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Flat management company refuses to pay

Is it worth to take a flat management company to Small Claims Court?

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A builder company has carried out substantial work on a property managed by a house management company.  Negotiations and instructions came from the company secretary, who also made stage payments on behalf of the company.  However the final payment has not been made – the secretary says that one of the leaseholders (a director) refused to pay his (substantial) share because some extra work relating only to his flat was not done.

The management company accounts show only a small figure for fixed assets and no cash.  Is it worth taking it or the secretary to Small Claims Court?

Happy new year to all!

Replies (15)

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By 356B
30th Dec 2021 10:50

One for the legal boys I think.

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By Andy556
30th Dec 2021 10:52

Yes, they instructed the builder to do the work. They did it so should be paid.
Why should they foot the bill, there's no excuse not to pay so cause as much disruption as you can. Small claims court is pretty cheap.
The secretary was acting on behalf of the company so it's the company you should take to court and not the secretary

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Stepurhan
By stepurhan
30th Dec 2021 11:03

How much is at stake? What paperwork do you have in place? Was the extra work that was not done part of the contract? If so, why was it not done?

This is still a legal question rather than an accountancy one. We might be able to give you some pointers but you are still better off taking legal advice if you consider going ahead.

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By lesley.barnes
30th Dec 2021 11:03

Before you go to court is the extra work that wasn't done in the contract or was this an add on after the price was agreed? Why wasn't the extra work carried out?

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By David Ex
30th Dec 2021 11:17

Might be wrong but that sounds like a legal question.

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By cbp99
30th Dec 2021 11:44

As said, really a legal question, but seems to be a liability of the flat management company (not its secretary). Irrelevant that one of the leaseholders refuses to pay the management co - that is for them to sort out internally.

Interesting that extra work relating to that individual flat was not done - this may not fall within the management company's remit, depending on the lease etc, but again, this is not relevant to the builder's claim.

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RLI
By lionofludesch
30th Dec 2021 11:44

Here's the crux of the perennial accounting question. Dormant or trading?

With whom is your contract? Is it in writing?

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By Novakova
30th Dec 2021 14:36

The question asked (for competent accountants) was: with SCC judgement against it, can the leaseholders close down the FMC and start a new one? Or, with SCC judgement against it, will the leaseholders be forced to put money into the FCC (directly or indirectly) and pay up?

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Replying to Novakova:
RLI
By lionofludesch
30th Dec 2021 14:46

Novakova wrote:

The question asked (for competent accountants) was: .....

You'd be better relying on a competent lawyer, though, wouldn't you ?

And presenting him with a few more facts - like who contracted for this work.

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Replying to Novakova:
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By Hugo Fair
30th Dec 2021 15:34

Except those actually weren't the questions asked in your OP!

And, as lion and others have said, you are getting deeper and deeper into areas of process and risk on which a lawyer would be a better bet as an adviser.

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Replying to Novakova:
Stepurhan
By stepurhan
30th Dec 2021 15:54

Novakova wrote:

The question asked (for competent accountants) was: with SCC judgement against it, can the leaseholders close down the FMC and start a new one? Or, with SCC judgement against it, will the leaseholders be forced to put money into the FCC (directly or indirectly) and pay up?

I think several competent accounants have suggested you take legal advice, this being a legal question, not an accountancy one. They have also asked for important relevant information, issues a solicitor is also likely to need answers to if they are to address your query properly.

But, by all means, insult responders by implying they are incompetent. That always gets better results, especially to questions asked in the wrong type of forum with lots of important detail missing.

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Replying to stepurhan:
RLI
By lionofludesch
30th Dec 2021 16:07

stepurhan wrote:

But, by all means, insult responders by implying they are incompetent. That always gets better results, especially to questions asked in the wrong type of forum with lots of important detail missing.

It's one thing for laymen to confuse the roles of accountants and lawyers.

Quite another for accountants to do that.

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Replying to Novakova:
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By bernard michael
31st Dec 2021 09:53

Novakova wrote:

The question asked (for competent accountants) was: with SCC judgement against it, can the leaseholders close down the FMC and start a new one? Or, with SCC judgement against it, will the leaseholders be forced to put money into the FCC (directly or indirectly) and pay up?

Have you checked the Articles of Association?? They may give you a clue as to the way forward

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Replying to Novakova:
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By thomas34
31st Dec 2021 12:25

Unless you have altered the question this post is 100% incorrect. Read Andy556's response and act upon it. You can use Thomas Higgins if you don't want to do the job yourself. It's unlikely that the leaseholders will want to form a new company just to evade their liabilities - however Companies House may give a clue as to how long the company has been in existence. And stop insulting those trying to help.

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Replying to thomas34:
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By Leywood
31st Dec 2021 13:58

thomas34 wrote:

And stop insulting those trying to help.

OP is an Accountant? Not competent.

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