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Advice & opinion

Bruce Maunder Taylor answers your leasehold questions

A matter of opinion

QUESTION: I live in a block of flats, originally sold as luxury flats, but the hall, landings and staircases are drab and sadly tired. Most of us are old, some are financially well off, some are on limited fixed incomes, some of us are agreeable and some of us are disagreeable. We had a meeting at which an interior designer put forward some good ideas (or, at least I thought so) and hoped to be given a budget and a commission. After an hour of listening to us arguing, she wished us luck, said she had changed her mind and left. A committee of five ladies (I hesitate to use that word in view of what happened afterwards) was then appointed to decide on colours, finishes, etc. I have seen better behaviour from groups of hungry animals at feeding time at the zoo.


Notice for another meeting has been sent out, there are no less than three competing proposals to be discussed and put to the vote. The 'ladies' are now doing the rounds touting for support for their own scheme and criticising the others - and they are all awful. How do other blocks deal with this sort of situation?

ANSWER: You need a chairperson who can conduct an orderly meeting. Possibly an outsider: your managing agent, solicitor or accountant? You are looking for someone who can be impartial, firm but courteous. Inviting a carefully selected interior designer to set out a scheme for a reasonable fee is a good idea. Exposing him or her to a live performance of a feeding frenzy at the local zoo is not.

Putting forward three ideas for a vote is not a good idea but putting forward one scheme at a lessees' meeting is. It is either passed or rejected. If passed, people accept it; if rejected, reasons are given and the designer has a

Flat shares may not be acceptable to insurers and can throw up other problems for freeholders

much better basis for the next scheme put forward for approval. When the next “lady” touts your support for her scheme, you might ask her if she has thought of the possibility of her actions developing a “them and us” culture in the block. Many lessees might vote in favour of each scheme they do not actively dislike (and possibly all three) on the grounds that they do not want any one of the “ladies” to be offended by negative votes for a scheme which is acceptable, even if it does not win. What would she suggest should happen then?

Directors under threat

QUESTION: At a recent AGM of our management company, a small group of lessees threatened to bring personal proceedings against the directors of the RMC. Fortunately, we are covered by directors and officers insurance and we believe that the threat is no more than a tactical effort to try to change what the vast majority of lessees consider to be reasonable and sensible management policies. Do you have any advice?

I recently came across a summary of claims which have been made under D & O policies in order to illustrate the sort of claims that are sometimes made and the outcome. These include a case whereby two directors were sued for libel by a former director. Despite the case being dropped following mediation, more than £35,000 of legal costs were incurred under the D&O policy. In a different situation altogether, RMC directors were fined by Companies House for failing to file company accounts on time. The D&O policy funded their legal costs in defending the action.

In a third case, a resident sued RMC directors for devaluation of their flat following the failure to identify and rectify external dilapidation. The legal costs in this instance exceeded £13,000.

Most resident management companies in my experience work well and most directors do act with common sense and pay proper attention to their responsibilities, but there are a minority of blocks in which one or a majority of the directors do not act in that manner. Likewise, my experience is that the vast majority of lessees do not wish nor intend to take legal action against their directors who are usually unpaid and put a great deal of personal time and effort into the responsibilities they take on.

However, there are occasions when the directors come under personal attack, however rare that might be and in my opinion, this is precisely why D & O insurance is essential.

Bruce Maunder Taylor is a chartered surveyor and member of ARMA's Council If you have a question for Bruce, contact him at: 26

Issue 20

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