Page 4 - 72_Begg to PBC_9-12-16 (5pp)

If, despite what the accounts appear to say, some of the £136,735 has not in fact been "utilised" but has been withheld in reserves waiting to be paid (and I am including here any monies still retained from Tony White and/or the electrician, which you say is in creditors) you will need to clarify exactly how much re- mains in reserves and why the accounts were wrongly stated. I suggest you get your accountant/auditor to help you with this. Please bear in mind that the bank accounts of MHML are invisible to the lessees, since you control them. They have no idea how much is in reserves unless you provide them with an honest statement of account.
Until litigation has started we will be unable to obtain formal disclosure of the MHML bank accounts to see exactly what has been paid out and to whom. But in order to save court time, as well as your own, you may prefer voluntarily to produce a copy bank statement of MHML covering the relevant period and showing how the reserves went from £98,262 to £10,385. You have said a number of times you have nothing to hide, so why hide it? You must understand that you are completely discredited in the eyes of the lessees. If they cannot trust you, how can you possibly expect them to go on entrusting further service charge money to you?
I note that Mr Karupiah has resigned as a director of MHML. While I can well understand why he might have chosen to do this, it is important to recognize that his resignation does not protect him from the consequences of misfeasance carried out by him or by MHML while he was a director of it.
Settlement Proposal
In a final attempt to save my time and your expense by bringing this matter to a conclusion without court proceedings, I am authorized to confirm that Mrs Hillgarth is willing (a) to release you and your co-direc- tors from all civil claims against you in respect of matters arising prior to today's date, and (b) to waive any claim against you and your co-directors for her legal fees in this matter, and (c) not to press criminal charges against you or your co-directors, provided that the following outcomes can be achieved:
(a) Change of Management
This could be accomplished if the existing directors of MHML (ie now just Dana and
yourself) will tender their resignation in writing from the board of MHML, to be replaced by
such other leaseholder directors as the remaining leaseholders may nominate, and by complying with the proposal made to you by Royal London Insurance Limited through their solicitors Macfarlanes. This involves issuing shares in MHML to all those leaseholders at Mitre House who do not presently hold shares in MHML. Thus the issued share capital of MHML would become £9, consisting of 9 Ordinary Shares of £1 each, and one Ordinary Share of £1
in MHML will be held by each of the nine leaseholders at Mitre House. Once this has happened the leaseholders can make up their minds how they wish the block to be managed in the future and by who.
(b) Redress for Mrs Hillgarth
The sum of £2,582.74 which was improperly charged to Mrs Hillgarth in respect of the ”Right to Manage" application pursued by Mitre House RTM Company Limited should be released and credited to her share of shareholders funds. To the extent that money has been used to pay you personally you would obviously need to reimburse the company.
(c) Compensation for Leaseholders
Each leaseholder should be repaid or credited with their due share of the amount charged by MHML for the unapproved work carried out in the course of the refurbishment by yourself and your sub-contractors.
I hope you will see that this is a generous proposal which will avoid court proceedings and will save you (not to mention Mr Karupiah and Mr Raja) from spending 2017 in the same way as you have spent most of 2016. Please will you discuss this offer with your co-directors and, if you would like to accept it, please let me know by no later than close of business on Friday 16 December. If it has not been accepted by that date, the offer will forthwith lapse and be withdrawn. Court proceedings will then inevitably ensue, includ- ing a claim for Mrs Hillgarth's legal costs.
Yours sincerely,
P.F.C.Begg Solicitor
CC Segar Karupiah Jamil Raja
Sefton Solomo