Section 20 & Sinking Fund

[Halfo09]

Hi all,
It appears the Directors of our management company spent a large amount of our sinking fund last year on what they have told us are 'Fire Stopping' issues including the fitting of fire collars in our basement.
A section 20 was never issued but instead costs where taken from the sinking fund, and I was wondering if they can actually do this without consulting the leaseholders?
Thanks

[eagle2]

Unfortunately yes, the Daejan case allows them to use the monies and you can only seek to recover amounts if you can prove financial loss, which you probably cannot. You can ask to see the supporting invoices and you may be able to claim that the works could have been carried out at a lower amount. Their argument will probably be that the works were urgent and so they decided not to follow the s20 procedure.

[Halfo09]

Thanks. I'm going to go down the Section 22 route and ask for supporting invoices as I'm concerned about a conflict of interest here.

[eagle2]

Strictly you need to follow s21 before you can make a request under s22. Have you tried an informal request for the documents? Again a conflict of interest doesn't help you unless you can prove that a lower cost could have been obtained elsewhere at the time.. Even then you need to be careful that you are not claiming monies from yourselves. What is the structure of the management company? Are all leaseholders members? Can you remove the directors? Do you have a managing agent?

[Halfo09]

Yes, you are right about the s21 request but I donk think we can do that until we get the account for last year.
We have a number of Directors who are leaseholders that make up the management company and then a managing agent. My concern is that one of the Directors is very close to our property manager from the managing agent (to the point that when he left one managing agent the Director insisted that we move to the agent he had gone to). The Director in question and property manager seem to be the ones leading in terms of the spend without much consultation going on.
We spent 450k on a new roof and we have been told that there is claim of negligence against the managing agent which doesn't seem to be being pursued as well.

[eagle2]

Yes, the s21 request would need to be in relation to the financial period in which the expenditure fell. There is no harm requesting the supporting invoices anyway.. If you can obtain members of the Management Company holding 5% of the voting rights to agree, you can force an EGM and elect more directors and/or remove existing ones and also vote to remove the managing agent.

[Halfo09]

Thanks. I'll start with S21 and then look to obtain invoices which I'm most interested in.

[eagle2]

Good luck, please let us know how you get on.

[Halfo09]

Thanks for your help on this.