cooperate - get a private firm of mediators and try to press FH into mediation and document any refusal. Under no circumstances agree to any form of binding arbitration. We are talking a few hundred pounds here - not "teams" of lawyers. Reject any proposal from the other side that do not correct all matters in your S20 notice.
        As mentioned we have been trying to resolve this for several years now, would the existing mediation requests be valid?

        Originally posted by AndrewDod View Post
        And I cannot see the relevance of the "tree" issue - regardless of the cause the FH is bound to repair (presuming the disrepair are things the lease says he is obliged to repair) -- and you are obliged to pay your share of those repairs (presumably 50%).
        The areas of disrepair actually are demised to the other LH, who happens also to be the FH - these areas are common parts (pathways etc). Because of the disrepair here, it has a knock-on effect on the parts demised to me. Would that have any bearing on matters?

        The tree is within my demise so I suspect they are trying to blame me for the causes of the disrepair. I am responsible for 50% of the costs but to be honest my aim was to contest this as of course the disrepair has become far worse given the consistent neglect to these areas.

        I am sorry to drip feed, I wanted to keep my original request short, but I see I may have omitted some relevant information which might have an impact on your suggestions. The FH has undertaken some repairs, however these have been minimal and "totally inadequate" (according to my engineer). Essentially all they've done is fill any cracks with concrete and plaster over. This has not attended to the root causes of the damage which, according to my engineer, will continue to degrade the structural integrity of the building if not resolved (we are talking about extensive water damage to the property from a non-functional drain situated within the other LHs demise). So the question is, will I be able to take the FH to the FTT in order to obligate them to undertake ADEQUATE repairs so as to resolve the root causes?

        Originally posted by AndrewDod View Post
        Is it the case that you don't want to pay because you think the FH should recoup all the money from the other lessee (himself)???? - if you want to go that route you will have a rough ride and the problem will never be resolved from what I can see of your scenario.
        Why do you believe this to be the case Andrew?

        Originally posted by AndrewDod View Post
        In short - forget for now the *cause* of the disrepair - and concentrate on the obligation to repair (whatever the cause).
        I think you've hit the nail on the head here and is the crux of it. However the question remains what recourse I have if the LH / FH undertakes shoddy repairs which do not address the cause.

        Comment

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