Directors of rmc have breached the s.24 tribunal order to hand over management

[SHill]

Hi

Can someone give me advise. I have been successful at First Tier Tribunal (Property Chamber) to Appoint a Manager Pursuant to S.24 LTA 1987. The Tribunal appointed a manger but the Directors of the RMC (Respondent) has not comply to handover the information by June 2020.

Their Representative at Tribunal was the Managing Agent who has been working hand in hand with the Directors running the RMC for 4 years to benefit their lifestyles.

The tactic the Respondent is using to absolve themselves from the breach of the Order is to pass the blame to the Managing Agent (Directors Representative for the proceedings) for the non compliance, knowing full well the Tribunal can't touch him as he is not party to the Order. Managing Agent cannot be party to the proceedings if not a party to the lease.

The Directors have been ambitious and economical with the truth and not transparent with the Appointed Manger. The Tribunal and the Appointed Manager have made the assumption that the Managing Agent runs all the bank accounts but this is not the case. The Directors appointed the Manager for the building in 2016 - 2019 but the Directors retained control of the Service Charge bank account which collects all the quarterly in advance service charges. They are refusing to hand this over and have been misleading the Tribunal and the Appointed manager leading everyone to believe the the Managing Agent is the one that is not handing over the bank accounts. I have explained to the Appointed Manager and provide an email from 2017 during the Managing Agent's instruction to confirm it is the Directors of the RMC running the Service Charge bank account collecting all the monies.

The Appointed Manger has been led to believe there is a negative balance of £28,000 on the service charge account and £14,000 of Creditors which is completely false but she is not able to verify this without the bank accounts statements. The Directors have not credited leaseholders for the surpluses at year ends since 2016 and have claimed on building insurance and charged the same invoices again through the service charge (double accounting) all exposed at the S.27A LTA 1985 hearing (refund of service charges).

There are three residents at the property and two are Directors. I am the resident who they will not allow to join the RMC as a Director despite my constant requests. It is obvious why they do not want me on the board which will enable me access to the information to expose their financial misconduct.

I have emailed the bank to notify them of the Tribunal Order and that the Appointed Manger is waiting for the bank statements from Dec 2015 - to date for the service charge account. They as expected replied with the response I expected a" we cannot be of any assistance"

The Tribunal Appointed Manager obviously has no funds to work with, so has not been able to set her management systems or enforce the Tribunal Order. I have asked her to contact Tribunal for further directions and Penal Notice but she now won't get back to me knowing she cannot proceed with enforcement in any event. We have hit a brick wall despite my apparent success!.

The Tribunal will not deal with me because they say they have Appointed a manager to deal with the handover and I will need to make another application to appoint another manager if I am not happy. It has taken me 3 years of Tribunal proceedings to get to this point, because the Directors frustrated the proceedings with manipulative tactics. I do not want to start again!!

1. Can someone explain what application I need to make to County Court get a court order to enforce the bank to handover the bank statements and bank mandate to the Appointed Manager in line with the Tribunal Order.The Bank Mandate will prove the Directors have lied to Tribunal.

2. I have issued a Section 16 Notice Pursuant to Section 16 of the Company Directors Disqualification Act 1986 to have the Directors and Company Secretary removed (the Rogue Managing Agent is acting as Company Secretary) . I am about to submit the application to County Court but unclear who is the Respondent - is it the individual Directors and the Company Secretary or the RMC Company . I suspect it needs to be the individual Directors but I need to be very clear so my application is not thrown out. Are there any solicitors out there who could advise? The Directors are obviously from one Company, the RMC and the Managing Agent acting as Company Secretary is from another separate company, the Block Managment Company.

3. The Respondent also is in breach of the Cost Order to pay my costs for Tribunal. The Tribunal had no hesitation in concluding that the Directors had acted unreasonably in defending/conducting the proceedings and that it was appropriate to make an Order for Costs under paragraph 13 (1)(b) and 13(2) of the Tribunal Procedure (First -Tier Tribunal) (Property Chamber) Rules 2013 but they are also in breach of that saying that the Respondent is the RMC and has no money to pay and they as Directors are not personal liable. My argument is that, it was their conduct during the proceedings that was causation of the Cost Order and not the RMC. They cannot assume the Company’s identity for their protection. The protection extended to the Directors as an officer of the Company only exists while they act within their duties. The various rights to pursue the Directors personally to recover the debt is valid when the Director has acted outside their duties, their authority, or the law.

I would be very grateful for advice this has now taken 3 years of my life and we are no further forward. The Directors misconduct cannot be condoned or ignored.


Thank you

[SHill]

...... Also what I left out above was, because the Tribunal have appointed a Manager will the Applicant for a County Court application to obtain bank statements need to be the Appointed Manger? This woud be a problem because she won't get back to me and she has proved to be very in experienced and not very robust in her dealings with the Directors.

