Want to know why we get a bill from Chamonix?

The single most common question we are asked is about Chamonix and our maintenance bill. It was also one of the main drivers for forming the Residents Association.  Want to know what's behind it all?

Then read on ...
Faced with ever-increasing pressures on Council Tax, many local authorities decided to reduce their costs by requiring home-owners on new estates to pay separately for the upkeep of the common areas of those estates.

They did this by making it a condition of planning permission that an Estate Management Company was set up to manage and maintain these common areas, and that every property built would be required as a condition of purchase to become a member of that company and to pay a proportion of the costs incurrred.

With proper management and oversight, it's an idea that could work well. But in some places where there are no effective controls on Estate Management Companies, it has become a scandal, with EMCs making large profits from home-owners.

The Government has recognised this problem, and has begun a consultation about limiting their powers and giving residents greater control over the level of charges and the service provided by their EMCs. 

 

How is our Estate Management Company set up?
Our own EMC has been set up as a Company Limited by Guarantee - a way that is supposed to ensure that all funds are spent on the purposes of the company, and that is gives us effective control, should we wish to exercise it.

The Estate Management Company set up by the Phase 7 developers is called ‘The Shepton Mallet (Phase 7) Management Company Limited', and all of the Phase 7 properties – some 97 households – are members and are required to pay an annual charge to this company. 

 

Who are Chamonix?

The EMC (that's us through the company of which we are all members) has appointed ‘Chamonix Estates Management Services’, or ‘Chamonix’ for short, to do two things. (For their website click here).

The first function is to maintain and manage the common areas of the Phase 7 development. It is Chamonix who organise the practical details of maintaining the common areas, such as cutting the grass, maintaining pathways, and so on.

The second function is to raise funds to pay for this. The EMC has to set a budget and raise funds to meet that budget each year. Our EMC appears to have appointed Chamonix to carry out this function as well, which is why our bills come from them.

 

We are fortunate for two reasons.
Firstly because, whilst our Estate Management Company is a Limited Company, it is not limited by Shares, but by Guarantee. This means that it does not have Shareholders who take profits from the company; it has members, and all the money raised has to be used for the purposes set out in the company’s formation documents – maintenance of the common areas. Each household in Phase 7 is required in its conveyance to become a member and to pay an equal share of the budget – so the Company is effectively made up of the households in Phase 7.

Secondly, because the Company is limited by Guarantee, its members appoint representatives to the EMC. As with any Limited Company, it is the those representatives who make the decisions and take responsibility for the work of the company.  This means that the Estate Management Company can be directly controlled by us, the residents of Phase 7, through the representative directors we appoint. It is those directors who set and manage the budget, and therefore how much each of us pays each year.  But it also brings responsibilities –  ensuring that the common areas are maintained to a proper standard, that an appropriate budget is set to cover all the costs - not just for cutting the grass but for all possible eventualities, and that each household pays its fair share of the cost.

We want to appoint representative directors who will work with the agreement of the whole community. Directors are elected by a vote of the members - the members are the 97 households of Phase 7 - at a meeting called by the company.  The members can require the company to call such a meeting - the rules governing this are set out in the Memorandum and Articles of Association (click here for a copy) and the Companies Act 2006.  

 

However, we have a problem!
Every company is governed by its Articles of Association - the rules which the company must obey by law.  The Articles of Association of our EMC state that after the 'End Date' - which is three months after the sale of the final residential property by the developer - directors can be appointed from within the membership - that's us as resident owners. 

Note:  This interpretation has been rejected by Chamonix, but it has been confirmed by independent legal advice taken by a member.

Chamonx - acting for our EMC - has refused this request. 

That shouldn't be a problem because Chamonix is only our Agent, and members of a company can call an Extra Ordinary Meeting to remove or appoint directors. However, to do this we need a copy of the register of members.  This register should be made freely available to any members who asks for one.  Seven members wrote formally to the Company Secretary on 26th November 2019 requesting a copy.  The letter was signed for but ignored - which is a criminal offence under the Companies Act 2006 (116 - 119).

We have also discovered that the sole director of our company is filing dormant accounts with Companies House, and has passed all of our funds to Chamonix.  And the company is not publishing or providing us with a copy of the Annual Report and Accounts - because it has effectively been closed down.

Given that Chamonix is charging in the region of 50% of our bill to 'administration costs' - a massive profit for Chamonix - we need to take action.  It's hardly surprising, as the Company Secretary for Chamoix is the same person as the Company Secretary for our EMC.  

We have to challenge this legally, and appoint directors from the membership, otherwise we may find ourselves locked into this 'Fleecehold' problem for ever.

What have we done so far?

The problem has been created by Mendip District Council's planning requirement, so we have asked Mendip to intervene.  So far, despite warm words and promises from our local Councillor and from Mendip District Council, nothing has been resolved. We're told 'it takes time'.  But there's been plenty of time, and so now we need to take legal action - to challenge both our EMC and Mendip District Council.  We will be contacting people in the early part of 2021 to decide how to proceed.

What can you do?
This is why it's very important that as many households as possible join the Residents Association. One of our core aims is to inform residents of these issues, and to facilitate an agreed common approach, with the appointment of suitable directors from within the membership who can work together with all the residents and contractors to provide the very best service for our community.  Whilst the Residents Association has a much wider vision than ensuring that the EMC is cost effective, it is one of our core aims to ensure that an agreed approach is maintained.

Join us so we can work together...
Every household in the Phase 7 development can join by completing the form here.  We have kept the cost as low as possible - just £5 a year per household to cover our costs. If you are unsure whether your property is part of Phase 7, there's a map on the home page of this site, and if you've received a bill from Chamonix, then your property almost certainly is part of Phase 7.  We are arranging for a leaflet drop to all the houses in Phase 7.  If you are renting your house, please pass this leaflet to your landlord or the property owner, or ask them to read this website.  Your Landlord can ask you to represent him or her as 'Proxy'. If you want more information, just contact us, and we will explain it all to you.