This decision is also a milestone for Leasehold Valuation Tribunals, which have been heavily criticised for having panels that do not always understand the intricacies of leasehold law, and have been known to pass dubious judgements.
Richard Kohn, a specialist solicitor at Salams, Hertzfeld & Heilbronn, who worked on this case, comments: "The person who controlled the landlord company was hiding behind a web of companies under his stewardship. He's an accountant who is neither certified nor chartered. He runs interlinking companies with his mother. The landlord company appointed the managing agent, which bought services from another company - including, for example, a cleaner.
"All three of those companies have common strands of ownership and directors. So when leaseholders asked to inspect the service charge accounts of the landlord company, they were prepared by another company, which provided a set of records from a third company. Such methods can be used to hide information and are a common way for landlords to attempt to wash their hands of responsibility."
This modus operandi is at the heart of leasehold complaints and tribunals are becoming more adept at recognising the tell-tale signs of this common malady.
Terence Michael, part of the Flat-owners' Network, says: "The disguised landlord is at the root of most leasehold tenant abuse - one man behind the disguise of more than one corporation, fleecing the tenants. The new laws promised by the Government must ensure there is complete transparency, so the landlord is unable to set up and hide behind a web of agents and companies in an attempt to conceal his actions."
Nightmare landlords often build up a "pass-the-buck" structure in a deliberate attempt to create confusion or to make it more difficult for leaseholders to pin them down. They complicate the simplest of issues, fail to produce service charge accounts that conform to legal requirements, do not produce all the invoices and receipts for each payment, do not comply with company law and sometimes wrongly dip their paws into the service charges to pay legal expenses.
Tribunals are slowly becoming wise to these tricks and some leaseholders argue that the panel would be strengthened by including one leaseholder who has suffered abuse at the hands of an unscrupulous landlord and has first-hand experience of how these strategies play out. Tribunal panels currently include three people: a solicitor, a surveyor and a lay person.
Leaseholders want to be directly involved in the entire system, in terms of drawing up the regulations, setting up a regulator, and being involved in decision-making both at tribunals and at every other level. They want to be instrumental in helping to simplify the present system, which is too cumbersome to be effective.
"We need a structure that makes it easy and cheap for leaseholders to assert their rights," says Mr Kohn.
"You have to be able to carry out a fully verifiable and ascertainable audit trail. We need a standard mechanism and format for every single invoice and receipt, showing every payment the landlord claims to have made. Failure to do so would mean a tenant does not have to pay service charges until all the invoices and receipts have been supplied in the correct format." He believes a standard format must be introduced, to make an "audit trail" effective. This should include:
Every single original invoice must be supplied for every single payment the landlord claims to have made;
the correct bank entry date/ amount/ number and original documentation must be attached to each invoice;
documents, bank and written statements must be attached to the relevant invoice detailing exactly where the funds have come from, with the date;
the relevant receipt must be attached to each invoice; and
a separate record must be attached to the above standard format for the entire set of invoices, listing the details for each invoice.
Leaseholders call for the Government to set up a tough regulatory body without delay to license as well as oversee managers and managing agents, acknowledging that buying a home is normally the single biggest investment in a person's life. But managers and agents have, to date, escaped the wrath of a tough regulator, allowing the unscrupulous to flourish.
The regulator could be called the Home Management & Investment Authority and would benefit by having half the board made up of leaseholders who have experienced nightmare landlords. This watchdog would have the power to strike off managers and managing agents who unlawfully dip their hands into service charges to pay legal costs, for example, and to impose heavy fines on them for transgressing the law.
Information would be passed on to the fraud squad, where managers or managing agents have wrongly dated or produced false documents. Financing the new watchdog could be achieved through compulsory contributions from everyone who receives a licence to operate as a manager or managing agent.