Service fee dispute and invalid directors?

Service fee dispute and invalid directors?

0:01 AM, 5th July 2024, About 2 weeks ago 2

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Hi, I am seeking clarification on a situation in which I am a member and leaseholder of a share of freehold along with four other properties owners who are also members. It is a limited company by guarantee.

There has been an ongoing dispute regarding the service fees for the past 14 years. Recently, following an investigation by the council, it was discovered that there was a deliberate breach in planning by the developer and previous freeholder.

The service fees, which were initially represented to be based on the size of the property, and the previous freeholder has made a written witness statement and admission of the truth actually being equal splits for the service fees.

When I initially raised this issue during the company’s establishment, the company agreed to change my service fee but failed to update the leases. Recently, several conflicts of interest have come to light.

Notably, the chair of the company built an extension on land owned by the freehold without obtaining proper consent or a licence. Additionally, the company secretary was one of the individuals who purchased a property without planning permission and was obstructive to the lease changes.

Given these discoveries and the resetting limitation law, I initiated legal proceedings last year to amend my lease to match the terms of those created after mine. My lease includes a clause allowing me to request changes if subsequent leases contain different terms.

During the legal proceedings, it was revealed that the directors of the company are invalid, as stated in the articles of association, and the member register has been tampered with.

Our company articles clearly states:

– company articles – section  7. The privileges of a member shall not be transferred

–  company articles – section 40 (f) A Director shall vacate his position if that Director:-

– fails to become a member of the Company within one month of his appointment or ceases thereafter
to be a member.

Furthermore, the current company secretary, who claims to be a director, was appointed as an alternate director in January 2024 by one of the invalid directors.

This director cannot hold the position as she is not eligible to be a member, having not purchased a property. According to company articles, section 40(f), a director must vacate their position if they fail to become a member within one month of their appointment or cease to be a member thereafter.

Two months after the appointment of the invalid directors, the AGM minutes do not list these directors as members, though the correct members are still recorded as such in the minutes. However, they no longer appear in the member register.

The current secretary claims to hold both positions of secretary and director but has not filed his appointment with Companies House since January 2024, seemingly to obscure his actions and is not a member.

Despite their invalid status as directors under the articles, they appointed a lawyer to represent the company against my claims. This action is inappropriate as they are not eligible directors according to the company’s articles. They engaged a lawyer without valid authority to do so.

Since I worked this out the lawyer has been silent.

The lawyer representing the company is, in fact, not representing the company, but rather the directors who should not hold their positions. But they still think they are valid and the lawyer still claims to be the company lawyer but clearly this is to to cause deceit!

They have concealed their control over the company and violated my legal rights. Despite my attempts to contact the lawyer, they have not responded.

However, I am determined to exercise my contractual legal rights and change my lease accordingly. The clause in my lease allows me to do so. It is concerning that the company is now being controlled by unauthorised directors, and the insolvency services seem to have turned a blind eye to the situation.

I would greatly appreciate any suggestions or assistance, apart from pursuing a FTT hearing. It is quite distressing for me, as someone living with severe PTSD and high-functioning Asperger’s syndrome, and this matter is causing significant stress.

Any help would be most welcome.



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Paddy O'Dawes

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11:06 AM, 5th July 2024, About 2 weeks ago

Sounds complex. The lawyer will be operating from a position of good faith, as in no reason to disbelieve that they are not being retained by the company. If what you say is true and they are ineligible or disqualified from being directors then your lawyer should have already pointed this out to their counterpart. Again if this is correct then the individuals cannot instruct on behalf of the company and that should make your complaint easily actionable. Have you put all this to your lawyer and obtained advice?

Judith Wordsworth

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10:35 AM, 6th July 2024, About 2 weeks ago

You need to consult a lawyer with expertise in Company Law.

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