Yoga studio closing down and won’t refund my membership

Yogasana

Hi there, I was hoping to kindly ask advice on a sticky situation I’m in.

I regularly practice yoga at a local studio, I go to class several times a week and the most cost-effective way for me to continue to do this was to dip into my savings, purchase an annual membership and pay this back into my savings on a monthly basis. I purchased the membership 5 weeks ago at a cost of £1,100. Then, roughly a week and a half ago the studio announced they would be closing due to the landlord terminating their lease. The owner asked me for my bank details to refund my membership, but to keep this quiet as they would not be able to refund anyone else with other kinds of membership/class packs and were only doing so with me because I had the annual pass. Fast forward to this Friday just gone, and I receive a payment of £650, meaning they have kept £450 of my money. I’ve emailed the owner but he is ignoring me. I obviously don’t expect the full £1,100 back when I’ve had 5 weeks use out of the pass, but I would expect a pro-rata’d sum.

This is causing me so much anxiety, I am unclear on my rights and how to get him to pay what I am owed and would greatly value any advice please!

thanks so much!

jon81uk

How much would the use you had cost if you had a monthly or weekly pass?

tightauldgit

Is the yoga studio a limited company and are they closing the business entirely? If so then you'll probably find that it's very difficult to recover very much from them. 

I would agree in general you'd be looking for a pro-rata refund and maybe less a little for admin - what do the terms of your membership say about cancellation by the studio? 

The issue is that if it's an issue of the company liquidating then it becomes a lot more complicated to recover anything due.

Yogasana

Thank you for the advice! The cost of a rolling monthly membership is £106 per month.

it is a limited company, but run under the owners name rather than the studio. I can see this is still active on companies house, so presumably he is keeping his company active but closing the studio. The terms are very light, and it says I have the right to cancel within three months, but nothing about if the studio cancels my membership.

the_lunatic_is_in_my_head

Yogasana said:

This is causing me so much anxiety, I am unclear on my rights and how to get him to pay what I am owed and would greatly value any advice please!

Hello OP

Generally the only option is letter before action and small claims.

As above if the business is folding completely then this becomes difficult, if they are a LTD then they'll likely fold and there will be no one to claim against.

If the owner was a sole trader or such then they have personal liability. 

I would expect a refund of around £994 based on 5 weeks use out of 52 but you can work it out to the day from when you took the membership out up until the last day the facilities are actually available to you by diving £1100 by 365 and times by the number of days you aren't able to access the service minus the £650 already refunded.  

Do you have any paperwork that shows who the actual company is that owns the business? 

Jonboy_1984

Yogasana said:

Thank you for the advice! The cost of a rolling monthly membership is £106 per month.

it is a limited company, but run under the owners name rather than the studio. I can see this is still active on companies house, so presumably he is keeping his company active but closing the studio. The terms are very light, and it says I have the right to cancel within three months, but nothing about if the studio cancels my membership.

Companies house will lag behind reality, especially if they try to Spongebob it (announce no assets, resign as directors and await a creditor spending money on winding it up), or otherwise walk away. 

Yogasana

Thank you everyone, really appreciate the advice.

The business is trading under the director’s name as a limited company. I bought the membership in person at the studio and the email receipt links to very basic T&Cs but it does state that it’s trading under his name in a limited company.

I guess next step is a letter then small claims and see what happens.

the_lunatic_is_in_my_head

Yogasana said:

Thank you everyone, really appreciate the advice.

The business is trading under the director’s name as a limited company. I bought the membership in person at the studio and the email receipt links to very basic T&Cs but it does state that it’s trading under his name in a limited company.

I guess next step is a letter then small claims and see what happens.

Sorry missed you said it was an LTD earlier.

Certainly worth sending the letter as a bluff, there are templates on Google or there are online firms that will send a more professional looking one for a small cost. 

Given it's a relatively small amount of around £300 I would suggest IMHO not adding to the stress as the small claims process will be a headache with little chance of success sadly*  

*Unless they plan to set up elsewhere but with more customers not getting refunds it's very possible a new set up would come with a new LTD. 

inspectorperez

From the limited information available, I would say that it is worth joining in the sole director with the limited company in any action for recovery and pursue his personal assets.

Assuming the landlord terminated the lease in accordance with its terms, that would suggest only a very short period of notice required. If that is the case, there is absolutely no way the company should have been offering 5 year membership deals.

It would also seem very likely that the director was well aware of the possibility of the lease being terminated for whatever reason when your membership fee was accepted. There is no way that your fee should have been accepted under such circumstances.

This may all add up to fraudulent trading and perhaps trading standards should be consulted.

born_again

Yogasana said:

Thank you everyone, really appreciate the advice.

The business is trading under the director’s name as a limited company. I bought the membership in person at the studio and the email receipt links to very basic T&Cs but it does state that it’s trading under his name in a limited company.

I guess next step is a letter then small claims and see what happens.

How did you pay?

sheramber

inspectorperez said:

From the limited information available, I would say that it is worth joining in the sole director with the limited company in any action for recovery and pursue his personal assets.

Assuming the landlord terminated the lease in accordance with its terms, that would suggest only a very short period of notice required. If that is the case, there is absolutely no way the company should have been offering 5 year membership deals.

It would also seem very likely that the director was well aware of the possibility of the lease being terminated for whatever reason when your membership fee was accepted. There is no way that your fee should have been accepted under such circumstances.

This may all add up to fraudulent trading and perhaps trading standards should be consulted.

where does it say 5 year memberships?