Serious Syndicate Dispute

[flyingdogguitar]

Hi,
Has anyone had problems getting their share monies back from aircraft syndicates?
Also does anyone know of a solicitor who may have experience in this area?


Many Thanks

Flyingdogguitar

[Sensible]

My advice is better than anyone’s who turns up with the name of a lawyer.

My advice is to sort it out without resorting to litigation. The only people who benefit from litigation are lawyers. I have plenty of experience and can assure you of that very fact. Sort it out between you or agree an arbitrator. Do not go to litigation. Litigation is the last resort and is a very hazardous and expensive path where the only winners are the lawyers.

Why can't you simply sell your share to an unwary punter?

[FNG]

Sensible signs off with the question "Why can't you simply sell your share to an unwary punter?"

If he's joking, chortle. If he's not, that is precisely the sort of thing which keeps lawyers busy and positively invites further dispute. It is the opposite of sensible advice.

I am sorry if Sensible has had unfortunate personal experiences with the legal system, and certainly litigation is to be avoided if at all possible, particularly when the amounts at stake are below six figures, but most lawyers these days are aware that they need to provide an effective service just like any other business, and try to do so.

Flyingddoguitar, PM me the details of your problem and I may be able to suggest (free, of course) some non-confrontational options for resolving your problem (or, if need be, some confrontational ones). I could also recommend a couple of solicitors for you to talk to.

[Monocock]

flyingdogguitar

I would take that offer up ina jiffy if I were you.

Solicitors rarely offer free advice....:D

[FNG]

Now you've really made me cross, Monocock: fancy calling me a solicitor! Expect to have your strip low-level stonked by a noisy fat git in something with holes in the exhaust pipes for the rest of the week.

[Flyin'Dutch']

M,

You have been very inperceptive.

A man of FNG's standing and flying these expensive machines needs to be at least a barrister.

It is well known that they have the time and means.

:)

FD

[robin]

Just like a marriage/divorce really.

You go into a syndicate lusting after that gorgeous beauty and fail to arrange a pre-nutial settlement. So when things go to worms and a separation becomes inevitable things get tricky.

This is an important thread for newbies to group ownership. Always remember that one day you are likely to need to move on, and ensure that when and if it happens you have an exit strategy prepared or formal agreement in place. That way you can get your cash out sharpish and move on to the new 'mistress'

[Monocock]

Oops,

Sorry chaps.

Anyway, thay all wear silly wigs at some point so they're all the same aren't they?

:}

[FNG]

Sols don't wear wigs, though some of them clamour to do so. They wouldn't if they knew how uncomfortable and silly they are. Hopefully mine we be going on a bonfire soon if the rules change.

As Robin says, you really need to sort out the shareholding arrangement before you buy in.

[Justiciar]

I'm involved in one such dispute at the moment for a client and unless you own a Gulf Stream such cases are not worth litigating. The problem with syndicate or group disputes is that they raise all sorts of interesting (for lawyers) issues such as contract and trust points and it usually take some sorting out to decide exactly who you dispute is with, e.g. is it with one or two members or the whole group; is there a company involved... all this means that costs usually vastly exceed the value of the share in issue.

Without knowing more its difficult to give more precise guidance, but if you PM me I will try and assist.

There you are you cynics, thats two lawyers offering free advice:ok:

[rustle]

There you are you cynics, thats two lawyers offering free advice That is actually worse!! Now he'll need a third one to (hopefully) sort out the differences in opinion between the first two ;)

[grow45]

quote:
--------------------------------------------------------------------------------
There you are you cynics, thats two lawyers offering free advice
--------------------------------------------------------------------------------

That is actually worse!! Now he'll need a third one to (hopefully) sort out the differences in opinion between the first two

Sounds like my cue.

g45

[TonyR]

If things are that bad I would offer my share to the group at a really low price and walk away.

If you have flown say 100 hours since you bought your share then you probibly saved yourself £4,000 or so.

It is better to regret that you sold cheap than end up in court.

Thats free advice from a humble engineer.

Tony

[MLS-12D]

For whatever it may be worth, I concur with Justiciar.

On average, I'm approached by an unhappy syndicate member once or twice a year, and almost invariably it turns out that they have a 1/5th share in an old C-150 or something like that ... to be brutally honest, the amount at stake is simply not worth the potential legal fees.

