Page 3 - 72_Begg to PBC_9-12-16 (5pp)

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The specification was agreed with the surveyor in February 2014 and AR Lawrence were appointed as the contractor in March 2014. In July 2014 you told Tony Smith that you were short of money and that was why you needed to reduce the specification/scope of AR Lawrence's work. Work started on 1 September 2014. Subsequently you wrote to the lessees on 23 September 2014 to ask for funding for the water storage tank (costing £7810 inclusive of VAT), stating at para 5 that you had no avail- able Reserves to cover this cost. Not withstanding that you had (without their knowledge or consent) reduced the scope of the work, you told the lessees: ”...in the absence of available Reserves for these particular emergency works all lessees are required to pay .... .."
But now it is clear— and you admit — that you had plenty of money. Now you say: ”we had £98,262 in reserves to fund the 2014 works budget of £105,019. Consequently we were short by £6,757 and hence the required £2,000 contribution from all 9 lessees which would then allow £11,243 to remain safely in Reserves for any unforeseen eventuality”.... If this last statement is true, it is clear that you misled both Tony Smith in July and the lessees in September 2014 as to the funds available to you in Reserves.
You continue: ”.......Somewhat regrettably a small £85 overspend on the £105,019 budget was in evi- dence at the end of the Works which was the only item requiring a dip into the Reserves of £11,243". From this 1 take it that Reserves following the project stood at, or should have stood at £10,385 (ie £11,243 less the £858 overspend).
Looking at the 2014 service charge accounts, and again at the comparative figures in the 2015 ser- vice charge accounts, it appears that money actually spent on the refurbishment (that is the meaning of ”reserves utilised") totalled £136,735 (ie £105,877 +£18,000 + £12,858). That is not only my inter- pretation but that of a qualified chartered accountant. But now you are saying that these figures should not be aggregated. And that £10,385 has not in fact been spent but remains in reserves. This does not show anywhere in your accounts. If you think it does, please point me in the right direction.
Nor can I reconcile your figure of £10,385 with the figures you have previously given me, which have been as follows:
Leaseholders funds
Starting Reserves before the Project
Additional contributions
Voluntary Contributions for Water Tank + T\//Sky Leaseholders Funds made available to MHML
Leaseholders’ funds paid out by MHML (per PB-C)
£98,262.00 £18,000.00 £12,858.00 £129,120.00
£117,435.21
£11,684.79
To AR Lawrence
To Surveyor
To PB-C and his subcontractors For Water Tank + T\//Sky
62,010.00 10,513.00 31,765.21 13,147.00 £117,435.21
Leaseholders funds remaining in Reserves after project
This figure of £11,684 represents a difference of nearly £1,300 from your figure of £10,385. If the money paid out by MHML for the Water Tank and T\//Sky aerial was actually only £12,858 rather than £13,147, the amount standing to Reserves should increase by £289 to £11,973.79, which is a difference of £1,588.79 from your figure.
As we have said so many times before, you really need to clarify straightforwardly for the lessees exactly how much money was paid out on the refurbishment and to whom. Your position that you are not prepared to provide a proper account until we apologise for our "lies and innuendos” is plainly untenable. If you provide a proper account which demonstrates that you have acted correctly, no doubt an apology could follow. But so long as you continue to withhold relevant information there is nothing to apologise about, and it becomes increasingly obvious that our accusations are well~founded.