20 June 2018 – The Reason For the Dispute

Los Claveles, the reason for the dispute,
30th July 2018
Much has happened since January 2015 when Mr Pengelly wrote to everyone informing them that he had sold his Canary Islands resort management company (WimPen) to Onagrup. Over time many facts have been reported and much propaganda has been issued by Onagrup in the name of WimPen, yet many owners at the Los Claveles timeshare resort in Los Cristianos, Tenerife still do not understand what is going on. This has prompted the Club Chairman, Albert Fletcher JP, to write this, hopefully easy to understand, story with not too much detail and without quoting too many clauses in the Constitution and Statutes (Spanish legal system).

The Constitution of the Club contains the rules by which the Club has to operate. This is legally binding. Under those rules the Club Committee is the body that has responsibility for looking after all the affairs of the Club. From time to time the Members General Meeting will instruct the Club Committee on various matters.

For many years the Club has employed a Contractor to work for them. The Contractor was WimPen. The Committee delegated to WimPen certain tasks which included keeping the Membership details, invoicing members for the maintenance fee and looking after Club Members’, i.e. owners’ money. When Onagrup took over control of WimPen the Club Members decided that they did not wish to continue the contract. The Club withdrew the delegations and ordered the return of the Membership Register, money and other property.

The Contractor refused. The Club Committee continued to communicate with the Contractor for around 12 months but could not make the Contractor abide by the wishes of the Club. The Chairman travelled to Barcelona (Onagrup’s Head Office) to try on behalf of Club members to get them to cooperate. This did not achieve their cooperation.

Due to the fact that the Club had ordered the Contractor to comply, and they continued to refuse to comply, the Club turned to the Constitution that said that any dispute could be resolved by Arbitration. The Constitution is a Scottish document so this had to be done in Scotland, under Scots Law. The Club Committee was advised by solicitors employed by the Club that Arbitration was quick, cheaper than going to court and was final and binding on all parties.

In the Arbitration that followed the Contractor put in a counter claim stating that the reason they did not comply was because they did not believe that the Committee was properly elected. The Contractor vigorously entered into this arbitration and employed many solicitors and took advice from a QC. They even brought solicitors over from Spain. After 18 months the Arbitrator ruled that the Committee was legitimate and that the General Meetings of members were properly convened and that the decisions made by the Club committee were therefore legitimate.

The Contractor, having been ordered to hand back the Membership Register, money and property continued to refuse. They then appealed to the Court of Session in Scotland (this would be the High Court in England). The final judgement has been made. The Appeal has determined that the Arbitrator was correct in declaring the Committee and all committee and general meetings to be legitimate.

Whilst these matters were in Arbitration the contract with WimPen / Onagrup came to its natural end on 3 May 2017. This contract has not been renewed by the Club committee, with the approval of Club members at the 2015 AGM.

The ex-Contractor has illegally stated that they represent the Club. Snr Jesus Monedero, WimPen’s Director of Finance, has signed letters stating that he represents the Club. Snr Castro, the WimPen / Onagrup Managing Director continues to send out invoices to members demanding payment from them and threatening members with suspension if they don’t pay WimPen. They are also preventing Club members from entering their Villas on the Resort if those members do not pay their maintenance fees to WimPen/Onagrup.

Whilst all this is happening the ex-Contractor has dismissed the Resort Manager and Reception staff. Since then the Resort Manager has won his case for unfair dismissal and Reception staff have been paid compensation by WimPen instead of going ahead with their unfair dismissal tribunal. (This comes out of Club funds which the ex-Contractor still has under its control).

The Appeal against the Arbitration decision in Scotland has now been completed, and the Club has taken the Arbitration decision to Spain to have it enforced under the New York Convention so that WimPen can be removed from Club office. It is important to note that WimPen / Onagrup cannot challenge the Arbitration Award in Spain, they can only challenge the enforcement.

….in the meantime:

The Manager who has been imposed on Club members by Onagrup / WimPen (ex-Contractor) to run the resort is addressing the owners’ Wednesday meetings, saying that their company intends to ignore the Arbitrator’s decisions made in Scotland. He is telling all owners that the company will rely on Spanish law and that this could take 20 years in his opinion. Spain is a signatory to the New York Convention which means that legal judgments made in other countries have to be recognized and implemented in Spain under the convention. The Manager has no legal qualifications. He is scaremongering.

