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7. The 2014 Refurbishment, Failure to follow Section 20 consultation procedures, and MHML's undisclosed charges.
MHML has failed to follow statutory consultation procedures laid down by Section 20 of the Landlord and Tenant Act 1985. 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 was 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.
Following a lengthy consultation process in 2014 between MHML and the Mitre House leaseholders under Section 20 Landlord and Tenant Act 1985 it was finally agreed 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. It was also explicitly stated in the board minutes of MHML of 23 May 2014 that A&R Lawrence had been ap- pointed to carry out the external and internal refurbishments.
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 differ- ent contractors. But some of the leaseholders found out that this was precisely what had been happen- ing. 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.
When the service charge accounts for the year to 31 December 2014 (see Item 4) were subsequently presented to the leaseholders, there were no details at all of the costs paid to AR Lawrence or any other contractors in respect of the refurbishment activity. There was simply a (wholly inadequate) item called "Reserves utilised" which showed an aggregate figure of £105,877 against the budgeted figure of £105,019.38 for the agreed works. But it was totally unclear from the accounts whether the whole of this sum of £105,877 had been paid to AR Lawrence & Sons Ltd, and (if not) to whom any balance had been paid.
Not only Mrs Hillgarth (on 10 and 15 December 2015), but other leaseholders including Diego Fortunati from Flat 9 (on 17 and 21 December 2015) and Christopher Lee-Pemberton from Flat 8 (since May 2015) all pressed Mr Brown-Constable, without success, to provide relevant details of the refurbishment work carried out and a proper breakdown of the "reserves utilised" figure.
Having failed to obtain any relevant information from MHML, Mrs Hillgarth made contact with Mr Tony White, the Managing Director of AR Lawrence in June 2016. Mr White, who had not in fact been paid all the money that was owed to his firm by MHML, agreed to provide a Witness Statement (attached as Item 5) in relation to his involvement with the refurbishment.
In the co.
urse of correspondence between Mr Begg and Mr Brown-Constable between March and July 2016 some admissions have been made and some understanding has emerged as to the scale of the fraud perpetrated on the leaseholders. Mr Brown-Constable now admits that some of the work on the re- furbishment was done by himself and/or through unapproved contractors. In response to a letter from Mr
Begg da.
ted 23 March 2016 Mr Brown-Constable specifically mentions the following items: Boxing of meters
Boxing of interior messy wiring