TonyR's advice is quite practical; but before making any offer, take a look at the written agreement to see if it contains a shotgun clause (http://www.lawyers-bc.com/partner/articles/clause.htm#shotg), which can be very effective.

MLS-12D

P.S. The standard COPA aircraft partnership (syndicate) agreement provides that each partner geta an equal vote in all partnership decisions, regardless of his or her actual ownership interest: so two partners each with a 10% interest are able to outvote the third partner who has an 80% interest. Before signing any syndicate contracts, make sure that it doesn't say anything crazy like that.

[Legalapproach]

Big plus in any group agreement is to have an arbitration clause avoiding the courts in the event of any dispute There was an article in Pilot a couple of years ago giving some detail. That being said I am in a group with justiciar and at least one other lawyer and we don't have such a clause but then we are all gentlemen(women)!!

You will get good advice from Justiciar but I would also offer to help if you pm me - there we are, 3 lawyers offering free help - that'll have some of the jet blast regulars in apoplexy!

[MLS-12D]

IMHO arbitration can be just as time-consuming, expensive and generally problematic as litigation. At any rate, it certainly is no panacea. Partner compatability and generous doses of tact and common sense are really the only safe guarantees ... an ounce of prevention is worth a pound of cure.

[FNG]

I agree with MLS. Arbitration clauses may have their place in Cocoa Futures contracts and Bulk Carrier Voyage Charters but make little sense in agreements concerning the ownership of a small aeroplane. Arbitration is, in my experience, more expensive, slower and less flexible than (modern) litigation. As I say to clients: why pay an Arbitrator to f*** up your life, when a Judge will do it for free? The real alternative is formal Mediation.

[Flyin'Dutch']

Nobody seems to have been brave enough and ask what the dispute is?

FDG, can you lift up a tip of the veil?

FD

[Airbus Girl]

If you have receipts/ certificate of ownership/ any other relevant documentation to prove what you've paid/ that you have a share, then what about the Small Claims Court. Its a very simple procedure and doesn't cost a fortune although there is a limit on the maximum claim. Basically, you get called to meet with someone not in a wig, and you sit round the table with your evidence and common sense usually prevails.
Of course, its no good pursuing someone with no assets, money in the bank or a job.

[Flyin'Dutch']

Or when the dispute is about the size of an aeroplane share.

Small claims courts cases are limited to £5k.

FD

[MLS-12D]

why pay an Arbitrator to f*** up your life, when a Judge will do it for free?Quite so. And then there is the problem of selecting an independent arbitrator: an exercise that can burn up a lot of time and money in its own right.

The real alternative is formal Mediation.Absolutely, although that of course presumes that both/all of the parties are reasonable and are prepared to come to some compromise resolution. Where one party is bloody-minded, mediation isn't going to work (you can lead a horse to water, but you can't make it drink :ugh: ).

[FNG]

Agreed, MLS, although I have found that if you can persuade even quite intractable people to meet with a good Mediator, the results are sometimes surprisingly positive.

At the last count, the topic starter had four or five lawyers offering free advice, but we're none the wiser on the nature of the dispute.

[MLS-12D]

True enough, FNG: a good mediator is worth his weight in gold.

Admittedly I am somewhat jaded, since for the past half-dozen years or so our local court procedure has required mandatory mediation (http://www.attorneygeneral.jus.gov.on.ca/english/courts/manmed/notice.asp) at the early stages of all actions. By and large, this consumes a large amount of unproductive time and money (negotiating who the mediator will be and where and when the mediation will take place, and applying to the court for extensions of the 90-days deadline because invariably one of the parties, or their counsel, or the mediator, doesn't have any openings in their schedule within that deadline).

As I recall, I have settled only one case through mandatory mediation (by contrast, I've settled every case that has undergone consentual mediation: so I don't consider myself to be 'anti-mediation').

[FNG]

Alas, we're getting that now as well. Sometimes the Court seems too busy issuing pious practice directions on Alternate Dispute Resolution to decide any cases, and some Judges appear to forget that, when disputes are intractable, it's the Court's job to decide them.

"Here are we trying to run a legal system and then all those silly lawyers and their clients come along with their lawsuits to muck it all up".

