How best to deal with troublesome freeholder. Advice welcome.

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    How best to deal with troublesome freeholder. Advice welcome.

    We are a private estate of 31 leasehold flats. We have our own limited management company. Each leaseholder is a shareholder but the majority are apathetic. There is a master Freeholder.
    Unfortunately developed over the years was that the management company ended up with just one director in contravention of the Articles of Association which stipulated minimum three directors.

    The sole director slowly became dictator and there was considerable disquiet about how things were being run and how the money was being spent. A year ago an AGM formed a new board (I am part). The previous dictator has refused to co-operate with the new board, for example by refusing to hand over financial records for previous years. So the new board cannot complete its due diligence. We even had a terrible time running the bank account because of the way he had put himself in sole control. Everything was frozen for months.

    We are getting legal action started but due shareholder apathy and now people being unavailable due to this corvid-19 disaster, it grinds on slowly. Too slowly.

    We come to last week.

    Lest Wednesday I was walking back to the main entrance to my block along a garden path. He came up to me and I naturally stepped back in order to preserve 2m social distance. He refused to come past me but instead tried to come up close to me telling me that it is time that I agreed a one-to-one negotiation with him. I presume he wants to negotiate with the board members one by one and play one off against the other to let him to find a way out of his situation.

    I told him firmly that under no circumstances would I enter into sole negotiation. Any discussions would have to be with the full board of directors with solicitors present. I also (nosily) made it plain my upset about how he had invaded my safe space to pressurise me.

    With that he kicked off and I really thought he would attack me. I defended myself verbally. I was not going to let him shout me down. I am elderly, in poor health, and 'shielding' from corvid-19. I wouldn't have been in the position to defend myself from an ex-martial arts instructor so I guess he thought he could dominate me..

    I feel he behaved in that disgusting way to try to force me to comply with his wishes by, in effect, threatening my health and safety. For all I know he could have been incubating corvid-19 which would probably kill me. It was very frightening and, frankly, I'm still distressed.

    I have taken some steps.

    I spoke to police 101 on 21 May. They have noted the incident but I have not yet asked them to issue a crime number.

    I instructed my solicitor to write to tell him that in no way will I accept this behaviour from him, To tell him that if a similar event occurs I will call the police and I will commence an injunction on him without further warning. I know he received that letter 22 May.

    I propose to wait 21 days and then instruct my solicitor to write to the freeholder pointing out that it is their responsibility to deal with this.

    At the moment I feel that my freedom to 'take the air' and get out of the flat has been prejudiced. His flat overlooks mine so I feel under continual surveillance. My quality of life has taken a battering.

    Now to why I wrote all this - are there any other actions I can take? Any (legal) suggestions most welcome.

    #2
    I can never proof-read on a screen. Of course the title should read Leaseholder !

    Comment


      #3
      People like lawcruncher may be able to help. My thoughts are unprintable.

      I think you have been very thorough and principled in your approach. Can you make sure no-one meets him one to one. You need to stick together.

      Very best wishes to you. I am sure everyone on here will what support they can.

      Comment


        #4
        while I cannot comment on the legal side of things I do feel for you, but you have done the right thing and sometimes to deal with a bully you need to take an amount of abuse.

        You may find that he simply destroys the records and walks away from the whole thing even selling his property if the wrong doings are massive and he now realises the extent of that wrong doing.

        That said the other leaseholders are also partly to blame for allowing it to continue so long in this regard and I can understand how a situation might have occured like this. Just trying to play both sides of the story, I have heard of directors not willing to give a view not willing to turn up to AGM's not willing to do anything, so in the end one director takes over just because nothing is getting done. I am not suggesting that this has happened in your situation but just make sure you have the full story to how it got to the one director position.

        My view would be you are now not sure if the reason for failing to hand over the documents is down to embarrassment that someone may question he has charged ex amount of business miiles or paper stamps or bills OR it is a case of something more naughty where the director may be paying his own management fees out of the fund etc... that said if the director has appointed himself as sole director by default as others left and decided to pay himself a salary to look after this and the other directors lost interest and did not want to take part / or sold and left then it's a big job for one person to do,,, in terms of managing the contractors/maintainence/repairs/insurance/fire safety certs etc.... normally there would be a managing agent who would charge a few thousands a year for the task of doing this.

        By his approach it sounds like something more naughty but given you are now on the board and on the bank accounts I think you have a right to ask the bank to duplicate the accounts for you so at least you can get an idea as to how big the problem was and if there are large cash sums being withdrawn, then you would have something with which to approach for direct questions.

        It sounds like a horrible situtaion try to not take this personally (which is hard).

        It sounds like the full picture may come out soon and while I would not recommend and you cannot really do this yourself due to the injunction one of the other board members may wish to approach him and get more info about such agreement he wants to come to (maybe with a recording device - but take advice on that).......

        Let's hope it's a case of embarressment rather than something much worse.

        All the best

        Just my personal view

        Comment


          #5
          An extremely helpful post. I particularly think it a good idea to pursue bank accounts. Also not known banks happy to accept one signature on these accounts.

          Comment


            #6
            If I give you just one of the list. He has routed the company's accounts through his personal bank account and refuses to provide the paperwork. He says he has been 'advised' not to hand the records over. The total is approximately £80 K.

