About 180 people are being sued by Terracorp Limited who had failed to pay their covenant or services charges on the plots of land which they bought from Terracorp that is owned by Alexander Deschauer on which there is hardly any development.
The Terracorp Limited v/s Mr. Martin Kearey, Mr. Olatunji Alaba Dairo, Mr. Shanmuganathan Karunakumar and others case is being heard at the County Court at Central London. As it stands today, out of the 180 defendants, about 40 of them have had an out-of-court settlement with Terracorp Limited.
Ajaib Singh a part-time worker from Birmingham was one of the 180 people who got sued in 2018 for not paying his covenant charges on the plot he had bought at Collingham Garden Developments in Nottinghamshire.
Life-long covenant charges rising at 5% annually
“I heard about the property as a good investment from a distant relative back in 2004 and at that time we weren't aware of the life-long charges in the form of keeping the property clean, cutting the grass etc, but there is nothing being done there” revealed Mr. Singh.
According to Mr. Singh, he was told that after “making his payments for the plot in instalments over a period of four years there would be no further charges levied on him.”
But he said how he was surprised that not only was he being billed for these service charges but that they were increasing by 5% on an annual basis such that next year he would roughly be expected to pay about £270. While this may seem petty cash to many, today he says he is being sued for not paying £2000 of covenant charges billed between 2008-2018.
“I had stopped paying for those charges in 2008 because I had paid in full for my property which I bought at £16,000. But then I discovered that while the property was still in my name, those open fields are being rented out to farmers by the company and basically I had no say whatsoever,” he discloses.
Among the 40 people who have as of today entered into an out-of-court settlement, Mr. Singh had mediated into it as well but then “the terms and conditions of the deal” were not favourable for him to go ahead with it. Having signed an NDA, he says, he is not in the position to disclose the details of the offered deal.
An estimated 3500 individuals, 20 companies & £72mn land-banking scam
While there are 180 people at the moment, Kusum Thanki who bought a plot from one of Mr. Deschauer's companies, called Glenridge (Lee) Ltd (GLL) on an instalment programme lasting five years at the cost of £24,000. The plot site is based near Great Missenden in Buckinghamshire.
“The plot was transferred to my name when I paid £24,000 and the covenant charge for first 5 years. According to the GLL’s solicitor at the time, the transfer was conditional upon me paying the covenant charge which I did till 2016-17,” said Miss Thanki who hasn't been sued yet by the company.
The contract according to Miss Thanki binds not just her but also her children, to pay their covenant charges until the development of the area is completed where none appears likely.
Miss Thanki is part of an action group now Land Banking Victim's Association Limited which has a total of 85 members today. 39 of these members according to her are sued while the rest of them have been victim to the land banking scheme.
According to Miss Thanki they have gathered material where they believe that an approximate 3,500 individuals, across 27 companies owned by Mr. Deschauer, who may be impacted by this scheme. In their group of 100 individuals who have been sued and come out the lowest price paid is £16,500 and the highest is at £40,000. Miss Thanki explains that even after taking a more conservative average of 24,000 and 3,000 individuals, the financial value of the scheme is a staggering £72,000,000.
Their action group now seeks legal advice and representation at the County Court at Central London by Barrister Helen Swaffield, of Contract Law Chambers. Miss Thanki talks about how the barrister is “trying to challenge the contract itself and defending the victims”.
“The issue is whether this land banking scheme is lawful or not. If such a scheme is found to be unlawful then these charges will not be paid” said Barrister Helen Swaffield.
The grounds on which the defence is arguing that the scheme is unlawful vary from the land not being actually owned by the company to the not delivering on the promises that the company made to these defendants.
Miss Thanki, in her letter to Judge Johns QC wrote about how Mr Deschauer “used local ethnic press and rogue salesmen from these communities to lure victims. They were deliberately targeted, exploiting their language vulnerability, for their savings culture and ignorance of the complex local planning laws.”
As of today, their action group is trying to reach out to the remaining victims of this land banking scheme and create awareness among the Asian community who may risk being prey to similar scheme in future.
