My right of reply and misuse of data.

solidpro

Hi Everyone

I live in a development of 52 leasehold homes. We each share 1/52 of the landlord company (Ltd). There is only 1 director currently and the legal secretary/managing agent resigned on the 16th after a huge falling out with about 10 of the people who lived here, including me.

At no point did I ever write or say anything personal about her. I never contacted her directly, always copying in the director. No direct whatsapps or anything.

Anyway, she resigned on the 16th as legal secretary and thats where the trouble started.

On 16th, she emailed me and CC'd 3 of my neighbours saying things like "You are pathetic, you are a child" to me. She ended the email saying she was going to share some of my queries with specific neighbours (who then emailed me 2 hours later asking me what it was all about, essentially proving the threat to share my private messages was carried out).

17th, day after resignation, emailed me and the company director with more of the same. Just a load of cheap words and rubbish, trying to get stuff off her chest and deflect responsibility.

On 23rd she BCC'd every single person in our development with some sprawling, unnnecessary (she resigns to the company, not all us tenants) resignation letter saying she resigned on the 16th and it's all my fault. Reeled off a load of nonsense about me being the cause of her resigning.

I have complained to the director / landlord on a number of occasions and just been ignored. I've asked how they protect our privacy, how they are dealing with this woman sending messages to all my friends (neighbours) about how awful I am and he is ignoring me.

What do I do? Do I have any right of reply? 

It's basically me against the landlord - a private limited company who are just silent. Do they have a duty to protect us as tenants/neighbours? Can I do anything? My name has been dragged through the mud now as a distraction from an oddball managing agent/legal secretary who was being called out for months by about 10 of us for not doing her job properly.

solidpro

I own two properies in a development of 52. Each property own's 1/52nd of the leasehold, so I own about 4%. I was also a director (1 of 5).

In late November, one director and the managing agent were starting to be very obstructive, wouldn't allow a vote for a chairperson, wouldn't allow voting for decision making, kept vitoing decisions. If any of us asked for visibility to the company bank account, we were shut down and told we were being 'confrontational'. You get the idea. Yes I realise that's not legal for one director to put us in this situation but it happened because two people retired (old chairman and old managing agent) who had essentially set us up to fail, we had got into a bad place and 3 of the 5 were trying to fix it (one was absent due to personal reasons).

In additon our new managing agent turned out to be pretty useless, volatile, divsive, etc. A one-woman band, shoehorned in by the retiring managing agent. No qualifications, not other blocks being managed, doesn't have a company, doesn't have PI or PL insurance, nor understand what they are. No accredditation and sole access to the company bank account which holds over £200k. There is zero oversight on the account, and no limits on how much she can transfer, who to or what device to unilaterally do it on. They don't have a contract and could not provide them. Worst of all they have found to be telling many untruths. When asked why there is no contract, she says she gave one to the board which was ignored - completely false. When asked if she manages other developments, one day will respond 'many' and the next 'none', depending on what answer is most helpful to her at the time.

Anyway, 4 directors resigned, hoping this would cause an AGM so all shareholders could appoint a new board who could get on with resolving all the issues. Unfortunately the remaining director refused to resign and is in cahoots with the managing agent. I would say about 50% of the shareholders who are aware of the situation find this both distressing and unhelpful. The company is not functioning, our insurances may be voided due to this and it's a massive mess.

Anyway, the remaining director has now called an SGM with one topic on the agenda - to appoint his mate in the flat below and then appoint him as chairman. They called it as a virtual meeting on the 22nd december at 7.30pm. Note this development is two large blocks, consisiting of mainly 3 & 4 bedroom houses. These two guys live in tiny corner flats and are not representative of the shareholders whatsoever. The mate below who is being appointed has quit twice from the board after getting into bitter aguments with other shareholders.

Both the director and managing agent are either ignoring all shareholder emails, or responding in the most ineffective way to simply stall or delay.

Having read the M & A of A several times, it's missing a lot, such as timeframes, and is worded very briefly, which these three people are using to hide behind.

What can any of us legally do? We want a proper meeting. We want to discuss and ask questions. Many of us want to dismiss the managing agent.

Is there something which is statutory in the 2006 Companies Act which can help us in this situation get a light shone on the situation? How can we force these people hiding behind emails and a one-topic zoom meeting where no shareholder is allowed to speak?

I suspect we need actual real legal advice but wouldn't know where to start... Help!

