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

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    Please can you explain why the Directors say this is an improper resolution and what makes it improper for the General Meeting :-
    1. The Directors to provide the Tribunal Appointed Manager, with the bank statements, consecutively from 21 December 2015 - to date for the following bank accounts and any other related bank accounts for the Company, within 10 days of this email dated 01 February 2021 or clarify at the meeting why this has not been actioned.
    I will reword it if necessary so they cannot wriggle out of it at the meeting. It is important to pin them down on this point.


      It is incorrectly worded because you cannot at this stage provide something by 11 February and there is a choice, so it is unclear which of the alternatives you are seeking.
      You should have asked them to comply with the FTT order or stopped at "..... within 10 days".
      You may try to amend the wording, preferably as little as possible, or explain what you meant, which is perfectly clear, but I suspect that they will not allow any amendments.


        I have had another email from Companies House to say the RMC will be struck off in 14 days if evidence is not provided for the reason for late filing.

        Can I get an accountant to file dormant accounts for the Company? Can this be done through the breaches team? I would be grateful for the breaches team email if you have it.

        I can’t believe the Directors are able to hold leaseholders to ransom this way!

        What happens to my flat if the RMC gets struck off.


          As a result of the First Tier Tribunal s.27a application (reasonableness of service charges ) I have been awarded credits for the Accountancy fees, D&O policy, bank charges etc basically all the costs that relate to the running of the Company (RMC) that were previously put through the service charges but are not a provision of the lease.

          1. Can the Directors now put the credit I have been awarded on my service charge account as a debt against the Company and me as shareholder? Can they charge me as shareholder even if the Articles do not provide for this?

          2. Although the Company Accounts are inactive I suspect the accounts are not being filed because they are loading the debt against the Company Accounts and are waiting for the meeting to announce the horror story.

          3. The Tribunal Application was February 2019 and Decision was August 2019 so, are they allowed to amend the year end 31 December 2018 Accounts?. Surely there is no excuse for them not to file these accounts.

          4. The 2019 year end was 4 months after the Tribunal Decision so there has been plenty of time to prepare these accounts in line with the Tribunal ruling.

          5. The Director have said amendments are being made to the Company accounts. Previously the Directors were loading the Service charge with their personal Tribunal expenses and Company expenses etc . The Tribunal Decision has put a stop to this so, now they will be switching these to Company expenses. The articles do not mention anything about the Shareholders picking up Company expenses. Do I have a right to object to this especially because the causation of the costs to the Company are as a result of breaches of Director duties.

          6. Can the Directors be made personally liable for the debts to the Company ?

          7. Are they within their rights to amend and tailor accounts from previous years?


            You are not an officer of the RMC, therefore you do not have the authority to instruct an accountant, If the point is that Company expenses are not service charge items, then the RMC is not dormant. it has expenditure which it has been unable to recover and it has a deficit, You should check your lease to see what happens if the RMC no longer exists, the management may revert to the freeholder subject to the appointment of the manager by the FTT. The email address is
            1 If the RMC is struck off, the directors can do nothing. Your liability to the RMC is fixed at £1.
            2, 3 and 4 I agree that there is no excuse for the late filing of accounts, any adjustments should be simple
            5 and 6 You have a right to object to any costs which were unnecessary and you can claim that they should be paid by the directors themselves
            7 The previous accounts would not be amended but the 2019 accounts may include a prior year adjustment due to the FTT decision


              Should amendments to the service charges as a result of a S.27a Decision only apply to the service charge allocations moving forward? Can they apply the Decision to the previous year and make prior year adjustments?

              If the Directors can transfer the costs ruled by Tribunal as not reasonable service charges over to the Company Accounts to be picked up by the shareholders then this will then effectively negate any credit I have been given as a result of my success at Tribunal. My percentage share as a shareholder is a larger percentage than my percentage share of the service charge. These costs could then not be challenged at Tribunal (S.27a) because they are no longer service charges. This would be grossly unfair!!

              Can prior year adjustments be made regardless?

              The Directors will no doubt be planning to vary the lease using s35 of the Landlord and Tenant Act 1987 to vary the service charge provisions in the lease. Section 35 of the Landlord and Tenant Act 1987 (LTA 1987) (as amended by the Commonhold and Leasehold Reform Act 2002), provides that a party to a long lease may apply to the Leasehold Valuation Tribunal (LVT) to vary the lease on the grounds that the lease fails to make “satisfactory” provision in respect of one of the circumstances specified in section 35 (4), LTA 1987.

