I’m aware that there hasn’t been much in the way of useful content on my blog recently. Sadly I have been ridiculously busy dealing with a number of court cases.
If I may take you back to this 2008 entry on Estate Agents & Dodgy Landlords, I am delighted to say that Smarter Housing limited have been successful in their claim against Rajinderpal Singh Dhillon.
In January 2006 I was introduced to ‘Ricky’ Dhillon by a mutual friend. I had founded Smarter Housing only 3 months previous to this meeting and the business was very much in its infancy – involving no-one other than myself.
Ricky Dhillon put himself across as a big fish in a small pond, immediately instructing Smarter Housing to let more than 20 properties. Keen to impress both Ricky and the client who had put us in contact, I set out to let these properties as quickly as possible.
The relationship between Ricky Dhillon and Smarter Housing seemed like a golden opportunity. When I founded Smarter Housing, I did so to ‘raise the standard’ (registered trademark) of student accommodation. One way to ensure quality was to develop them in house and Ricky was completely on board with this idea and said we could could do big things together- he could buy and develop the properties, with my input on to location and specifications, whilst I would ensure they were let and the student tenants were kept happy.
Unfortunately, Ricky took on too many projects and in August 2006, one month the first ever tenants were due to take up occupancy, it became apparent he would not be completing the properties in time. I had a choice to make – risk losing 20+ sets of tenants on week 1 of trading, or help out and ensure our continued success.
While many estate agents would simply point the finger at the Landlord for failing to complete the property on time, I did not have this luxury as the sheer scale of the problem would have killed off my ‘Smarter’ brand before it have even started. After many detailed discussions about how to move forward, I opted to borrow against my future cashflow to bail Ricky out of his situation.
As it turns out, this decision was a major mistake. It slowly began to emerge that Ricky did not own the majority of the properties he had asked me to let on his behalf and was, in fact, carrying out building work on behalf of other individuals.
Fortunately the terms of business between Rajinderpal Singh Dhillon and Smarter Housing was signed on the basis that he was the Landlord and all tenancy agreements were created in his name. Furthermore, the majority of the invoices paid by Smarter Housing were made out to Ricky Dhillon, who had told third party contractors that he was the Landlord of the complete set of properties in question. These factors were crucial for the court case that followed.
When the full scale of the fraud became apparent, Ricky Dhillon and Smarter Housing parted ways, although this did not have the impact of losing 20+ properties. As I had eventually identified and contacted the real owners of the properties I was able to do business with them directly, thus Smarter Housing maintained management of all but 6 of those Dhillon claimed to own.
Dhillon was clearly outraged that Smarter Housing had emerged from the situation relatively unscathed and went on the warpath, telling everyone he ever met that the company owed him “lots of money”. He followed this up by issuing a County Court Claim for £10,000 in August 2008 – over a year after communication had come to and end. This was an opportunistic claim, as he knew I was in Dubai for a few weeks, and by the time I returned a judgement had been entered against Smarter Housing.
I was therefore forced into seeking legal representation and issuing a counter claim, once the initial hurdle of having the judgement set-aside had been dealt with.
On 25th November, 2010, Smarter Housing succeeded in the claim against Ricky Dhillon at a trial in Walsall County Court. We are due back in court again in January for a costs hearing unless the payment amount can be agreed.
Today I am in negotiations with Dhillon’s solicitors regarding an offer of payment in the region of £3,000 – more than the judgement amount but ignoring some £23,000 of costs. As Dhillon’s actions forced Smarter Housing into making a counter-claim it is expected that these costs would be added to his bill. Somewhat expectedly, Dhillon is pleading poverty and asking for a monthly payment plan.
I’ll revisit my use of legal representation and the final outcome once payment terms are agreed. For now I shall just say that I am contemplating accepting a revised offer for sake of good karma, showing I pity him and so I can move on to more important matters. For now, lets talk business!
Due Diligence
Prior to the trial I did some research that I should have conducted way back in January of 2006.
Firstly, I conducted a Google search for Rajinderpal Singh Dhillon. This led me to an article in the Coventry Telegraph:
Landlord fined over sex shop; Coventry premises had hard-core porn on sale.
Rajinderpal Singh Dhillon, 35, of Alcester Road, Stratford, pleaded not guilty at Coventry Magistrates’ Court yesterday to knowingly permitting the building, in Far Gosford Street, Coventry, to be used as an adult shop without a licence. He was ordered to pay pounds 1,500 in fines and pounds 250 in costs….. [in] sentencing Dhillon, magistrate John Whittaker told him: “You were informed in August 2003 that the property was operating unlawfully. I do not find the evidence given [in court] credible.”
Alarm bells begin to ring! Next, I decided to look at the record of County Court Judgements. This PDF file shows the County Court Judgements registered against Ricky Dhillon. The document cost me £8 to obtain from the registrar and highlighted yet more problems – numerous unpaid CCJs.
Finally, I decided to investigate the properties which I understood were owned by Dhillon. Clicking on any of these properties – 29 Clarendon Avenue, Leamington Spa; 13 Rosefield Street, Leamington Spa; 2 Monks Road Coventry; and 136 Alcester Road, Stratford-Upon-Avon brings up the Land Registry documents which provide yet further worrying information: constant remortgaging, bankrupcy charges and a home address registered to someone else. These documents cost £6 each.
The lesson in business
In this case, due dilligence could have been carried out in under and hour and for less than £100. Compare that to the financial loss (including legal fees) nearing £30,000, the damage he did to the reputation of Smarter Housing and the countless hours I put into dealing with the resulting events – not to mention the stress of the ordeal – and it should be easy to see why due dilligence is so important.
The example is extreme but I hope by reading this I can prompt you to think about your clients carefully as, despite positive recommendations, they may not be as credible as they first appear. I will end this by pointing out that the individual who introduced me to Ricky Dhillon no longer deals with him in a business capacity because of, you guessed it, a dispute over finances.
Pingback: Tweets that mention Back to business - a lesson in due diligence | Adam Arnold - The Smarter CEO -- Topsy.com