Section62

A 'motion of no confidence' is a common way to bring situations like this to a head... does the legal structure allow the shareholders to call a SGM and table a no confidence motion?

Edit: Also, are virtual meetings permitted and what are the rules on any meeting being quorate?

solidpro

That's it, I'm not a lawyer or companies house professional.... apparently none of us are! All it says in the M&AofA is that the directors may be no less than 2 and if it is, either the remaining director or the managing agent must call an SGM and get 1 or 2 appointed. There has never been less than 5, but seems we're being steamrollered into the one remaining director appointing his mate, making him chairman and doing whatever they like. 

How would one, using the Companies House rules about a ltd company (which the landlord is) shareholders forcing something - anything? 

Virtual GMs were held twice only during lockdown. All 22 AGMs before and the 3 after lockdown are all held in one of our communal areas.

Really just looking for something which legally our Ltd company must abide by to stop this awful 'SGM' happening with one thing on the agenda and get everyone to actually face up to their shareholders. Something in the Companies Act???

brianposter

Look at the documents which have been filed on the Companies house website ?

gm0

You need to look at your articles.  The annex attached to the CH documents upon formation of the company.  You may have these from conveyancing.  They should be available at CH (but I am unclear if this is universally true). Age of company and whether uploaded and updated (if changed) could clearly affect availability.

And use them - properly.  To either "remove" the director and/or force an election of a new set in full.   Or mandate some specific action or actions via resolutions.

Pass a motion of shareholders at a company formal meeting to direct the "directors" to a particular action.  

If the current director doesn't follow said rules of incorporation - won't allow a formal and properly submitted motion *then* you have the start of a legal case to take legal action against the company for failing to do that.  Before that you don't.

But it they are cunning and obstructive. It is of course easy to hold a meeting whose agenda you control, to not finish all items,  not get to AOB.  Decide when it is inquorate.  Decide to put things to a broader vote (but then not follow up meanwhile to organise it as the action is with the director to proceed with organising said vote of all SOF owners), to decide who speaks on Zoom - mass muting.  And so talk out or defeat a or delay a resolution - you don't like - but not do anything so outrageous that you create a real legal claim opportunity that is solid.  Or they can wait until just before the meeting to "detect" a subjective breach of protocol with submitted papers and then disallow it and push it off the agenda.  That argument may fail later but the resolution is gone for another cycle.  Lots of delaying tactics are available to a director holding the AGM to subvert a rebellion.  And other voters may get bored or not pay attention.   There should be a requirement to hold AGMs in the articles - there usually is.

People often have expansive views of what is required legally.    The actual requirements have a specific form and are quite skeletal.  A lot of what goes on with SOF and resident as shareholder and lessee meetings on top is "custom and practice".  The only real anchoring document with legal recourse - is the articles hanging off the law on Ltds.

So read your rulebook carefully.  And think about the objective.  Is it "more directors" and a breadth of opinions in the room.  Or is it the removal of this individual - and keeping them unelected in future.   What will enjoy broad support.  How do you hassle them sufficiently.  Direct them to deappoint the agent.  Direct them to make no further decisions without an SGM issue by issue until x directors are in place.  Direct them to hold an open election.  To circumstances.

In my experience more people are unhappy with how things are run - than are willing to step up and make an effort and take part in running it.  Passenger directors with a dominant personality and cliques are not uncommon.  And if there is a little Napoleon around - it scarcely makes the role more appealing.  Dealing with JohnDoe and listening to people whinge about JohnDoe but not engage with him or speak up when the time comes (avoid direct confrontation). Great.

There are tradeoffs with agents.  Cheap, small, local - can store up trouble with poor record keeping and accounts and informality, lack of modern working practices and technology.  But cheap vs corporate equivalent. Size for size.  A "proper" professional agent may be more expensive.   To a few hundred per lease per year.  Delta less of an issue with 52 than with fewer.  We have just been through this cycle from small agent (and records decay) to a better one. But I have no doubt the agent fee will go up in subsequent years to market price for what we now get. There will be a reason related to site effort level why this happens.  And our directors have got rid of the equivalent of your poor agent. Successfully.  Without a leasehodler rebellion about the agent fixed fee.  Yet the now corporate bill will become due over the life of the agent contract.  It is a kind of legerdemain.  You get what you wish for.  In our case a vocal minority (who attend meetings) got fed up with the prior cheap but not very cheerful solution. And want it run properly for a bit.

