Who is in charge at Park View? Management Day-to-day responsibility was delegated to the Park View Residents Association (“PVRA”) in 1993. The actual work is overseen by annually elected owners who make up the PVRAC, who appoint a Managing Agent to carry out the work. For the record the 1993 resolution delegating powers to the PVRA as set out in to the Agenda Notice of the 6 November 1993 Annual General Meeting (No actual minute has been seen) stated as follows: "To confirm that as from 1 January 1993 the company will be deemed to have passed all its assets and liabilities, other than ownership of the Freehold Property, Park View, Malvern, to the body know as the Park View Residents Association, and, from that date will have entrusted that body with the obligation to act on behalf of all the tenants in the matter of the building maintenance..." The key phrases here are 1. “…all its assets and liabilities, other than ownership of the Freehold Property, Park View, Malvern to the body know as the Park View Residents Association…” 2. “…matter of the building maintenance..” The first phrase is clear and unequivocable. The second phrase requires expert opinion as it is unclear whether the words “building maintenance” actually covers what the Directors believe they have delegated. The Directors delegation is assumed by them to cover everything. "The freeholder has powers and duties of management under our leases and the right to calculate and apply the service charges and to see that the facilities and the property are properly maintained. In 1993 the company delegated these powers and duties to the PVRA..." (Source: First paragraph "Report of Chairman to the Shareholders" dated 7 June 2008). It would seem sensible that: 1. The delegation is voted on annually at the Company’ AGM so that new Owners are aware of the issue 2. The wording of the delegation is changed to reflect what actual happens but also includes a statement of who is legally responsible should there be disputes Legally There are two bodies at Park View. Park View (Malvern) Limited (“PVML”) is the Lessor (also know as the Company, Landlord or Freeholder) represented by the Directors. Each owner has 1/44 share in PVML (i.e. 1 share out of 44 shares). The Park View Residents Association (“PVRA”) is the body that manages Park View and is represented by the Park View Residents Association Committee (“PVRAC”). Every owner is a member of the PVRA. The Directors and how they see their role As has already been said the Directors represent the Company, PVML, which is owned by the shareholders. It would seem that the Directors perceive their responsibilities as acting in a "governance role" only stepping in to take action at Park View when they deem it to be necessary. Examples of this are when they asked to interview the previous Managing Agent (PCP) to give their approval and when they tried to sack the Officers of the PVRAC back in April 2008. There is no doubt that with their delegation of powers to the PVRA that their role of governance is correct rather like trustees operate. The question though that is unclear is what happens when there are disputes resulting in action (i.e. legal) being taken by either an owner or by people or bodies representing the Management or the Lessor. It surely must be true that the Directors should ensure that the PVRA adhere to the lease covenants and if they do not then take action to ensure that they do. The fact that lease covenants have been breached, as in the Fund A and Fund B accounting saga, does not exclude the Directors from blame by saying it the PVRA’s problem. The Directors currently say that should there be breaches in Lease covenants then that is an issue for the PVRA. "The Directors should not try to run Park View and should not interfere in the covenants, wing balances or other internal accounting matters. To my knowledge they have not done so and will not do so." (Source: Chairman of the Directors letter to an Owner dated January 2009). "If there have been errors you must look to the PVRA Committee, the Managing Agent and especially the Accountants....." (Source: Penultimate paragraph "Report of Chairman to the Shareholders" dated 7 June 2008). We are now in a situation where there has been a material breach in lease covenants with the Fund A and Fund B accounting saga. Does this exclude the Directors from blame by saying it is PVRA’s problem? The Directors may find that it is the Lessor who is liable. Whilst it is perfectly reasonable for the Lessor to delegate the operation of Lease rules to the PVRA, the buck stops with the Lessor, represented by the Directors. This is confirmed in the 9 May 2008 letter from the Lessor’s solicitors, Whatley Recordon, to the Directors. On the second page it states as follows: Park View (Malvern) Limited, as freeholder, will retain certain powers but these will mostly relate to the freeholder's powers under the Leases to ensure that the tenants meet their obligations. This statement implies that lease covenant responsibility stays with the Lessor. This question needs independent expert clarification.
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