Management Company in breach of own Statutes - how to complain?

GPO1916

The Owners' Management Company I am a member of is refusing to repair some of the facilities found in the common areas (to wit, a set of automatic car park gates).

As this is part of the common areas, it falls under their responsibility to maintain them and to repair them when needed. However I get a no from the Board.

I believe this is in breach of company law, as they are failing to comply with our own Statutes of Association (available to all members), which clearly say, among other things, that the OMC is established for the purpose of "maintaining, repairing, preserving, improving (etc.) the Estate... and generally improving the Estate".

I am quite baffled to be honest that the OMC is refusing to take action; but not only that: they intend to let it rot as it is, instead of getting on with the repairs.

I feel that my rights as company member are being infringed. After all I have never missed one single payment, and I have a right that all common areas and their contents are kept in good condition. I have looked at other threads in this section but I couldn't find any advice on how to deal with this problem.

Does anybody know do I make a complaint? Do I have to go to the ODCE for example?

Any comments will be greatly appreciated.

CIARAN_BOYLE

GPO1916 wrote: »

The Owners' Management Company I am a member of is refusing to repair some of the facilities found in the common areas (to wit, a set of automatic car park gates).

As this is part of the common areas, it falls under their responsibility to maintain them and to repair them when needed. However I get a no from the Board.

I believe this is in breach of company law, as they are failing to comply with our own Statutes of Association (available to all members), which clearly say, among other things, that the OMC is established for the purpose of "maintaining, repairing, preserving, improving (etc.) the Estate... and generally improving the Estate".

I am quite baffled to be honest that the OMC is refusing to take action; but not only that: they intend to let it rot as it is, instead of getting on with the repairs.

I feel that my rights as company member are being infringed. After all I have never missed one single payment, and I have a right that all common areas and their contents are kept in good condition. I have looked at other threads in this section but I couldn't find any advice on how to deal with this problem.

Does anybody know do I make a complaint? Do I have to go to the ODCE for example?

Any comments will be greatly appreciated.

Show up at an AGM and raise the issue. Argue for directors to be appointed who commit to performing the repairs.

Look at the accounts. Maybe there is no money to do the repairs or maybe it was discussed at the AGM and the members decided that it wasn't important.

From a legal discussion point of view the idea of a company acting ultra vires never required a company to perform the purposes set out in its objects clause. Instead it was illegal for the company to do any activity outside its objects clause hence many objects clauses including a broad any other matters comment however the idea of acting ultra vires was removed from the latest companies act.

Henry Ford III

Are the MC broke? Maybe the repairs are v. pricey and they'd have issues collecting increased annual management fees to cover them?

Write to the MC and enquire why aren't the gates being fixed. Go to the AGM if need be.

Cupra280

Did the OMC give a reason for the refusal?

If it is a budgetary decision, that may be because some other members are not as up to date on their payments as yourself. If that is the case, I feel your pain.

GPO1916

Well, I know the money is there. As a member I get the accounts and audit sent to me every year.

I do not have a communication in writing from the OMC, but from what I hear the reason not to proceed with the repairs is that .... repairs cost money. It is as though they are seen as nothing more than a liability, not a common facility.

I fully appreciate that a repair may be costly, but so is garden keeping, and electricity, and insurance, etc.

An AGM is coming soon and I am planning to attend.

My question is: if the OMC is supposed to look after all common areas of the Estate, but they refuse to deal with this particular aspect of them, and seeing that there are not budgetary issues either, is there a way to force them to take action, using the argument that they are neglecting the obligations for which the OMC was established?

Many thanks for all the comments received so far.

Cupra280

The money may be there, but some items need to be prioritised. Insurance, for example, is mandatory.

My OMC had a similar issue, and a band of non-Board of Director members sought some estimates and submitted this at the AGM for a vite by all present members.

CIARAN_BOYLE

GPO1916 wrote: »

An AGM is coming soon and I am planning to attend.

