Introduction

This open letter sets out serious concerns regarding the proposed installation and operation of an ANPR and parking enforcement system at Church Mews. The concerns are not simply about whether ANPR is desirable, but whether the RMC has the legal authority to confer the proposed rights upon a third-party parking operator, whether the scheme is compatible with leaseholders’ existing contractual parking rights, and whether the Company is proposing to enter into a potentially long-term commercial commitment with undisclosed termination and financial liabilities. The letter therefore calls upon the Board to pause any commitment or implementation and to provide full disclosure of the proposed contractual arrangements, the Company’s legal authority, the proposed use of residents’ vehicle data, the position concerning the adopted highway, and the potential financial and contractual consequences for the Company and its members. These matters should be properly addressed before the RMC proceeds with a scheme that could materially affect leaseholders and the Company as a whole.

 

Dear Directors,

FORMAL NOTICE TO THE BOARD OF DIRECTORS

Re: Proposed ANPR / Parking Enforcement Scheme – Authority, Long-Term Contractual Commitment, Exit Liabilities and Required Disclosure

I write formally as a member and leaseholder of the Company concerning the proposed installation and operation of an ANPR parking enforcement system at the development.

This correspondence is intended to place the Board expressly on notice that the directors must not assume, exercise or purport to confer upon a third-party parking operator rights which the RMC itself does not legally possess.

As I understand the position, the RMC is a management company and is not the freeholder. The individual leases grant leaseholders express rights in relation to the use of the development and, in particular, designated parking spaces.

Accordingly, unless the Board can identify a specific legal, contractual or proprietary basis giving the RMC authority to grant the proposed parking operator the rights contemplated, the directors cannot simply confer those rights by entering into a contract with a parking company.

A contract entered into by the directors cannot, of itself, create rights in the RMC which the RMC does not otherwise possess.

1. FORMAL CHALLENGE TO THE COMPANY'S AUTHORITY

The Board is therefore formally requested to identify the precise source of the Company's authority to:

1. appoint a third-party parking enforcement company;
2. grant that company rights to enter and operate upon the development;
3. install ANPR cameras;
4. capture vehicle-registration information concerning residents, leaseholders and visitors;
5. impose contractual parking restrictions upon leaseholders;
6. issue parking charge notices to persons exercising rights granted under their leases;
7. regulate or interfere with the use of individually demised or expressly allocated parking spaces;
8. grant the operator exclusive parking enforcement rights;
9. enter into a long-term contractual commitment;
10. restrict the Company's ability to terminate or replace the operator; and
11. expose the Company, and potentially its members through service charges, to termination or other contractual liabilities.

Please identify the specific provision of the Company's Articles, the leases, the transfer/deed documents, any relevant management agreement, or other legal instrument upon which the Board relies.

A general assertion that the arrangement is being implemented for "safety", "security", "parking management" or "the benefit of residents" is not, by itself, a source of legal authority.

2. LEASEHOLDERS' EXISTING RIGHTS

The Board is reminded that the individual leases are legally binding contractual instruments.

Where a lease expressly grants a leaseholder a right to park in a specified or designated parking space, the RMC cannot simply assume that it has authority to introduce a third-party contractual regime which purports to impose additional conditions upon the exercise of that right.

In particular, the Board should not proceed on the assumption that the RMC can convert a leaseholder's existing contractual right to park into a permission which is conditional upon compliance with a parking operator's separately imposed contractual terms.

If the Board considers that it has such authority, it is requested to identify the precise lease provision or other legal instrument which confers that power.

3. ANPR CAMERAS ON/AT THE ADOPTED ROAD

I also require the Board to identify the legal basis upon which the Company proposes to authorise the installation and operation of ANPR equipment at the proposed entrance location, particularly given that the road in question is understood to be an adopted highway.

Please confirm:

• who owns the land upon which each camera will be installed;
• who has authority to grant permission for the installation;
• whether the local highway authority has consented;
• whether any licence, wayleave, highway consent or other permission is required;
• whether such consent has been obtained; and
• the legal basis upon which the RMC considers that it can authorise the installation.

4. COMPLETE CONTRACTUAL DISCLOSURE

Before any further action is taken, please provide an unredacted copy of the complete proposed agreement with the parking operator, including:

• all schedules;
• annexes;
• appendices;
• terms and conditions;
• site plans;
• signage schedules;
• equipment schedules;
• data-processing agreements;
• service-level agreements;
• renewal provisions;
• termination provisions; and
• all documents incorporated by reference.

If the contract has not yet been finalised, please provide the latest draft.

If no contract exists, please confirm this expressly.

5. CONTRACTUAL TERM AND LONG-TERM COMMITMENT

Please confirm:

• the proposed initial contractual term;
• the precise commencement and expiry dates, if known;
• whether the proposed arrangement constitutes a long-term contractual commitment;
• any renewal periods;
• automatic renewal provisions;
• notice periods;
• exclusivity provisions; and
• whether the Company is prevented from appointing another operator during the contractual term.

Please also confirm whether the proposed agreement contains any provision capable of binding the Company beyond the initial contractual period.

A long-term contractual commitment is plainly a material undertaking by the Company and must not be treated as a routine administrative or management matter without proper consideration of the Company's authority and the consequences for members.

6. "FREE" INSTALLATION – FULL DISCLOSURE OF THE CONSIDERATION

The description of the proposed system as a "free installation" is insufficient.

The Board must disclose what the parking operator receives in exchange for providing the installation and operation of the system.

In particular, please confirm whether the operator receives:

• parking charge revenue;
• exclusive enforcement rights;
• access to the development;
• access to leaseholder and visitor vehicle data;
• a guaranteed contractual term;
• restrictions on termination;
• compensation for lost future revenue;
• any minimum revenue entitlement; or
• any other commercial benefit.

