Company now saying they won't pay

[Snorky85]

Hi

Wondering if anyone can advise. I am a shareholder of a residential management company (I own a house). We all have to pay into the maintenance pot every year and the charges are calculated based on our property size etc etc. The directors of the management company are the site developers.

We are now in the process of taking over the management company as the site developers have finished. We have finally had a look at the accounts and all is not as it seems.

We had two letters (on letter headed paper) from the developers stating they would be contributing towards the annual management charges for the final 3 properties that were being built to compensate for the disturbance etc on site. We had these two letters from the past two years saying they would do this. They also adjusted the annual charge calculation to take into account the 3 unfinished properties.

Now we know that they have never contributed to the maintenance pot and it is short by their contributions. One of the developers has turned round and said that they "fixed the driveway instead of paying into the pot" and doesn't know why the other developer said they would be contributing to the management pot. Worth noting that the deeds of the land state they had to repair the driveway where it was dug up anyway.

I was just wondering how strong a legal case we have in this situation. Is it worth pursuing them through a small claims court? Amount to be reclaimed is £6k+

Any thoughts on this would be greatly appreciated.

 

[obscure]

On the basis of what you have written you have a very strong case.
Written confirmation that they would pay... didn't pay.... claimed to have done work to the value of except that they were already contractually bound to do that anyway.

Only issue is who was the letter from. You mention 2 developers - does that mean 2 companies, 1 of whom wrote the letters. Or 2 people in 1 company?

 

[Snorky85]

Thanks for your reply. The letter was written on letter headed paper from the developers (a partnership of three men) and was signed by one of the three men.

 

[Mr D]

Thanks for your reply. The letter was written on letter headed paper from the developers (a partnership of three men) and was signed by one of the three men.

An actual partnership (as in not a limited company) or is it a limited company?

 

[Snorky85]

An actual partnership (as in not a limited company) or is it a limited company?

It's an actual Partnership (not a limited company) that is VAT registered.

 

[Mr D]

It's an actual Partnership (not a limited company) that is VAT registered.

A disadvantage of a partnership over a limited company is that the partners are personally liable for debts. Jointly. Any one of them can commit the three of them to a debt.

 

[Snorky85]

Thank you - that's what I thought. Unlimited liability for all three of them acting together. So do you think this is worth pursuing through a small claims court? I had read about a process to follow to try and get the monies before going down the court route. We have written to them twice about it and spoken to them on the phone when they told me they done the driveway instead - which I pointed out that wasn't what was agreed or stated in the letter from one of the partners.

They said that partner would get back to me and never has and so another recorded letter and email has been sent, address to the partnership and to the specific partner.

 

[Newchodge]

You need to write a letter before action setting out in clear detail exactly what you are claiming from the partnership and why it is owed. Give them a date, 14 days after they receive the letter stating that you will commenced legal action to recover the monies unless they settle the matter before then. Address it to each individual member of the partnership, including, if appropriate, 'trading as Dodgy Devlopers'. Then issue proceedings unless they respond in a way that justifies delaying the action.

 

[Lovetts Solicitors]

Because it's a partnership then strictly speaking you need to be sending a Pre-Action Protocol letter rather than a regular Letter Before Action. Annoyingly the definition of individual for the purposes of the Protocol includes not just sole traders but also unincorporated partnerships.

In addition to the usual requirements of a Letter Before Action (stating what you are claiming and why) you also need to provide details of the agreement (how it was formed - e.g verbal, written, etc, when it was formed and between whom) as well as providing an Information Sheet and Financial Statement. If you Google for "pre-action protocol for debt claims" the first link that comes up on the justice.gov.uk website has the details. Unfortunately the Protocol also requires you to give them 30 days to respond rather than the usual 7 days.

Of course you could just send a simpler letter, but it would mean that should you want to take legal action you'd then need to send a Protocol compliant letter (or get a law firm like us to do it for you!)

 

[parkingandsecurity]

Where is the development ? It might be worth approaching a reputable management company who will have experience dealing with this situation.

 

[Snorky85]

Thank you @Lovetts Solicitors for your comments-really appreciated.

Just to clarify, the developers (the partnership of 3 men) are currently the 3 directors of our management company (although when the AGM is here we plan to vote them off as Directors). The 2 letter stating they would be contributing to the management company funds was from one of the partners to the residents (shareholders of the site management company), on letter headed paper.

Do you have a rough estimate of legal costs for doing this work for us? We are trying to weigh up whether it is financially viable.

 

[Lovetts Solicitors]

An initial Letter Before Action to say that you are owed a fixed sum is not expensive (we charge £5, other firms are usually similar) and would at least put them on notice that you are serious.

If this gets disputed, which by the sounds of things would be a definite possibility then you'd want to start with a review of the case and formal legal advice. That's usually about £500 for that size of case.

Alternatively if there's no response to the letter you could issue a claim in the court which would be a court fee of £410 and solicitors costs of about £215, of which £510 would be recoverable from the debtor if they paid the claim in full.

You may have to wait until you have control of the management company before you can do this, as any action would have to be in the name of the management company as on the face of it that is who the monies are owed to.

 

[Engage Legal]

Hi Snorky

You say above: "It's an actual Partnership (not a limited company) that is VAT registered." Is the partnership an LLP (Limited Liability Partnership) or a "traditional" partnership. If the former, you might have difficulty recovering any judgment against it. If the latter, each partner will be liable for the debt personally so you may have much better prospects of recovery.

 

[Snorky85]

Hi, it's not an LLP (but I will double check as it was a while ago I looked at it). I'm an accountant so had thought about this previously, but best to double check instead of having doubt in my mind!

 

[Snorky85]

It's definitely NOT an LLP