The disagreement between the owners of the Cherry Orchard in Port Erin and leaseholders continues in spite of attempts at mediation.

In documents supplied anonymously to Isle of Man Newspapers, the hotel owners warn leaseholders all deals are off if they talk to the press.

In December we reported that leaseholders had taken the owner of the Port Erin complex to a Rent and Rates Tribunal twice over ’excessive’ charges.

After a tribunal in 2014, Robert Gillings - the majority shareholder in the Cherry Orchard Management company by virtue of his hotel company Cherry Orchard Apartments - was ordered to repay residents’ excess charges.

The tribunal found that the management company had substantially overcharged leaseholders and ordered reimbursement. Leaseholders believe the overcharge to be in excess of £90,000.

Mr Gillings said he could not manage the Cherry Orchard on the tribunal directions and requested mediation, which started in 2015.

Both sides agreed to be advised by a third party, chartered surveyor Ken Crothers, who would direct how the service charge should be set, this was a legally-binding agreement. Subsequently the Cherry Orchard Management company refused to implement the report’s recommendations. There were no repayments, prompting another tribunal, held in December 2016.

Overall service charges rose by over three times between 2000 and 2014. Between 2003 and 2013 heat and hot water costs rose by over 350 per cent, while energy inflation was 150 per cent.

Administration costs were raised 15-fold from 2000 to 2011.

Because the complex leaseholders are known to be in dispute with the management, together with the high service charge, the value of flats has fallen.

In recent months leaseholders - most of them elderly and on fixed incomes and some with vision problems - have been bombarded with lengthy correspondence from the management company.

In the correspondence the management company argued the services charge should be higher than at other places as it offered services not offered at a residential block.

It said the tribunal was in some cases ’unclear’ and others ’unfair’ so for ’greater certainty and appropriateness of the calculation’ made some changes. It proposed adopting estate agent Dean Wood’s charging structure of £18 per flat a month.

Meters will be fitted to get accurate figures not estimates for energy use, following the tribunal’s recommendations. Costs relating to the laundrette are now the responsibility of the hotel.

The management company offered to extend leases by a further 800 years.

The long term plan is to convert all of the complex - which includes a restaurant and bar - to residences. They want commonly used areas of the complex to be returned to the management company, which they valued at £5,000.

They offered to repay overcharging awarded by the tribunal.

The company has told residents that it wants to end the ’damaging dispute’.

It added: ’Everyone has got something, perhaps not all of what they wished for.’

But it said that publicity in the media had damaged the company’s relationship with the residents.

The company said the Cherry Orchard was ’fast approaching a disastrous situation’. The new proposition ’should safeguard’ the future for all and avoid liquidation.

In the past Robert Gillings was warned by tribunal chairman John Wright to stop making threats of liquidation and that such a move could bring about an action for ’fraudulent preference’.

The company’s proposition is on the understanding it is not released to the media.

It said this was is the final offer. If it is rejected, a new source of funding would be required and ’there will be no opportunity to receive any payment in respect of the overcharging issue and there will be some very large bills from legal and accounting professionals’.

Leaseholders were advised to take legal advice.

But in an email to Mr Thrussell from leaseholder Graham Jones, who represents other leaseholders, he points out the offer ’is based on a fundamental misinterpretation’ of the agreement - which is binding - and of the report by Mr Crothers, who confirmed the report ’does not countenance further negotiation’.

Refusal to honour an agreement to accept a report ’creates great distrust which cannot be overcome with a "take it or leave it" grand plan accompanied by implicit threats’, he said.

There is a further tribunal hearing relating to cleaning on maintenance charges on March 9.