              Would they need consent from all leaseholders or are they going to be able to do what they want again with their 75% share of the Company.

              There are 4 flats but three residents ( one tenant who is Director has 2 flats knocked into one but they remain under two titles ) and then there is also the leaseholder who has a lease for the garages (He is on my side) . If there are 5 leaseholders in total but only 4 shareholders what say will I have if the lease is amended?


                The Tribunal have Appointed a Manager which takes away any authority from the directors. They have no power to manage the building anymore so cannot take any money out of the Company for remuneration or run up directors loans.

                The only costs the Company will incur moving forward should be the filing of the Company accounts ( how much for filing dormant accounts - £250? ) If the Appointed Manager is made Company Secretary as well this cost can be put in the management order as service chargeable and the Company is then inactive (dormant). Is that correct?

                The only costs the Company has incurred to date are as a result of Director misconduct.

                What costs would the Company have now there is an Appointed Manager who has already been given the authority to put accountancy and bank charges in the service charge expenditure ?


                  The directors are not acting rationally. If they allow the RMC to be struck off, they will no longer be directors, they will be unable to charge you anything and they will be unable to recover their loans to the Company.

                  The accounts should reflect the FTT decision. The 2018 and 2019 accounts appear to be open, so any adjustments relating to those years would be made within those accounts and a prior year adjustment would be made within the 2018 accounts.

                  If the directors attempt to raise a Company charge, you can argue that your liability is limited to £1 and refuse to pay anything more. The Company would then need to apply to the court to try to enforce the claim and you can argue that the directors should pay the costs before the court.

                  Any leaseholder can apply to the FTT to change the terms of the lease but you would need to be notified and you would be able to challenge the proposed amendments, The FTT has the task of ensuring that any amendment is fair to all leaseholders.

                  Whether or not the directors have any authority depends on the precise wording of the appointment of the manager. Any officer may file dormant or micro company accounts in your case. It is just a matter of changing the dates and adding a note of the bank balance, it can be completed online in no more than 15 minutes. The filing fee is £13,


                    1. I suspect they will have recovered loans already to increase the debt against the Company. They are claiming the Company is in huge debt and have said they will be invoicing me for my share.

                    2. They have probably not filed accounts yet because they are making the adjustments to the Company accounts to reflect the increased debt. All they are doing is transferring the costs that have been ruled as not service chargeable, to costs incurred by the Company so they can invoice me that way. They won't allow me to get away with any success enjoyed at the First Tier Tribunal. This is their way to punish me for my challenge.

                    3.I can argue my liability is limited to £1.00 but they have already said ....."The Directors, as Members, request the members to place the Company in funds to enable it to pursue such processes as may be required (including the issue of proceedings) to obtain such information as they and the Company's auditors as well as the new Manager may require to enable accounts to be prepared. Such funds to be provided in proportion to the percentage shares in the Company held by the Members. In event that any Member does not provide his or her share of the funds necessary then such of the other members as do provide the same shall be entitled to make a loan to the Company for a sum not exceeding the funds required and shall be entitled to require the Company to enter into a Debenture at such interest rate and upon such other reasonable terms as he or she shall negotiate with the Board. This proposal is not put forward as a Resolution to be considered or voted upon by the Member. It is a request".

                    4. The Board is of course is the Director and the husband of the Director with Alzheimers. (he is not a Member, leaseholder or an Officer of the company but is making decisions on behalf of the Company). Entering into a Debenture will be their way of still being able to provide a loan to the Company as disguised renumeration and have the Company set a charge against my flat at a large interest rate which will then increase dramatically and prevent me selling my flat until it is paid off. The "Company Auditor" is the Director's Company Secretary and accountant for his other property companies. His appointment is clearly a conflict of interests but the other Director will of course vote in favour of his appointment. He is a particularly nasty man and will be doing all he can to assist the Directors. The Directors exceeding their powers this way surely is leaseholder abuse. I am feeling victimised by this whole situation. Can a member do their own private audit of the Company accounts or as a minority member do I have to accept their version of the accounts. The bullying they resort to when challenged is clearly unacceptable.