            He became sole director simply by other directors leaving and never calling an AGM to get any replacements. I had resigned because I had a heart attack.

            Comment


              #7
              Originally posted by gismo67 View Post
              If I give you just one of the list. He has routed the company's accounts through his personal bank account and refuses to provide the paperwork. He says he has been 'advised' not to hand the records over. The total is approximately £80 K.

              He became sole director simply by other directors leaving and never calling an AGM to get any replacements. I had resigned because I had a heart attack.
              Blimey, that sounds serious, might be worth a call to action fraud.

              Comment


                #8
                It is taking a long time to assemble the scant information we have got. I suspect we are almost ready but we need our solicitors advice. In the meantime we are planning to dismiss him from the board. And if he tries to challenge that he will need to go to law - that's exactly what we want to happen because he won't be able to hide paperwork from the discovery process.

                Comment


                  #9
                  We are working on the company problem but this threatening behaviour against myself is what I'm concentrating on.
                  Can I expect the Freeholder to do anything? What might they do? Could I force them to take action if they don't bother?

                  Comment


                    #10
                    Hi when you say the total is 80k how many years is this over and how much of this do you think is suspicious?

                    If the 80k was total spend over say 5 years + then I would be less concerned than if the 80k was a deduction over a single year period. Not that the whole matter is anything other than concerning.

                    While I am not trying to suggest it's not serious given one heart attack please try and put boundary between yourself and this person as it sounds like further interaction could only hurt yourself.

                    The been advised statement sounds like a smoke screen.

                    I would take some legal advice before removing him from the board, in doing so his responsibility might end and he can shred the documents and walk away. You might also want to take advice from companies house, he probably does not need to publish accounts but there must be a book keeper /accountant (if not him) and a return to HMRC. That return might just be single line entries for income / expenses etc but that and the bank accounts might give you some clues.

                    If the said person is the only director and he is managing all the works for the 39 flats and doing the book keeping / accounting I can see him thinking he would be owed anywhere between 2-10k a year to carry all that out... With him being the only director it's rather been left open to misuse and he would carry the casting vote.

                    I do not know if the responsibility to appoint new directors rests with the one remaining or the one's that leave.

                    In no way do I agree with what he is doing but I think this will be very hard to hold someone accountable. He may have been advised as to this hence the reason why he is withholding the records.

                    So lets say you get the documents, then for each year you see an entry that says

                    Book keeping 3k
                    Management of contractors 2k
                    General expenses 1k
                    Maybe he took on the gardening also and charged that at 2k a year and the cleaning at 2k a year or had friends and family do it

                    So where would you go with that and who could say it's unjust? if there are no other directors for all the work to fall to one could be classed as unreasonable.

                    How would you feel if you see the above?

                    What is sounds like is that he might... have milked the situation for all he could do.....now he being called to account......

                    You might only find out after the next few years of accounts giving you a milestone to compare against... or look at the accounts from before you took time away from the role what is the delta between costs per year then and costs now,, have any major works been undertaken ?

                    Just my personal view

                    All the best Stew.

                    Comment


                      #11
                      Yes, if your lease is fairly standard. There should be a covenant requiring leaseholders not to cause annoyance or disturbing (words to that effect ).
                      Once you make a formal complaint the clock starts. The freeholder must take action. Do try not to get stressed, easy for me to say from here.

                      Comment


                        #12
                        Originally posted by gismo67 View Post
                        We are working on the company problem but this threatening behaviour against myself is what I'm concentrating on.
                        Can I expect the Freeholder to do anything? What might they do? Could I force them to take action if they don't bother?
                        While I do think what he is doing is wrong, if he was coming to your door day in day out and banging on the door then you might have cause to get the police involved to my knowledge someone shouting at you and getting a bit to close while you are both entering/leaving a building will not be classed as threatening behaviour,,,,

                        That said I believe the behaviour does not have to actually be threatening it's that you just have to feel threatened...... so on that grounds I would be tempted to keep a diary and log anything you feel makes you feel threatened.

                        However I don't think this "At the moment I feel that my freedom to 'take the air' and get out of the flat has been prejudiced. His flat overlooks mine so I feel under continual surveillance. My quality of life has taken a battering" will give the police any cause to act, you have the injunction which is where it should stop.

                        Just my personal view - I will leave some one with some more skills than me to comment further

                        All the best Stew.

                        Comment


                          #13
                          Thank you scot22 I will be patient and just start the clock ticking. I am hoping that a Freeholders investigations might trigger an investigation of the money issues.

                          Thank you Stew. The Articles say directors should not be remunerated. He has actively prevented new directors being appointed. He has mis-stated the company's accounts, counting special reserve fund contributions as income, then declaring a profit whereas we had made a loss for 6 or 7 years The reserve fund savings were therefore short. I won't list on here all the mis-accounting we have found even without the missing company documentation. Getting it all in a coherent form and submitting it to Companies House is proving difficult, an uphill battle made worse by Covid19. I think his behaviour last week proves we are getting close to finding out what he wants to keep hidden and the pressure on me was to try to wriggle out of the inevitable. His method of working is to pressurise individuals and play one off against the other. Even the accountants described him as manipulative. I know how difficult and thankless the task of running a management company is, I was company secretary and/or treasurer for several years but in my time everything was open and I ensured everyone saw all the accounts.

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