Hello, I wonder if someone could give me an overview on the following situation. I am a director in an RTM company. Before I became a director, the RTM company entered in a litigation with one of its members (we can call this Case 1). On a separate issue (Case 2), this member was claiming an amount between £15k and £20k in compensation from the RTM company. The result of the RTM company suit on Case 1 resulted in a settlement agreement in Case 2, in favour of the RTM member. The agreement as well as the reasons why a case that should have been won by the RTM company have been sealed by the court. I do not understand exactly who asked for the agreement to be sealed, whether it was the member or the RTM company's directors, however we are now in a position where we have a settlement bill in excess of £40k and are unable to verify whether the directors acted in the genuine interest of the RTM company or if there has been some sort of cover-up for something else - or some wrongdoing. Me and other directors who have been recently elected by the RTM members would like to clear the fog surrounding the RTM company's operations over the period 2013-2014 and would like to know if 1) it is possible in principle for new directors to access the sealed documents and 2) if a settlement that was finally fixed to about £40 for a demand that was originally in the region of £40k can be evidence that the directors in charge at that time have not acted in the interest of the RTM members and all leaseholders in general, causing them substantial losses. Finally, if we managed to gain access to this information and considering that the RTM company is a non-profit organisation acting in the interest of the development and its members, would all the RTM members be entitled to know what caused such a loss?
If we were to file a case against the directors who took part in that litigation process what would be the chances of success and the potential cost?
Case 1 relates to the member altering the company records at the Companies House, appointing himself and removing other people. I think this was a provocation as the appointments happen during the AGM and the Companies House keeps records of what is communicated to it. In answer to your question no alterations have been made by the member since that time so I believe that Case 1 is no longer an issue. The striking thing remains that the RTM company sued him for this matter and ended up paying him in a settlement agreement.
Thank you Joshua,
Let me review and I'll come back to you. If I have further questions, would I incur in extra costs? I am a volunteer in the RTM company's board and am doing this with my personal money.
I have a few questions but can you please answer only if you can do this without making me incure in further charges? I promise I will not take advantage of your goodwill.
We will probably proceed as you suggest, through the company secretary. If we have to ask the court, what would the supplied information contain? Also, being a "sealed order", how would the court disclose it?
I think we may in fact be in a situation where the members were not asked for consent; in fact they are not even aware of how much it was spent. It will soon become clear to them however as we are about to release copy of the accounts but we are reluctant to approve them as approving them might mean we accept that what was done is justified - am I correct by saying this?
Most important of all: what if they either haven't kept records of the minutes and/or if the secretary does not hold copy of the consent order? What action could be taken against them if that was the case?
Thank you Joshua.
By 'sealed' I meant that the court ordered that the terms and contents cannot be revealed to other parties, including the newly appointed directors apparently - I don't know the technical terms to describe this but it is essentially confidential to the parties involved. In light of this, does all of the above still apply?
The directors who have settled, and the member who also received the money say it. Apparently none of them can discuss or disclose it.
My suspicion is that the RTM company asked for this to be kept secret to cover something and basically "bought everyone's silence". This is what we need to untangle and find out if the old directors used the leaseholders funds inappropriately, by deliberately choosing, for whatever reasons, to engage in a costly exercise to settle a matter that would have cost half the money, without consulting the members.
In this case can I use my credit to have my question diverted to someone who is familiar with these types of situations?
Can you in this case confirm I will not be charged the £37 that was originally requested?
Thanks a lot.
And supposing we were, at some stage, able to demonstrate that the directors have not acted in the interest of the RTM company and the leaseholders, effectively committing to large expenditure in legal fees and settlement without members authorisation, what are the chances we would be able to access the settlement details that according to them have been made secret by the court?
Thank you very much Joshua, this does bring me a step forward. I appreciate your help!
Well I don't know... it's a long way to go but this is now a good starting point. Thank you again.