As Applicant to the Tribunal proceedings and my success with both the S.27A LTA 1985 and the S.24 Application to appoint a manager can I apply to County Court to enforce the Tribunal Decision or is the ball now in the Appointed Manager's court which will be a disaster.

She may well be a good property manager but has proved to be not very experienced or capable in dealing with the breach of the Tribunal Order.

Thank you

[eagle2]

The property is in the hands of the property manager now so it is up to her to take any action as appropriate. You may be able to remove the directors from office under the Companies Act but you would need specialist legal advice.

[SHill]

Do you know what Application she needs to make to County Court to obtain the Bank Statements and Bank Mandate from there Bank? It seems ridiculous that I have had the success at Tribunal but can't do anything with it.

[AndrewDod]

You are way over-complicating this.

It is nothing to do with you. The appointed manager HAS TO take decisive action to resolve the matter - that is why they are appointed. If that involves taking legal action then they do that. They must do that.

[SHill]

Thanks for your response I really appreciate the help.
The problem is the Appointed Manager has just buried her head in the sand and is not doing anything about it. The Tribunal Order is 7 month in breach. She needs to apply to Tribunal for further directions to get the banks statements to allow her to set up her management systems but she has not submitted the "Order 1 "form. The Judge has told her the Tribunal have the jurisdiction to attach a Penal Notice to the Order but she has not actioned this. She has no experience in the Tribunal process - she is a Manager not a lawyer. I need to know what I as Applicant can do now apart from start all over again with a S.24 application.

[Gordon999]

The newly appointed manager is legally responsible for administration of service charge account for the period after appointment. She has to inform every leaseholder of her bank account number for payment of service charge and show a copy of her appointment letter by the FTT . She has to instruct all leaseholders to change their bank standing order to pay her.

The previous managing agent is responsible for the service charge account prior to handover date and has to arrange for the service charge records to be audited and balance of "unspent money" must be handed over to your new manager.

They don't hand over the bank account statements , then you get a court order from the local Magistrates Court.

Since they refuse to hand over the service charge admin details , you can report the service charge documents as "stolen" at your Police Station.

[eagle2]

Unfortunately the new manager is answerable only to the FTT and not to you or other leaseholders. As Andrew explained, she has the power to take legal action against any party which is preventing her from carrying out her duties, which again are set out by the FTT. She can decide if she needs fresh directions from the FTT eg if she needs to extend her existing duties or extend the length of her appointment.
You can apply under s24 for a new manager to be appointed but it is unlikely to be agreed, the manager will probably explain what she is doing and how she is being obstructed (most of which you will be unaware) and the chances are that the FTT will allow her to continue on the basis that a new manager is unlikely to improve matters.
Regarding your costs, did you obtain a s20c order? If you did the new manager will be unable to pay you and collect monies through the service charge. You can take legal action against the RMC but there is little point if it has no monies of its own.
If you wish to take legal action to remove the existing directors, I strongly recommend that you seek legal advice, there are sections of the Companies Act 2006 which could be used. I also recommend that you check the Articles of Association, what is the minimum number of directors required? If you are not careful, you may end up with no directors or without the minimum number of directors and the RMC would be unable to act.

[Gordon999]

I think the new manager is responsible for managing the service charge account after the appointment date and for the period going forwards. This person has to inform all leaseholders of change of manager and change their bank standing orders to pay money to the new manager's bank account.

The service charge account and the bank account before the appointment date belongs under the old managing agent. This agent has to produce the audited account for the last period of administration and hand over the unspent service charge money to the new manager or leaseholders. The old managing agent doesn't hand over the bank account if it is in their name. Only handover the unspent money.

You can make complaint to Companies House which has powers to disqualify directors. Best if you organise the other leaseholders to become directors and help you take control of the company and vote out the old directors.

[eagle2]

Again, check the Articles of Association to see if they provide indemnity to the officers of the Company. Is there a directors and officers insurance policy in existence? I don't recommend taking legal action but if you do, please seek legal advice, any action would probably need to be taken against both the Company and its officers

[Gordon999]

The legal advice would say : don't be stupid the directors are protected by DO insurance policy paid by you.

[SHill]

Thanks everyone
1. Directors are only protected by D & O if they have acted legally and within the boundaries of their Directors duties codified by the Companies Act 2006. They do have a policy.
2. Articles of Association (Table A) indemnifies the Directors for any liabilities incurred in defending proceedings if a judgement is given in their favour
3. The bank account has been named in the name of the managing agent but is held at the Directors Bank Coutts in London and is run by the Directors (this was confirmed by Property Manager during their contract) .
4. They are rogue Directors so were never going to disclose any unspent money. They have manipulated the accounts to show significant debt. The years this case took to go through Tribunal proceedings has allowed them to manipulate the accounts, not file accounts at Companies House to force a Strike off of Company so accounts disappear with Company. I have filed an objection to Strike off and it has been suspended pending court proceedings.
4. Can't vote Directors out. There are only three residents the two Directors and me. One Director has Alzheimers and is 85 years old and the other Director now ultimately controls the RMC Company for his own advantage and has been coercively controlling the management to my detriment as a result of my challenge. That is why I was proposing the Disqualification Proceedings
5. Articles state minimum Directors is one.