My question is: if the OMC is supposed to look after all common areas of the Estate, but they refuse to deal with this particular aspect of them, and seeing that there are not budgetary issues either, is there a way to force them to take action, using the argument that they are neglecting the obligations for which the OMC was established?

Many thanks for all the comments received so far.

No legal requirement to look after all common areas. So if the members don't want it then it doesn't have to be done. If the members do want it they have to raise it in an AGM or a EGM and force it to be done either by way of a direct motion or by voting for directors that will force it to be done.

Carawaystick

What does you lease say? You might have to go down the specific performance route.

GPO1916

Cupra280, I would like to do something like what you just said. We have a couple of quotes for this job and I know I can bring it up at the meeting during Matters Arising. It all depends on the numbers attending AGM.

What happened with the vote in the case you mention? Did you win?

davo10

Op you have to remember that if you are an owner, then you are the management company. But you are possibly one of many members. Subscriptions are set for the year ahead based on quotes for services recieved at the start the year, they may not have budgeted for this and may not have the funds to fix it without doing another round of collections. Some of your fellow members may not see it as a priority and may not be willing to pay more this year for the gate. If the funds are not there then they cannot pay to have it fixed. Your management company should have a sinking fund for unforeseen expenses, you should ask them about this.

Cupra280

GPO1916 wrote: »

Cupra280, I would like to do something like what you just said. We have a couple of quotes for this job and I know I can bring it up at the meeting during Matters Arising. It all depends on the numbers attending AGM.

What happened with the vote in the case you mention? Did you win?

We did yes.

In fact, it created a revolt. The then Directors were not returned, as nobody present at the AGM had confidence in them. A new Board of Directors was voted in, included myself. At the time all new Directors were also living on the site, so we were all aware of the issues within the development. Also, we were able to develop a better relationship with the Management Agent.

It was tough. This happened a few years ago. Money was very tight. Services did have to be provided in order of their priority. While there are still some people hardcore defaulters, the position has much improved.

GPO1916

CIARAN_BOYLE wrote: »

No legal requirement to look after all common areas. So if the members don't want it then it doesn't have to be done. If the members do want it they have to raise it in an AGM or a EGM and force it to be done either by way of a direct motion or by voting for directors that will force it to be done.

Thanks for this Ciaran. This is precisely the situation in which we find ourselves in: a majority in the BOD votes no. End of. And I would have thought too there was nothing to do about it.


But the ODCE Company Law Handbook on Residential Property Owners' Management Companies reads, in p. 41,


"Dealing with alleged breaches of the management company’s articles :

[9.13] Section 25(1) of the Companies Act 1963 provides that the memorandum
and articles of association of a company constitute an agreement between the
company and its members.

[9.14] One of the consequences which flows from this statutory provision is that
where there is alleged non-compliance by a company with its articles, members may
have an entitlement to sue the company to enforce the provisions of the articles."

www. odce. ie/Portals/0/Handbook_Management_Companies_2012.pdf


I argue that by refusing to maintain and repair this set of gates the OMC is failing to comply with what is said in the articles of its own Memorandum: that the OMC is to maintain and repair the Estate, inclusive of common areas and their contents.

The text just quoted from the ODCE guide to company law would appear to support my view.

Are there enough grounds then to sue the OMC, or to threaten them with suing so as to get them to enforce their own Statutes?

CIARAN_BOYLE

GPO1916 wrote: »

The text just quoted from the ODCE guide to company law would appear to support my view.

Are there enough grounds then to sue the OMC, or to threaten them with suing so as to get them to enforce their own Statutes?

Companies Act 2014 replaces all previous companies acts and eliminates the memorandum and articles of association as needed documents.

antoinolachtnai

The memorandum and articles don't give you any rights. On the other hand, your lease does give you some rights.

It is quite difficult to vindicate your rights under the lease in practice. It is likely to involve a trip to the High Court. I would see if you can find another way to convince them.

Its not a breach if the Board decides, for example, that maintaining automatic gates isn't a high priority or no priority at all. Thats what they are there to decide. However they may not be aware of how residents feel about the issue. Thats why its so important to attend the meetings and to make sure that the BoD is composed of residents rather than owners who dont actually live there.