                    5. The Directors are effectively the Landlord (RMC has a lease for 75 years) the superior Landlord does not get involved and does not want to get involved I have already approached them. How many leaseholders have to agree if the Landlord wants to vary the lease if there are less than 8 flats? One Director owns two flats so I am assuming she has two votes. I as leaseholder would probably be better to make an application to the Tribunal to vary the lease so the Directors can't impose large loans on the Company as a way to punish me. What are your thoughts on this?

                    6. At the hearing I tried to think of any eventuality where the Directors could disrupt so I made sure the Judge made a note in the management order that the Tribunal Manager would be the point of contact for consents required in line with the lease. It was agreed the Company Secretary would-be the Appointed Manager but I can't see that the Judge made note of this in the order - his oversight which is a nuisance. The Directors were left with no powers really so imposing loans on the Company which I am liable for is their way to retain power over me and to continue to victimise and disrupt.


                      Can Directors amend the Articles when ever they choose. Do Members have any say in this?


                        1 The directors cannot recover all their loans unless they can collect monies from you. They do not appear to have the power to charge you now that the manager has been appointed. What does the FTT order say?
                        2 It should not take long to calculate how much has been disallowed by the FTT and there has been sufficient time to make adjustments within the accounts. Surely the manager is responsible for filing accounts now.
                        3 The Company accounts which are filed at Companies House are not audited and do not contain an accountant’s report. It is up to the manager to decide if funds need to be raised and if the RMC needs to borrow monies. The service charge arrears ought to be collected as a priority in order to avoid the need for borrowing.
                        4 No legal charge can be applied to your apartment. At the present time, there is nothing within the Company accounts to be audited. You have the right to require an audit under s476 CA 2006 but it would be a complete waste of time and money, the accounts only disclose the £4 share capital.
                        5 and 6 The directors do not have the authority, subject to the FTT order, to change the terms of your contract without your agreement or to borrow monies and charge you interest.
                        Only the members may change the Articles by special resolution.


                          In relation to my question, what powers do the Directors retain when the Tribunal Appoint a Manager. The FTT Order below

                          Management Plan

                          1. The rights and liabilities of the Respondent arising under any contracts of insurance, and/or any contract for the provision of any services to the Property shall upon the date hereof become rights and liabilities of the Manager.

                          SCHEDULE OF FUNCTIONS AND SERVICES

                          1. Maintain appropriate building insurance for the Property, subject to checking the terms of the Block Policy maintained by the Superior Freeholder.
                          2. Ensure that the Manager’s interest is noted on the insurance policy.

                          Service charge
                          1. Prepare an annual service charge budget, administer the service charge and prepare and distribute appropriate service charge accounts to the lessees.
                          2. [Set] Demand and collect [ground rents,] service charges (including contributions to a sinking fund), insurance premiums and any other payment due from the lessees.
                          3. Instruct solicitors to recover unpaid rents and service charges and any other monies due to the Respondent.
                          4. Place, supervise and administer contracts and check demands for payment for goods, services and equipment supplied for the benefit of the Property with the service charge budget

                          1. Prepare and submit to the Respondent and lessees an annual statement of account detailing all monies received and expended. The accounts to be certified by an external auditor, if required by the Manager.
                          2. Maintain efficient records and books of account which are open for inspection by the lessor and lessees. Upon request, produce for inspection, receipts or other evidence of expenditure.
                          3. Maintain on trust an interest bearing account/s at such bank or building society as the Manager shall from time to time decide, into which ground rent, service charge contributions and all other monies arising under the leases shall be paid.
                          4. All monies collected will be accounted for in accordance with the accounts regulations as issued by the Royal Institution for Chartered Surveyors.
                          1. Deal with routine repair and maintenance issues and instruct contractors to attend and rectify problems. Deal with all building maintenance relating to the services and structure of the Property.
                          2. The consideration of works to be carried out to the Property in the interest of good estate management and making the appropriate recommendations to the Respondent and the lessees.
                          3. The setting up of a planned maintenance programme to allow for the periodic re-decoration and repair of the exterior and interior common parts of the Property.
                          1. Fees for the above mentioned management services will be a basic fee of £3,000 +VAT. Those services to include the services set out in the Service Charge Residential Management Code published by the RICS. Any additional services will be charged as per HML’s Schedule of Charges attached hereto.
                          2. Major works carried out to the Property (where it is necessary to prepare a specification of works, obtain competitive tenders, serve relevant notices on lessees and supervising the works) will be subject to a charge of 10% of the cost. This in respect of the professional fees of an architect, surveyor, or other appropriate person in the administration of a contract for such works.
                          3. An additional charge for dealing with solicitors’ enquiries on transfer will be made on a time related basis by the outgoing lessee.
                          4. VAT to be payable on all the fees quoted above, where appropriate, at the rate prevailing on the date of invoicing.
                          5. The preparation of insurance valuations and the undertaking of other tasks which fall outside those duties described above are to be charged for a time basis.