The leases in general are not helpful here - unless there is an evidenced breach of it in terms of the responsibilities of the freehold company not being met - in which case you have a case as lessee against the freeholder (the SOF company - but not the current director personally).  You have no direct relationship with the agent to call upon.

If you cannot get the other voters to turn out and vote for a motion. i.e. the current director "wins" at the meeting via argument or apathy.  Then you are no further forward.  And have limited recourse.   If they are smart - this is what they will aim for.  

In the first instance you need democratic support for defeating this too convenient director election.  You therefore need alternative directors willing to stand instead or alongside and to serve.  Or you have nothing.

All you can do is continue to be as big a nuisance as you can according to the articles.  Putting things to a vote (if there is a clause for shareholders to do that) i.e. making director discretion smaller.  Insisting every decision goest ot a vote of 52 (if your articles allow one or two (or a few) of you to force that.  The director will of course maximise what they do silently with discretion and minimise disclosure and meetings to make this hard for you. If dug in.  

You may have to waste some money on legal help to get this stuff right as paperwork.  

As going to court claiming they have broken the rules - but your proposals were not properly done. Won't succeed.   And the court objective is also something to consider carefully.  If you have suffered losses - they may be reclaimable against the company.  The court isn't going to want to intervene in the governance of the company nor opine on agent service levels or efficiency.  And slinging words like fraud around doesn''t make it so, nor is it evidence it for getting anyone interested in criminal or successful private prosecution.

Be prepared if you sue the SOF company that the "director" takes legal advice and pays for it from the assets of the company.  As they should.  And follows the direction of their PI insurer.  As they should.  It is the company being sued. 

Even if this is not rechargeable as service charge (which sometimes it is) to leaseholders.  It is still coming from the community SOF company pot.  The company being skint and unable to function without raising the charge and refloating working capital - is the same 52 in the end.

The real leverage is persistance (and community support) to make it more difficult to carry on running it the way they are - than not.  There is no low effort solution with legs and teeth.  It is quite likely (according to their own view of priorities) they think they are doing a great job. And you are all ungrateful swine.    Getting them angry enough to flounce and full reboot with them as the angry outsider now chucking process rocks is the best you can hope for.

brianposter

In the meantime, set up a Whatsapp group of interested leaseholders.

ReadySteadyPop

Sell the flats, let someone else deal with it.

solidpro

Thank you for the extensive reply. I'm going to re-read it several times, but it does almost exactly lay out our concerns as to how the process, the proposed meeting is being manipulated and the difficulties of a problematic managing agent.

A few things have happened since yesterday including the fact we have contacted a barrister at a decent london property law firm and have a 90 minute consulation setup tomorrow to establish costs and what they can do to help.

The single director being proposed had, a month earlier said in conversation 3 things which had raised concerns. This was just a few days before the board of directors all resigned but one. He said that he feared for his life due to threats from a neighbour, that he would never go back on the board of directors and that he is still carefully considering litigation for the neighbour in dispute. I legitimately sent an enquiry (9th December) to the remaining board member and our Managing agent querying their suitability based on this detail spoken to me and 2 other shareholders. They did not reply but yesterday, the MA lost her temper, called me a bunch of names and ended the email saying they were going to forward my query onto the shareholder concerned. As a sole trader/partnership this is a direct breach of GDPR. I did not reply to the name calling but I did raise this as a complaint to both the MA and Director today and the MA simply responded with more name calling.

As far as I know, sharing my private emails to the managing agent and board with 3rd parties, including other shareholders is a breach on several points and especially because I have complained aren't the duty bound to report it to the ICO within 72 hours?

Quite frankly the unusual responses are unsettling as a company owner myself for over 20 years, I'm well aware of the distinct line between being professional and being personal. I shall keep updating.

solidpro

We just noticed the Managing Agent resigned as legal secretary yesterday. Still yet to decipher how this changes things - the power of the remaining director, his ability to hold a legal meeting, whether he will even do it, or what power this gives to shareholders to take control of the situation. We'll try and discover more tomorrow.

solidpro

I believe:

1. The remaining director is outright ignoring motions being requested by shareholders,
2. Ignoring shareholder requests to nominate directors
3. Sharing private information with 3rd parties, including one or more shareholders to use specifically against shareholders
4. Ignoring GDPR complaints regarding sharing private correspondence.

16% of the shareholders so far understand this to be the case. Hopefully this will all come to a head soon.