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Reply: Discharging a long overdue debt due from Mrs Hillgarth to MHML by way of discounting an amount due to her along with all other directors.
3. Fraud in the course of the 2014 Refurbishment.
In order to comply with terms in the head lease of Mitre House it was agreed between MHML and the leaseholders at Mitre House that a substantial refurbishment of the block, both internally and externally, should take place. This refurbishment work ultimately started in September 2014 but had been preceded by some two years of detailed, intensive and frequently acrimonious correspondence. There was a wide divergence of opinion within the block about the appropriate extent, cost, style and timing of the work to be done.
For substantial work of this nature which is ultimately going to be charged to the leaseholders the law requires a proper consultation process (see Section 20 Landlord and Tenant Act 1985). A consultation process duly took place in early 2014 between MHML and the Mitre House leaseholders. The outcome of that process resulted finally in agreement that a firm called AR Lawrence & Sons Ltd should carry out full external and internal redecoration works at Mitre House at the tendered price of £105,019.38, (being £81,487.62 for external works and £23,531.76 for internals). This was all set out in a Section 20 letter dated 22 June 2014 from MHML to the leaseholders – see Item 3 of the Second Schedule. It was also explicitly stated in the board minutes of MHML of 23 May 2014 that AR Lawrence had been appointed to carry out the external and internal refurbishments.
Paul Brown-Constable knew very well from the two year period of negotiation that the leaseholders would not approve the refurbishment work under Section 20 if he were to do the work himself. It had to be done by a reputable independent contractor. However Mr Brown- Constable went through the motions of the Section 20 process, stating that all the work was to be carried out by AR Lawrence, but knowing full well that he would be doing most of the internal work himself.
Once a specification/schedule of work has been approved by the leaseholders under the Section 20 process, and contractors approved to carry it out, it is not open to MHML, except with the consent of its leaseholders, to deviate unilaterally from the approved scheme of work, or to decide that it will use different contractors. But Mrs Hillgarth found out that this was precisely what had been happening (see her Witness Statement at Item 9 of the Second Schedule). Although the leaseholders were paying to have the work done by skilled tradesmen at AR Lawrence, it transpired that some of the work was actually being done by Mr Brown-Constable himself and/or by other contractors engaged by him.
Reply: In a MHML Board Meeting on 23 May 2014 it was again advised to Mrs Hillgarth that neither her Wade final cost of £219,000 nor any of the other tendered costs, including the cheapest, £105,000, included the items she had requested of Wade/Hemi to quote for initially.
It was further advised in this meeting to Mrs Hillgarth that some of the items costed for in all of the received tenders, including Wade’s £219,000 and the cheapest, £105,000, could be done slightly cheaper quite easily by MHML personnel and also that certain sensible savings could also be made from even the cheapest tender (£105,000) which again could easily be achieved with no detriment to