April 73

See if you can get other owners who agree with you to attend the meeting. Raise the issue at the AGM & ask for a vote. Ensure you have enough people aligned with you to get a majority to agree that the gates are fixed.
It's the most straight forward option.

athtrasna

Be prepared to pay hugely increased fees if force through repairs that the sinking fund won't support. There must be a reason they haven't been repaired to date.

Lantus

For the cost of trying to go to the high court to attempt to effectively sue yourself you could repair the gate!

Threatening to sue a volunteer board of directors who are unpaid just demotivates them and encourages them to stop caring.

You either have the cash or not. This is an accountancy and management problem. Not a legal one.

jd

I thought the court of jurisdiction is the Circuit Court, according to the mud act?

Turtle_

CIARAN_BOYLE wrote: »

Companies Act 2014 replaces all previous companies acts and eliminates the memorandum and articles of association as needed documents.

Afaik that's only partially true? Iirc, it's only true for private limited companies (e.g. clothes shop Ltd. Or printing services Ltd.). All other companies (such as companies limited by guarantee not having share capital, public limited companies, every other type of company) still need articles and memorandum and can still be held ultra vires..?

silent_spark

Turtle_ wrote: »

Afaik that's only partially true? Iirc, it's only true for private limited companies (e.g. clothes shop Ltd. Or printing services Ltd.). All other companies (such as companies limited by guarantee not having share capital, public limited companies, every other type of company) still need articles and memorandum and can still be held ultra vires..?

Companies limited by guarantee have had to change their memo and articles to a constitution following the Companies Act 2014 (or, if they don't change them, it is assumed they have adopted the template constitution). No idea about the ultra vires bit.

GPO1916

Hi, thanks to all who replied.


Just to recap on the issue,

*I know it is not a budgetary issue because (luckily for us) we have a very healthy sinking fund (all members get a copy of yearly audit).

*There are only a handful of directors, but it would seem that two of them think the best course of action is to let the electric machinery rot away in the weather. It is not a new problem, both Agents and BOD have been made aware of this months ago.

*It is true that once the "Companies Act 2014" starts to apply, the OMCs will by law become CLGs and the Memorandum and Articles of Association will become a two-part Constitution. This is due to happen before the end of the current year.
All changes though appear to by and large be cosmetic when it comes down to the residents OMCs. Surely company law will still apply?


I am aware that the proper avenue to fix this, as some of you have pointed out, is to use the means provided, ie. get other members to turn up at AGM and do something about it. This was my first plan, but it has proved impossible as most apts are rented out, and the ones that are resident-occupied do not want to get involved in running the block.


My question is, if I as an individual member of the OMC have the right to ask the BOD to comply with the statutes governing the development, in relation to the matter I have explained above, and in case I can't get them to enforce the articles of association, is there any body or institution I can turn to to get help.

The idea I am getting from the answers posted so far is that I am basically alone and there is nothing to do. I thought that the quoted lines from the guide to Company Law would bring some hope, but I fail to see how that can be applied to a practical case such as this.

athtrasna

Mod note

Legal advice cannot be given on boards. It may be time to consult a solicitor.

GPO1916

My apologies Moderator if is seemed that way. Not my intention.

GPO1916

GPO1916 wrote: »

My question is, if I as an individual member of the OMC have the right to ask the BOD to comply with the statutes governing the development, in relation to the matter I have explained above, and in case I can't get them to enforce the articles of association, is there any body or institution I can turn to to get help..

The articles of association do not say that the management company shall maintain the electric gates. They are under no specific obligation to do so.

Im sure they say something like the purpose of the company is to maintain the complex in general and that it is the responsibility of the BoD to decide how to do this. The members (owners) elect the BoD.

It seems the BoD has taken a conscious decision not to keep the electric gates. This could be for many, perfectly acceptable, reasons.

The way to deal with this is to talk to the management, attent the AGM, raise the matter and see if others agree with you.