[Gordon999]

Just found Daily Mail Report in 2012 about "Coutts Bank was fined £8.7 Mil for handling proceeds of crime".

You should make a complaint your local MP and ask him/her to join the Parliamentary Group APPG for Leasehold Reform chaired by Sir Peter Bottomley and make a complaint to Mr Jenrick, Minister of State for Housing , Law Commission and CMA .

[eagle2]

Well done for your perseverance and I can fully understand your frustration. It certainly seems to be an extreme case of leaseholder abuse, perhaps you can try to get someone like the Leasehold Knowledge Partnership or your MP to take an interest in your case.
Companies House may be able to assist you, try contacting the breaches team, not the enquiries team. I can supply you with their email address if you wish.
If the directors have lost interest in running the RMC and are allowing it to be struck off, what is their objection to appointing you as a director and them resigning? You can call an EGM under s303 CA 2006 for that purpose. It is possible that they will fail to arrange the meeting in which case you will be able to arrange one yourself under s305 CA 2006. If they attend a meeting, it may assist to talk to them in order to progress, which must be in all of your interests. If there is a clash of personalities, it may be helpful to suggest that an independent person be present or take someone independent with you.
Alternatively, perhaps you can suggest mediation or arbitration. Is there a method of dispute resolution proposed within the lease?
Alternatively, you can apply for a court order proposing that you are appointed a director and the existing directors are removed. I recommend that you try s303 first. It is important to include yourself as a director within an order to satisfy the minimum number of directors.
Table A usually goes beyond what you have described and refers to applications for relief granted by the Court. I am not saying that it would apply in this case but for the benefit of other readers, a court would normally grant relief if a director had acted in good faith, which does not apply here.
I don’t understand the failure to file accounts, they are normally dormant accounts for an RMC, with separate service charge accounts being issued to leaseholders.
What is the Company Secretary doing? I am surprised that it has not resigned. Perhaps you can complain to Companies House or the managing agent’s supervisory body.

[SHill]

Hi

Thank you all for your input

In response to Gordon999 post I have already contacted LKP who have added my file to the records as part of their input to the various reviews.

In response to eagle2 , Companies House breaches team are aware of the position.

The directors have not lost interest in running the RMC, they are tactically allowing it to be struck off so the Company and service charge bank account disappears with it. Their objection to appointing me as a director is they do not what me to have any access to the accounting information.

They have been running the RMC like it is their own personal Company for years. The husband of the Director who is not a member of RMC Company or a proprietor of the property, is signatory to the Service charge account which collects all the monies!! and writes letters on behalf of the company signing himself as a Director.

There are two directors and me at the property and they will not appoint as a Director; they have not included me in a meeting in 16 years of my ownership of the property. I request meetings to discuss matters but they ignore correspondence. So to arrange one myself under s305 CA 2006 would be pointless.

I have been to mediation and they reneged on mediation agreement. That is why I took it to Tribunal to Appoint a Manager- was successful but they have breached order and not handed over bank statements for service charge account, so Manager has no funds and no information to set up her systems and she has now gone to ground.

No mention in Articles or Table A for applications for relief granted by the Court.

Failure to file accounts (dormant) is Directors tactic to Strike off RMC, loose all the service accounting information with it and the back story. He can then set up a new RMC company and tailor the AoA to suit himself as Director.

He is not resigning the other Director of 85 years old with Alzheimer’s as I requested. Her condition gives him and her husband complete control. He is refusing to resign the Company Secretary who is the previous Managing agent and lost his contract to the Appointed Manager- the Director and he are partners in crime.

I have raised a complaint to regulatory body about previous Managing Agent but he has wriggled out of it by passing blame saying he takes instruction from Directors so has absolved himself from misconduct.

Director is using Managing agent as a pawn in his game, passing blame and saying he is relying on the Managing Agent to cooperate with the handover of management information to the Appointed Manager, and claiming that he cannot comply with the Order because Managing Agent is not cooperating (knowing full well that the Tribunal can’t enforce it because Managing Agent is not party to order)

The previous Managing Agent and Director can hide behind each other to each protect themselves from complying with their obligations. They are both very manipulative.

The Director is persistently expressing to the Tribunal he has endeavoured to assist in the handover and is claiming all the information and bank accounts remain in previous Managing Agents control, absolving himself from the breach of S.24 Tribunal Order. Deliberately misleading the Tribunal.

Directors have control of bank accounts held at Coutts. I have told Tribunal Directors run the bank accounts but it is the Appointed manager that now the point of contact for the Tribunal.

The serious concern is the deceit and the Director misleading Tribunal to avoid complying to the Order in order to retain control of the bank accounts and building.

He believes he is above the Law.