[DOC.400]

"Expect to have your strip low-level stonked by a noisy fat git in something with holes in the exhaust pipes for the rest of the week."

D'ya need a nav FNG? ;)

"Thats free advice from a humble engineer."

Never!! :p

Rgds
DOC

[rustle]

At the last count, the topic starter had four or five lawyers offering free advice, but we're none the wiser on the nature of the dispute. Perhaps one of the group members wants to allow the aircraft to be used on grass airfields ;)

[MLS-12D]

Right on, FNG. Your point about Judges forgetting their raison d'être is well taken.

You have my sympathies. I can't offer any advice, except to resign yourself to this "progress", and of course factor in the additional time for the purpose of estimating your fees.

Such initiatives, intended to reduce the time and expense of litigation, almost invariably have the opposite affect. :rolleyes:

[FNG]

MLS, I have sent you a PM.

[TonyR]

We in our group would like to get rid of one person who refuses to go. He is just not a team player and gives too much grief to other members.

We could as a majority sell the whole aircraft, buy it back and form a new group without him, but if you have any suggestions let me know.

[FNG]

Sorry to hear that, Tony. Presumably not a limited company group? Even if a company, absent a detailed shareholders' agreement or non-standard memorandum and articles of association, compelling a sale could be tricky. PM me or email if you want to discuss it.

[Evo]

At the last count, the topic starter had four or five lawyers offering free advice


Well i've got an essay on promissory estoppel to write... :O

[FNG]

Ask Lord Coke:

"'estoppe' cometh of the French word estoupe, from whence the English word stopped; and it is called an estoppel or conclusion, because a man's own act or acceptance stoppeth or closeth up his mouth to allege or plead"

(2 Coke on Littleton (1628) 523a)

He also said that "warranties are favoured by the law, being part of a man's assurance, but estoppels are odious", but he is usually misquoted on this.

If that get's you an alpha you can give me a go in your Falconar.

[Evo]

You can have a go in the Falconar whenever you want.

And i'll use Lord Coke - anything that adds flavour to the inevitable Hughes v. Metropolitan Railway Company will probably be welcomed :)

[Sensible]

Just to give a clue to the brilliance of the legal system, here is an actual true story:

A company has 3 directors, one managing, the other 2 in name only. The managing director has 50% shares and the secretary 50% shares. The managing director wants to get rid of the secretary (marital break up) the other 2 directors say no. The other 2 directors get written invitations to directors meetings for seven months and never turn up. The 2 directors are given notice of a further meeting to vote on their directorships (Regulation 81 of table A) and they don't turn up so they are voted off the board. The secretary is sacked next day too.

Removed directors then throw a tantrum and phone the company's bank who freezes 30+ thousand in the account. Director goes to another bank, opens a new account and then it's business as usual. loads of correspondence with bank who refuses to part with money unless all 3 directors sign cheque (but 2 were removed so are no longer directors!!!???) after 6 months, company issues proceedings in the county court against the bank for release of funds.

Bank proposes that at the court hearing that it pays money into court and steps out of the proceedings, the 2 sacked directors and secretary should be substituted as joint defendants and bank gets an award of it's costs! The court agrees and the banks costs are awarded AGAINST the plaintiff!!!!!!???????? The court saying that the dispute is nothing to do with the bank and it should therefore be entitled to it's costs. The 3 new defendants are given a month to file a defence which they fail to do. Company goes back to court to ask for the defendants defence to be struck out and for release of monies. Court decides that there is no cause for action against the defendants (the company told the court that at the first hearing!!!) and that the defendants and company must both seek legal advice and the case is relisted in 6 weeks time. Meanwhile the company's 30+ grand is paid into court which the court at this stage says that it doesn't have the power to release back to the company!!!!!!! The law is an effin ass!!

Courts are last resort!!!!!!!! and I repeat the advice in my last post:

Quote:

"My advice is better than anyone’s who turns up with the name of a lawyer.

My advice is to sort it out without resorting to litigation. The only people who benefit from litigation are lawyers. I have plenty of experience and can assure you of that very fact. Sort it out between you or agree an arbitrator. Do not go to litigation. Litigation is the last resort and is a very hazardous and expensive path where the only winners are the lawyers.

Why can't you simply sell your share to an unwary punter?"

