Ex-Management Company withholding documents and funds

[AAAAAAAZ]

Please somebody help as I'm tearing my hair out.

 

I'm one of 12 property owners in a small private freehold development who collectively employed a management company to look after the running of the communal aspects of our development. This worked for a few years, but then turned sour when they doubled their fees. So collectively we owners and the management company both agreed to end the contract, and the company agreed to return around £1200 of disputed fees, plus any money left sitting in the 'kitty' (not sure how much as they hold this data), plus handover all of the documents/accounts/statements etc so that we could self manage.

 

It's now 6 months since the contrat ended and we're still waiting for the money, accounts, statements, etc, despite monthly calls, emails etc. They just keep saying it's being processed and will be 'soon'.

 

I'm not sure how to proceed. I can't really send an LBA for the money as I don't know the exact figure they owe us (as they hold all the records of who paid in what and how much was in the 'kitty'). Also, because the contract was terminated I'm not sure how to enforce the handing over the documents/accounts/statements etc they hold that we need.

 

Any advice appreciated. Thanks.

[BankFodder]

Well clearly there was a fiduciary relationship here and I think that you are probably looking at the possibility of an action for Account of Profits – which is an action which you would have to start under part eight of the County Court procedure rules. You need to be aware that this means that it wouldn't fall into the small claims costs rules and that if you lost the case – which seems to be unlikely – then you would have to do pay your own costs and the other side's costs.
However, more troubling is that there is a possibility that the management company could go into liquidation in order to avoid various liabilities.

Is this a well established management company? Have they got lots of clients? Have they been around for a long time? I suppose it is probably unwise to put their name up here on this thread at the moment – but maybe you could send me details of them in confidence to our admin email address and we might be able to find some background information which could be helpful.

You say that you are one of 12 property owners. Are you all private individuals or are you part of a company? I have to say that it would probably be helpful if you were in a company because it would be easier for one entity to commence an action against this management company rather than having to try to coordinate 12 individual actions.

There are other strategies that come to mind – but one would need to be concerned about overwhelming the management company so that they decided simply to evaporate and leave you with very little – and maybe even having difficulty getting hold of the documents that you require.

 

[BankFodder]

Also - read this

Group Litigation Orders

[AAAAAAAZ]

Thanks for the info BankFodder.

 

The company is large and well established, they wouldn't dissappear over a few thousand pounds. Likewise, their size comes with a level of chaos and disregard for customer service. Eg it took months to dispute and disolve the contract as their staff turnover is so high we would be dealing with a new manager each month who didn't really care about sorting it out. And all the time they kept bulldozing us with more spurious charges and wouldn't answer straight when we questioned them, in the hope we'd just pay them. It was exhausting, which I think is a tactic they use a lot to just do what they want as most people just give up and pay up.

 

The 12 of us are shareholders of a company yes, but it's just a shelf company to facilitate management of our development, so we have next to zero assets other than what is being withheld (if anything) by the management company.

 

I have to say I feel nervous of the cost risk of County Court action. They are big enough to drag it out until it just 'goes away'.

[BankFodder]

Okay. You have to understand that I'm feeling my way here – but your company arrangement sounds very convenient in the circumstances. What happens to the company that has to go into liquidation? Presumably it doesn't own the flats so nobody loses anything. Presumably the contract with the management company is with your own company comprised of the flat owners as shareholders.

On that basis your company could happily get involved in litigation with the management company – and lose and simply wind itself up and leave the management company empty-handed. Obviously the litigation would have to be funded but it could be funded by way of loans by the individual flat owners to the company which could then be repaid if you litigation succeeded.

You keep down your own costs by doing the litigation yourselves – and between 12 you there must be at least a couple of people who have the confidence and the energy to conduct litigation on behalf of the others. I'm assuming that you are all of one mind on this.

Individually, the management company must be carrying some details about you and I think I would start off harrying them a bit by getting each individual flat owner to send them an SAR and see what happens. Apart from anything else, you might find that there is some interesting material revealed – or you might find that there is material which should be there which isn't – and that itself could be interesting. Of course the management company might not respond within the 30 day SAR. – In which case they are in breach of their statutory duty and that would give you an immediate right of action which would be simple and would fire a warning shot.

I suppose I'm thinking of guerrilla tactics here and I think the best thing to do is to try and conduct short sharp campaigns – but also I think eventually you will need to go for an account of profits. When I say "eventually" I mean in short order. If you were instructing solicitors then you would find that there would be a protracted exchange of correspondence which could take anything up to 6 months or more. I don't think you need to hang around like this. As you would be acting on your own behalf, I would expect that you would enter into a ten-day correspondence and then a 14 day letter of action and then issue the papers.

I think that they would be rather taken aback at the speed at which you are acting. It's the management company based far away from you?