                          Complaints procedure
                          1. The Manager shall operate a complaints procedure in accordance with or substantially similar to the requirements of the Royal Institution of Chartered Surveyors.

                          PROPERTY MANAGEMENT PLAN

                          A Management Audit is carried out by a Service Charge Chartered Accountant so that the Manager may establish the basis for future accounting and resolve any past difficulties. Such a cost is included in the proposed Year 1 Budget (attached).

                          Financial accounting, reports and records shall comply with current regulations and the Manager will prepare reports each financial year to keep the leaseholders updated with income and expenditure arrears, which can be produced by our accounting department upon demand on a quarterly basis.

                          Two separate trust accounts will be set up for Three Kings Yard, one for the Service Charges and another for the Reserve Fund allocation.

                          REQUIREMENTS TO MANAGE

                          The Manager shall stand in the place of the Respondent where any consents are required under the terms of any lease by which the flats in the Property are demised by the Respondent, including but without limitation License to Alter, Licence to Sublet, and License to Assign and shall be entitled to charge a fee for such required services in accordance with the Schedule of Charges from time to time

                          1. DIRECTIONS - "The rights and liabilities of the Respondent ............. for the provision of any services to the Property shall upon the date hereof become rights and liabilities of the Manager."
                          - Does this cover the Company obligations such as Company Secretary and Company Accounts becoming the rights of the Manager?

                          2. I have underlined point 3 of SERVICE CHARGES "Instruct solicitors to recover......any other monies due to the Respondent."
                          Would this include the allegedmoney the Directors claim is owed to company?

                          3. At the Tribunal hearing we discussed the Appointed manager would be Company Secretary but it has not been mentioned in the Schedule of Functions (oversight of Judge). If the Directors retain control of this position there will be ongoing problems. What can be done about this now?

                          4. I need to be very clear of what authority the Directors will have moving forward if any, so I am armed with the facts in preparation for the General Meeting.

                          5. Is it clear in the FTT Order whether the Appointed Manager is just in control of service charge accounts or the Company accounts as well.?

                          Thank you for your time


                            1, 3 and 5 The directions are unclear, they refer to the financial accounting and complying with regulations which could be considered to include the filing of accounts at Companies House. On the other hand, they do not deal with the Company Secretary's duties. The section to which you refer only relates to the management of the property. You can ask the manager whether or not she is responsible for filing accounts but I suggest that you seek an amendment by the FTT in order to clarify, Obviously, if the RMC is struck off, the manager will not have the rights and liabilities of the RMC. Also, it is unreasonable to allow a 3rd party to possess the power to allow the RMC to be struck off and effectively dismiss the manager.
                            2 Any other monies includes all amounts which are payable to the RMC. So the directors do not have the authority to claim any monies at all. It is for the manager to decide whether or not to seek recovery of the amounts disallowed by the FTT and if so, from whom. She may decide that the amounts were unreasonable and should be paid by the directors or offset against their loan account.
                            4 The directors appear to have no authority. it is up to the manager to ensure that she obtains all the information which she needs. You will need to apply for the appointment to be extended before the end of the term.

                            The directors do not appear to understand the meaning of the FTT order, they seem to think that if they obstruct the manager for long enough, the appointment will come to end and they will be allowed to manage again. I do not understand the failure to file accounts, if the RMC is struck off, they will cease to be directors and they will lose part of any loans which may remain payable to them. I agree that they will have taken all the funds which they hold but there must remain a shortfall representing the amount which they claim is your share of expenses. You may be able to understand their intentions better when you attend the meeting. Do you know if the manager will be attending the meeting?