If the parking operator derives its commercial return from parking charge notices issued as a consequence of the agreement, please confirm this expressly.

The Board should not characterise the arrangement as "free" without disclosing the consideration provided by the Company in return.

7. EXIT COSTS AND CONTINGENT LIABILITY

Please provide the complete termination provisions and identify the Company's maximum potential financial exposure if the agreement is terminated before expiry.

This must include any:

• termination fee;
• reimbursement of installation costs;
• equipment removal costs;
• compensation for anticipated future parking-charge revenue;
• loss-of-profit claim;
• minimum revenue liability;
• damages;
• contractual penalty or other payment.

Please provide the actual contractual calculation or formula by which any such liability would be determined.

Please also confirm whether the Company's liability increases or decreases depending upon the point during the contractual term at which termination occurs.

The absence of an initial installation charge does not establish that the proposed arrangement is financially risk-free. A substantial contingent liability arising upon termination could represent a material financial commitment by the Company.

8. SERVICE CHARGE AND SECTION 20

Please confirm whether the Board has obtained legal advice as to whether the proposed long-term agreement constitutes a Qualifying Long-Term Agreement for the purposes of sections 20 and 20ZA of the Landlord and Tenant Act 1985 and the applicable consultation regulations.

If the Board's position is that Section 20 consultation does not apply, please provide the legal basis for that conclusion, taking into account all costs, liabilities and contingent liabilities, including any termination or exit payment.

In particular, please confirm whether any costs arising under the agreement could ultimately be recovered from leaseholders through service charges.

The fact that installation is described as "free" cannot, without examination of the complete contractual arrangement, establish that the Company has no financial exposure.

9. COMPANY AUTHORITY

Please provide confirmation of the legal basis upon which the directors consider that the RMC has authority to enter into the proposed arrangement.

This is particularly important because the RMC is a management company and is not the freeholder, while the individual leases contain express rights concerning the use of the development and designated parking spaces.

The Board should therefore confirm that it has considered whether the proposed agreement:

• falls within the Company's powers;
• is consistent with the Company's Articles of Association;
• is consistent with the leases;
• interferes with or purports to regulate rights expressly granted to individual leaseholders;
• grants rights to a third party which the RMC itself does not possess;
• creates an obligation capable of binding the Company beyond the authority of the directors; or
• otherwise requires member approval or another form of consent.

10. DIRECTORS CANNOT CREATE POWERS BY RESOLUTION

For the avoidance of doubt, a resolution of the Board does not create a proprietary, contractual or statutory right which the Company does not otherwise possess.

The directors' authority is derived from the Company's constitution and applicable law. The directors must exercise their powers within those limits.

Section 171 of the Companies Act 2006 requires directors to act in accordance with the Company's constitution and only exercise powers for the purposes for which they are conferred.

Sections 172, 173 and 174 also impose duties concerning the promotion of the Company's success, independent judgment and reasonable care, skill and diligence.

Accordingly, the fact that a majority of directors may support the ANPR proposal does not, of itself, establish that the Company has the legal power to implement it.

11. NO ASSUMPTION OF LEASEHOLDER CONSENT

I expressly state that I do not consent to the RMC or its directors:

• varying my contractual rights under my lease;
• imposing additional contractual conditions upon my exercise of those rights;
• granting a third party rights which the RMC does not possess;
• authorising enforcement against my use of my designated parking space pursuant to a purported third-party contractual regime; or
• entering into a contractual commitment purporting to bind leaseholders to such an arrangement.

Nothing in this correspondence should be interpreted as acceptance of the proposition that the RMC possesses such powers.

12. NO CONTRACT OR IMPLEMENTATION PENDING RESOLUTION OF THE AUTHORITY ISSUE

Given the matters set out above, I formally request that the Board does not sign, execute or otherwise enter into the proposed agreement, nor authorise installation or enforcement, until:

1. the Company's legal authority has been established;
2. the complete contract has been disclosed;
3. the contractual term and termination liabilities have been disclosed;
4. the Section 20 position has been properly determined;
5. the effect upon existing leaseholder rights has been considered;
6. all necessary land and highway permissions have been obtained; and
7. the Board has properly considered whether the proposed arrangement is within the Company's powers and in the interests of the members as a whole.

13. BOARD RECORD

Please ensure that this correspondence is circulated to all directors and members, formally placed before the Board and recorded in the Company's records and/or minutes.

Please also confirm:

• whether any contract has already been signed;
• whether any commitment has already been given to the parking operator;
• whether any installation date has been agreed;
• whether any exclusivity has already been granted; and
• whether any expenditure or liability has already been incurred.

If the answer to any of these questions is "yes", please provide full details and copies of the relevant documentation.

14. FORMAL RESERVATION OF RIGHTS

For the avoidance of doubt, I expressly reserve all rights available to me as a member and leaseholder.

Nothing in this letter constitutes consent to the proposed ANPR scheme, consent to any alteration of my lease rights, acceptance of the Company's authority to enter the proposed arrangement, or waiver of any statutory, contractual, proprietary or other rights.

If the Board proceeds notwithstanding the matters raised above, I reserve the right to challenge the Company's authority to do so and to take such further steps as may be available to me.

I therefore require the Board to treat this correspondence as a formal notice that the Company's legal authority to implement the proposed arrangement is disputed and that the Board should not proceed on the assumption that it possesses powers which have not been demonstrated.

I request a substantive written response and the complete contractual documentation before any further commitment is made to the proposed parking operator.

Yours Cordially,

Alan Spiller.

 

 

Read more on my concerns in the article  "RMC & ANPR Governance Concerns" by clicking on the link in the main menu.