Remove a Company member

[Freehold Director]

Freehold Company Ltd by guarantee with no share issue

As we have three members of our Company who will not pay any service charges,contractual monies and our management charge ,even though told to by the
FTT tribunal.Can we remove them from the Company.They continually cause us problems and great unrecoverable costs.

This is in our Articles of Association.
if the behavior of any member shall be contrary to the interest of the Association, the Board shall be entitled to dismiss such member from the Association.

The Directors and the other members find their behavior really unbecoming as they state that they want to bankrupt the Company.
They are forcing the Company to take them to the county court for payment of Contractual debt owed and service charges owed under FTT ruling.
They want their friend who is a management Agent to run our flats he is a ARMA reg Agent .He openly told us that if he told them to pay they would.
Our understanding is that as we do not have shares none of us own the Freehold its the Company that does,so the Directors can remove them from the Company membership under that resolution.

I would like a good legal answer not one of what would be moral the right thing to do.

[bbva]

We used a no win no fee solicitor company to recuperate service charges. The flats have to have a mortgage. The mortgage company paid off the debt as well as the solicitors fees.

[leaseholdanswers]

We used a no win no fee solicitor company to recuperate service charges. The flats have to have a mortgage. The mortgage company paid off the debt as well as the solicitors fees.

Recuperate service charges, well that a new one on me!

BBVA is right, with the FTT determination its a simple letter before action, no need to mediate in this case, failing which you will ask the County Court to forfeit the lease. Armed with a determination, most mortgagees will cough up after a letter from the company advising them of the intended action. Mortgagees can be identified on an HMLR online search

Even if you just use claim on money online for a money judgement the fees are not staggering

Claim amount Sending form to court centre Using Money Claim Online
Up to £300 £35 £25
£300.01 to £500 £50 £35
£500.01 to £1,000 £70 £60
£1,000.01 to £1,500 £80 £70
£1,500.01 to £3,000 £95 £80
£3,000.01 to £5,000 £120 £100

If they prefer an agent perhaps you should think of why there is this lack of trust, not simply we want our mate in.

[Freehold Director]

Please read question about removing member.As to why they want Agent ,personal dispute between freeriders and BOD 23 out of 26 100% happy.

[Gordon999]

You need to put a proposal before the Board of Directors to

(a) to consider and if appropriate to dismiss A,B & C from membership of the association due to non-payment of service charges as the Board is entitled under the Articles of association

( b) to instruct a solicitor to recover the service charge arrears. ( use google search for "solicitor for service charge arrears" )

You need to have the minutes of meeting to record the Boards decisions and circulated.

[leaseholdanswers]

Please read question about removing member.As to why they want Agent ,personal dispute between freeriders and BOD 23 out of 26 100% happy.

I did and you have answered it is up to the Articles to give them notice and remove them. I would however caution you to think about acting on a personal dispute in a corporate way.

It is I suggest far better to accept and acknowledge to them that while they are legally entitled to dispute matters in a lawful manner the intention to bankrupt the company or to use the costs and implications of county court recovery action as a tool to engineer that bankruptcy or the appointment of an external agent is behaviour that is etc etc.

it is incumbent on you to offer them the chance to respond to these statements and on that as well as any issues they have to present them to the board and the board will arrange mediation to attempt to resolve those issues

Notwithstanding that the Board then reserves the right to remove members whose behaviour etc etc,

In that way if they in future do it again or seek to overturn such a removal in the court, having taken an objective approach is going to put you in good stead with the Court especially if they fail to respond or act.

As long as your invoices are correct, then bill em warn em and sue em they soon get the message. A CCJ is not a nice thing to have.

[leaseholdanswers]

I ran out of time to add that you must bear in mind both slander an libel as even if you can provide proof the cost of defending an action brought about by a vindictive leaseholder, using no doubt a “blame direct” firm no win no fee can be ruinous for the company.

Sensible companies like your will no doubt have added legal indemnity insurance to their buildings policies for a small premium which can assist in such cases rather than pay, as I recommend, having lawyer draft a letter on this matter for you.

[Freehold Director]

Hi Leaseholdanswers,and Gorden999
Thanks to both of you for your most valid answers.
After giving them the statement that you suggest
I was going to give them two weeks notice of Board meeting ask them to attend and explain their conduct ,and then we decide whether to dismiss.

On the point of court action the case will not only include the FTT tribunal ruling,
They owe ground rent, a fixed charge that is included in the lease which is out of the ruling of the FTT. The Insurance provision in the lease is their responsibility to insure and if they do not the landlord has to and claim back from them by action ( contractual debt) This again was not in the FTT ruling as not their jurisdiction. Also interest as per lease outstanding since invoices issued. We then have 2013 service charges that we are going to ask the Court to make decision on .I know that there is a chance the judge would transfer to FTT, but I will state that year 2013 was in the Freeriders application to the FTT for unreasonable costs but the FTT refused to deal with it and said come back next year.
As the freeriders have refused to pay the last ruling it would be a waste of time going to FTT because we would only have to go back to CC to get the money.(they actually admitted that all costs were reasonable at the hearing and 2013 costs were the same as 2012).
We ask the judge and see what he says.

Now my question. When I serve the court papers and say that we require breach of lease so we can proceed with s146 notice ( to get our costs ). Is it alright to do that even though as yet we have not engaged solicitor as it is not cost effective and they might settle before Judgement day.
Just for the record the FTT stated what a lovely well maintained property we have and told the freeriders to sort it out.
Sorry for the long post

[leaseholdanswers]

No if you seek forfeiture you are better to take that to the FTT and get a determination and then enforce that at the CC if they do not pay. I would do that for the 2013 actual costs and perhaps add a determination for 2014 as reasonable in advance estimated costs( assuming lease bills in advance)

If ground rent is due then just sue them there is no defence, as long as the bills are right and contain the s166 notice and s47/48 information. Add in insurance costs.

I'd leave the dismissal issue its a bit of alandmine but a CCJ might cow them into submission. Follow the CPR on the letter before action and then money claim.

[Gordon999]

Have you contacted the online solicitors firm which offer recovery service for ground rent and service charge arrears ? They may do all the work at no cost to you. I cannot give out the name the firm in this forum and I have no connection with the firm.

Regarding the 2013 service charges , you have six months from end of service charge year to produce audited accounts ( certified by qualified accountant) and this will confirm the correct amount of 2013 service charge owed by the delinquent leaseholders.

[leaseholdanswers]

Regarding the 2013 service charges , you have six months from end of service charge year to produce audited accounts ( certified by qualified accountant) .

Once again I will explain that that is incorrect. Though the 1985 Act has been amended to make that a requirement it is
1 not yet in force as no commencement order has been issued
2 the government have stated that they will not do so in this parliament