                              1. I copied the Manager into the email with the S.303 Formal Notice and added that she should be included in the General Meeting. The Directors have not invited her or included her in the subsequent correspondence. She did not reply or acknowledge my email. She is no longer responding to any of my emails which is very frustrating and not a good indication of the service ahead.

                              2. Can I seek an amendment by the FTT Order to clarify in relation to the Company Secretary and the Company accounts or does the Appointed Manager need to do this?

                              3. Can you confirm if S.42A Companies Act 2006 - Service charge contributions to be held in designated account
                              is in force which, if I understand correctly allows leaseholders to inspect the trust account statements?

                              Service charge contributions to be held in designated account

                              (3)Any of the contributing tenants, or the sole contributing tenant, may by notice in writing require the payee—

                              (a)to afford him reasonable facilities for inspecting documents evidencing that subsection (1) is [F17, or regulations under subsection (2A) are,] complied with and for taking copies of or extracts from [F18them] [F18such documents], or

                              (b)to take copies of or extracts from any such documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies).

                              4. The Directors failure to file the accounts is so they can amend the Company accounts to load debt against the company so they can provide a Directors loan with a large interest rate which they will invoice me my share and not pay theirs- just as they have been doing with the service charge. They know I have no control over this as minority shareholder, they can earn themselves probably 8% interest, collect money from me and probably use a disguised renumeration scheme to lend the company money.

                              5. If you say, the FTT Order is clear on this matter and The Appointed Manger now has the authority to "Instruct solicitors to recover unpaid rents and service charges and any other monies due to the Respondent." Then hopefully this will put a spanner in their works.

                              6. They still have to pay their arrears which I suspect they have manipulated the accounts to show they are paid so there can be no mud thrown at them. I know of the Directors's book keeper and he is less than honest.

                              7. I believe they are in breach of the Trustee Act.
                              1. The Directors are claiming they do not run the trust account but won't say who does. The RMC (Landlord) is the legal payee and the legal payee is the trustee.
                              2. They are in breach of the Trustee Acts and the Companies Act if they don’t account properly for the service charge fund. So if they maintain they do not run the trust account they are guilty of a breach of the Trustee Acts and the RMC Directors can be held personally liable for the breach of trust.
                              3. S42,LTA 1987 imposes a statutory trust on the person to whom service charges are paid (trustee) and that person (Directors) will be liable for any breach of the trust.
                              4. Acting as a trustee means that service charge accounts should not be run in deficit.
                              5. It’s also a breach of trust for RMC directors or an agent to commit to expenditure if they are aware that no service charge funds are available. So when the Directors “claim” the alleged overall service charge balance is stated as -£28,081.63 and the alleged list of creditors shows £14,331.30 outstanding, surely they have breached their statutory duty.
                              6. Are you aware if the Directors could make someone else the signatory for the trust account (service charge monies), such as the bank manager or managing agent ? I am trying to work out why they keep claiming they are not signatories to a bank account of which they are the legal payee and trustee.
                              7. They are not backing down on this point and it sounds as if they are trying to catch out the Appointed Manager with one of their tactics because the Directors solicitor have claimed she is being libellous saying they run this account.
                              8. I suppose you don't need to be signatory you just need the log in details and password of the online account to be able to run it. Maybe the bank manager or the managing agent have been made signatory so the Directors can split hairs and say they are not signatories but fail to let anyone know they have access to the accounts anyway.
                              9. The previous Managing Agent confirmed they did not run this account (unless this position has change recently.)
                              10. Does it go hand in hand that the legal payee /trustee is also the signatory?
                              11. Is there a legal requirement for the trustee (RMC) to be signatory to the Trust service charge bank account.


                                1. What administration expenses would a RMC have apart from preparing and filing the Company accounts if an Appointed Manager is responsible for everything related to service charges.

                                2. I want to ensure the FTT amend the Management order so it is water tight and leaves the Directors with no power to disrupt.

                                3. If the Appointed Manager is made Company Secretary and she is responsible for preparing and filing the Company accounts and the fees for this is covered under the accountancy in her service charge budget, what other Company expenses are there? Are the Directors able to charge the shareholders for the D & O Insurance Policy ?

                                The FTT Order has already incorporated the following company expenses into the service charge.
                                Ground Rent
                                Accountancy fees
                                Bank Charges


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