When I say "arbitration" I don't mean formal arbitration either! get somebody who is good and practical preferably somebody who knows you both and able to talk reason into one or both of you!

[Justiciar]

I have recently redrafted my own group's constitution to allow us to more easily remove a member, though I must say that even our constitution does not specifically provide for removing someone who is not a 'team player'.

Many constitutions are drafted on the assumption that every one will get on. You usually cannot force any one member out and the position is if anything even more difficult if there is a company which manages the group.

A sale by majority decision may be the only answer if the rules allow it, with a sale back to the 'new' group. It would have to be on the basis of a fair valuation. As you would in effect be winding up the group you would have to distribute the value of any other assets such as spares or an engine fund. Hopefully, with the writing on the wall the problem member would see sense.

Sensible

sounds like the company in your example didn't have the right lawyers:{

It is most unusual to have company law matters resolved in the County Court as that court lacks the expertise (and often the jurisdiction) to deal with disputes of the sort you refer to, so the first step should have been a transfer to the High Court. Read at face value your account makes no sense what so ever so I suspect, as is usually the case, that there is alot more to it than can be easily set out in a forum like this.

However, the fact that you quote Table A makes me wonder if the correct procedure for removal of the directors was used. Paragraph 81 of Table A is merely a list of circumstances when a director may cease to act. The procedure for removal is set out in Section 303 of the Companies Act 1985. It requires a vote by the shareholders at a meeting of which 'special Notice' (28 days) has been given. If this was not done then it would explain the bank's dilema, as there would have been no lawful removal of the other directors.

Am I getting warm;)

[Sensible]

Regulation 81 (e) of table A reads:
The office of director shall be vacated if-
(e) he shall for more than six consecutive months have been absent without permission of the directors from meetings of directors held during that period and the directors resolve that his office be vacated.

In the event, the directors were removed by ordinary resolution in accordance with section 303 of the companies act and there were no objections in accordance with section 304.

To my knowledge this is the only circumstance where a director can be removed by another director without a majority shareholders support.

[Justiciar]

Sensible

Not sure I entirely understand what procedure was used: was it a resolution under Section 303 or a resolution of directors pursuant to paragraph 81?

In any event I should be very interested to know on what basis they claimed to be entitled to continue acting as directors and what the Bank's argument was for not giving effect to the request from the remaining director to pay the money over.

I think we are in danger of hijacking the thread!

[Sensible]

It was a director(s) resolution and the sacked directors claimed that their dismissal was "unfair" although the precise detail of this was never disclosed by them. The bank maintained it's position that it would only release monies upon instruction from all three directors even thoughthe banks mandate was for secretary and what became the sole remaining director to sign cheques etc. the two sacked directors were never included on the mandate! although the bank insisted that the account should be operated upon their consent!

Incidentally, the reason for removal of the secretary was that she was removing funds without consent of the managing director (total £120,00) The secretary remained sacked and the two sacked directors have not to date applied to the courts for reinstatement.

Yes, I know that it's a thread hijack but it illustrates the poo which one becomes submerged in when one resorts to litigation!

[Justiciar]

All sounds very bizarre to me:hmm:

It certainly shows why you need to choose your lawyers carefully. I never have liked civil litigation for that reason - everyone wants their pound of flesh, everyone wants their lawyers to go for the jugular but no one wants to pay for the privilege. There is always at least one looser and sometimes no one wins - except arguably the lawyers, who have done to the best of their abilities what the clients wanted them to do and simply want paying for the time and effort.

The moral of the story is to spend a bit of money at the start getting your business or flying group properly organised with a constitution or set of rules which cover most eventualities.

[MLS-12D]

everyone wants their pound of flesh, everyone wants their lawyers to go for the jugular but no one wants to pay for the privilegeStory of my life! :* That's why I prefer representing (insured) defendants whenever possible.

[FNG]

Glad to see that Sensible is still advising the topic starter knowingly to deceive an unwary purchaser. Who needs lawyers when you have honest businesspersons!

Example A: "One pilot flies in stupid fashion. Conclusion: all pilots are dangerous tossers." Result: PPrune outrage, continued for 97 pages.

Example B: "Legal Case goes wrong. Conclusion: legal system is rubbish and all lawyers are greedy tossers" Result: Pprune approval, continued for 97 pages.

