Our Board is dominated by one Director

QUESTION: Our block is owned by the lessees.  Our Board of Directors is dominated by one person.  A few years ago she was really great at getting things done but, if one of the other Directors disagreed, it was her way or no way.  It’s now her and two poodles, we only ever get the basic statutory consultation, we haven’t had an AGM for two years, and if anyone challenges her, the managing agent contacts the complainant for an appointment to inspect their flat to see if there is any disrepair, unauthorised alterations and who is living there. It’s now like living in a Big Brother society.  What can we do?

ANSWER  In the lessee-controlled management of any block, the Directors have great power. Who and how many you appoint are matters of great importance and consequence.  The performance of their function will have far-reaching consequences on your living conditions and the value of your investment.  Be in no doubt about that.  Most Boards of Directors are unpaid lessees who put in a lot of time and effort, frequently with little thanks and a fair bit of occasional grief.  It is a position of considerable responsibility.  Most Boards work well and deliver the goods although  a few have problems from apathy and failure to take action.

Sometimes Directors have to be firm with finding and supporting the majority view and an alternative minority view is rejected.  When the majority view conflicts with the lease, the law or the RICS Code, the Directors (who are statutorily required to act in the best interests of the Company) have a very difficult problem.  Dealing with the problem of those who cannot afford to pay is a major issue.  It is not difficult to find words like dominated, control freak, etc. being used, sometimes justifiably, sometimes not.  The best key to unlock these problems is the majority view, but even that can be abused at AGMs with proxy voting or disallowed votes: it happens.  If you have a means of contacting the lessees (not always possible when you don’t know who they are), then do so and find out if there are enough of you who are willing to speak out collectively.  It is very disappointing when a group of lessees find that the dialogue which ought to exist between Directors and lessees is so absent that they feel they have to provoke what ought to be an unnecessary FTT application or go on service charge strike.  If matters are so bad that even those sorts of tactics do not work, an application can be made for the appointment of a Manager by Order of the FTT for a short period, say two years, while the company sorts out its problems and reconstitutes its Boards of Directors, or, when a company has been struck off the Register and no longer exists, while the lessees get the company reconstituted or replaced.  An FTT Order is a desperate, last resort process, but there are a few cases in which it has happened, and a few others where it has been threatened in order to break down an otherwise impenetrable dialogue barrier.

Bruce Maunder-Taylor - Chartered Surveyor and member of ARMA's council