The managing company in charge of the block I live in recently appointed 4 resident directors. One of the first things they did was to introduce a “no pets” ban over the whole site. Unfortunately neither they, nor the management company, consulted the lease which says that pets are allowed with permission.
A couple of months ago we put our property on the market and received an offer from a couple with a dog. Initially we thought that a pet was not allowed until we checked the lease and also discovered the OFT ruling regarding blanket ban on pets. Having contacted the management company we received permission in writing that the dog was acceptable, solicitors informed and we start selling process.
Shortly after we had word from our solicitor that the permission had been revoked citing that the dog was not old or infirm, no mention of this “clause” beforehand. This retraction came about after the management company were contacted by the director in question without consultation with the other three.
Since that time we have had a continual battle with the company and one particular director who seems to be hell bent on getting the permission denied. There was total apathy amongst the owners for the last AGM and appointment of directors so any volunteer was accepted.
My main question is how do we deal with a director who has his own agenda but has sufficient friends in the block to counter a vote of no confidence?
Advice from Ian Hollins, Clear Building Management
Sadly, it’s not uncommon to hear of leaseholders being on the receiving end of, at best, an overzealous neighbour and, at worst, a mini tyrant who controls a block like it’s his or her own personal fiefdom.
Leasehold ownership is pretty much unique to the UK and it’s where two conflicting pieces of law – leasehold law and company law – can collide, to the detriment of residents.
You are correct to highlight that the lease is the important document here, as it’s effectively the contract between you and your management company; I should point out here that I haven’t had sight of your lease or your company articles of association nor is it clear where in the UK you are located as different laws apply in Scotland for example, compared to in England and Wales.
At the end of the day, your managing agent really should be doing a better job of standing up for you and the other leaseholders against this rogue Director. Unless “old or infirm” dogs are referenced in the lease then this is wholly unenforceable (I know this is a hot topic for some Directors and have also heard of Directors who would grant permission to “indoor” cats but not “outdoor” cats, and to “small dogs” but not “big dogs”).
Fortunately, no such definitions appear in the lease so pet consent is just that – consent to keeping a pet.
Where the lease allows you to keep pets without restriction then you are within your rights to do so; the only caveat being that there is likely to also be a clause within your lease which prevents you from being a “nuisance” to your neighbours or interfering with their “peaceful enjoyment” of their homes. As such if the pet was to be found to become a nuisance – e.g.: a dog that barked incessantly – then this clause could be used against you.
In your case, you require the consent of your management company but, as you correctly point out, a blanket ban on pets, or a clause requiring consent which doesn’t indicate that such consent would not be unreasonably withheld, was found by the OFT in 2005 to be potentially an unfair contract term. You can therefore assume that your application for consent to a pet will not be unreasonably withheld.
All of the above relates to Leasehold Law, the behaviour of this Director and your understandable desire to see them removed now moves us on to Company Law.
Directors often volunteer with the best of intentions or occasionally with an axe to grind and, as you have mentioned, volunteers for this unpaid role can be thin on the ground.
Leaseholders are usually also shareholders of the management company, typically each leaseholder also owns one share in the management company, or in the case of Right to Manage is entitled to become a member of the company in return for a guarantee of £1.
Directors have a legal duty to act in the best interests of the shareholders, and with leasehold properties this is usually achieved by ensuring that a competent agent is appointed, Directors & Officers Insurance cover is put in place, and the lease is fairly and consistently applied.
As Directors owe their duties to the company, it is complicated and often prohibitive to make a claim against a Director as a sole shareholder.
I would suggest you initially make your complaint to the Company Secretary (usually the Managing Agent) and the other Directors and request that they take corrective action to settle your complaint and perhaps suggest some suitable guidance for this Director so they can better understand what they can and can’t do in their role.
If this doesn’t work then you could, with sufficient support from other shareholders, request the board call an EGM. Whether or not you can do this will depend on the articles of association for the company and it would be sensible to take legal advice; this type of meeting typically requires the approval of the board of Directors and your reason for calling the meeting will need to be disclosed beforehand.
If all else fails, then (and again assuming your company articles are suitable) you can get the support of a small number of shareholders (10%) to call a meeting using what’s commonly known as “the requisition method”. This is a meeting requested by shareholders (as opposed to the Directors or Company calling the meeting).
It is described in the Companies Act 2006 and you would disclose the purpose of the meeting and the items to be voted upon. The benefit of this method is that if the company do not call the meeting as you request you can go ahead anyway providing you follow the correct procedure.
This route should only be undertaken after obtaining professional legal advice although you may find that legal expenses cover on your home contents insurance will provide you with cover for the advice and any subsequent actions.
I hope that this has given you some useful pointers as to the options available to you, but as all leases and company articles are different you need specific advice in order to process.
I wish you luck with selling your property and every happiness in your new home.