MLS and Justiciar, I gave up commercial litigation because of all the rancour, greed and fibbing (and that was just the clients). Doing constitutional law instead doesn't pay quite as much, but it's all much less shouty.

[Justiciar]

Doing constitutional law instead doesn't pay quite as much, but it's all much less shouty

I sympathise with the sentiment, but there is little call for advice on constitutional law in this neck of the woods (not from my clients anyway):(

i suppose if I wanted something really non-confrontational I could move into probate..........

Advising the flying community can be interesting. You probably wont find such a concentrated group of well healed individuals anywhere else with such expensive hobbies who are so reluctant to pay for their legal advice (or anything else for that matter). It always surprises me how a pilot will swan around in his expensive Cessna, Piper or TB something all day long but winge about a landing fee until hell freezes over:\

[MLS-12D]

You probably won't find such a concentrated group of well-heeled individuals anywhere else with such expensive hobbies who are so reluctant to pay for their legal advice.I think that you must be my English doppelgänger ... sounds like you and I have a lot of the same experiences! ;)

[Justiciar]

MLS - check your PMs:ok:

[Legalapproach]

Delay in replying due to computer being down and stuck in court so unable to collect it from the repair shop. The point with an arbitration clause in a group agreement is that it is possible to specify the nature of the arbitration and thus substantially reduce the costs. I was not talking about a formal referal to an arbitrator such as one might find in an international commercial contract but a tailor made arbitration clause specifying, for example an arbitrator to be nominated by the Chairman of the local strut of the PFA. Subject to any issue of conflicts of interest you might get a cheap informal process chaired by someone who actually knows about the type of subject he/she is dealing with and it can cut out the use of lawyers, damn.

As most group agreements have a degree of flexibility in them it is possible to incorporate a similarly relaxed arbitration clause by which the group members agree to be bound.

Having once been asked by my father to advise him on an arbitration clause providing arbitration in Switzerland in respect of a contract to supply Iranian Oranges to Russia via a Uk company operated by foreign nationals I agree that a commercial arbitration clause can be as time consuming, complex and expensive as the courts (unless, of course you have a tame barrister as a son!)

[MLS-12D]

unless, of course you have a tame barrister as a son!I see that I have much in common with you, too!

This thread is turning into an on-line meeting of the lawyer-pilot members of Pprune! ;)

[grow45]

This thread is turning into an on-line meeting of the lawyer-pilot members of Pprune!

Just out of curiosity how many of us are members of/aware of the Lawyers Flying Association?

g45

[Flyin'Dutch']

FDG seems to have disappeared in the sunset. Never found out what the problem was.

Maybe just a lack of communication, or getting the point across.

;) ;)


FD

[FNG]

I had noticed that also, FD. Surely not a troll, as hardly a troll-worthy subject.

I was a member of the LFA for a year but it seemed inactive and my membership lapsed without a reminder. The website is moribund. Is it worth rejoining?

[High Wing Drifter]

Well Amature Dramatics is one of his hobbies :\

[Justiciar]

Had an exchange with one member recently when I asked for a precedent for an aircraft mortgage. Got a rather dusty response which did not endear them to me:ugh:

One of the beauty of flying is that you can escape the company of lawyers - with one or two honourable exceptions.

[MLS-12D]

grow45 / Justiciar,

I was a member of the Lawyer-Pilots Bar Association (http://www.lpba.org/), for about five years, but let my membership lapse. They publish a quarterly newletter, which is sometime interesting, sometimes not. Unfortunately, during all of my years of membership I never once had the opportunity to vote for any of the officers of the LBPA. Frankly, I'm not interested in belonging to an undemocratic organization, especially one that purports to be international but really is purely American in its focus and interests.

I hope that the Lawyers' Flying Association is better!

MLS-12D ;)

[Justiciar]

I hope that the Lawyers' Flying Association is better

I am not sure that it is. It would be interesting to hear from anyone who can advance the positive benefits of joining that as opposed to another organisation. Frankly it is more interesting to belong to something which brings together people from many differing professions and occupations.

[Flyin'Dutch']

Frankly it is more interesting to belong to something which brings together people from many differing professions and occupations.

No such thing methinks.

:(

I have bemoaned the lack of a proper club culture on these shores to many a flying mate.

Too individualistic an attitude in the UK.

Great shame.

FD