He is informing owners that their company is making the former Resort Manager’s accommodation into a show home and that it does not need the Club Committee’s approval for this (which is not true!). Every time Wimpen / Onagrup has been asked about who is paying for this work (and the wifi upgrade, the pool alteration, etc.) they have said that they are paying for it. Have you ever heard of a contractor paying for upgrades to a resort? No, neither has the committee. If they are paying for it, then owners should question their intentions, which will be to serve their own ends.
The Manager is saying that their company can legitimately carry on managing the administration of the Club while the Court result is awaited in Spain. (This is also untrue as it is illegal under Spanish law to provide services without a contract).

It has been brought to the Club Committee’s attention that the ex-Contractor is using their employees to distribute anti-Club Committee propaganda. This propaganda is said to be written by an organisation calling themselves the alternative committee and suggesting they represent members of the Club. The Club Chairman is convinced that this is orchestrated and supported by the ex-Contractor. But why would the ex-Contractor do this?
The answer is that the ex-Contractor has exhausted its legal battle in Scotland. The ex- Contractor is aware that it is just a matter of time before the decisions in Scotland are enforced in Spain. This is why it has reverted to try and persuade Club members, by whatever means it can, to reverse the decision not to renew its contract. The ex-Contractor and Onagrup are now trying to start a new Arbitration process in Scotland without having complied with the original Arbitrator’s decisions, which according to our Constitution should be ‘final and binding on all parties’.

Why is all this happening?

Mr Pengelly is in is 80’s. He had every right to sell WimPen to Onagrup. Mr Pengelly was looking to retire and we heard that he did not think anyone else was capable of taking over the company from within. No doubt the thought of a large buy out fee was a consideration for selling his business.
Mr Pengelly, who has a known reputation for being stubborn, chose not to disclose his intentions to the Club Committee, even though he was the Chairman of the Club at the time. By selling the company, the contract to run the Los Claveles Resort was sold also. Members felt that this was wrong.
Los Claveles is unusual in that the land and the buildings that make up the resort are owned by the timeshare owners. The Club committee believes that Onagrup was not aware of this and that they thought that they were buying the resort. They said in their press releases and on their website that they had bought Los Claveles, and immediately changed its name to Ona Los Claveles. They have since changed their website because they realized their mistake.

The Club Committee had to work hard to obtain a meeting with Onagrup after the company was sold to them in January 2015, and when the meeting eventually took place at the end of March the Committee was not impressed for a number of reasons. It did not help that Onagrup would only speak in Spanish and that they would not answer the questions put to them. It was also clear that it had no excuse for making changes to the Resort without consulting the Club members and its Committee.

Why would the ex-Contractor fight tooth and nail to retain control of Los Claveles? Why would they spend a small fortune on lawyers to retain control? Both are valid questions.

Clearly the answer is not the €183,000 per year that they charged for their Club and Escritura services (invoicing, keeping the accounts, etc.) It may be that they make a considerable amount from renting out available apartments. It may be for other reasons.

It is worth noting that a much smaller resort in Tenerife, with less facilities than Los Claveles has recently been sold for over €20 million. Look at the following scenario:All timeshare resorts tend to have an aged population. Los Claveles is 30 years old. Los Claveles is also one of the few resorts taken over by Onagrup that is profitable and that has a bright future. There is an increasing tendency for owners to default on their maintenance fees or to try to give up their weeks. The ex-Contractor has been absorbing weeks like those like a sponge by any means available and as cheaply as possible. The Constitution allows for a decision to be made by 75% of the ownership for the Resort to be sold. FNTC is the Trustee that was dismissed six years ago in 2012, but it is still refusing to hand over to the new Trustee Hutchinson that was appointed by an Annual General Meeting in 2012 FNTC has a known reputation for assisting organisations to take over resorts cheaply. Onagrup run hotels. They are both pushing Los Claveles down this route.After all, there is a lot of money to be made.

Onagrup is a large organisation that does things for profit. Owners are reminded that Onagrup is acting in its own interests and is not solely acting in the interests of owners/Club members. Onagrup illegally “sold”, or otherwise disposed of, 700+ cancelled weeks in 2016 to their business associates (ie weeks for which owners had stopped paying maintenance). Mr Pengelly told the Club Committee these weeks belonged to the Club.
Onagrup attempted unsuccessfully to use the votes associated with these weeks to outvote ordinary members at the 2018 AGM and take control of the Club.

Many resorts have taken on organisations like Onagrup. Some have failed and some have been successful. Mr Pengelly informed the Club Chairman in March 2015 that Onagrup has a lot of money and that they will pay to keep everything in the courts as long as possible until the Club runs out of money to defend itself and until the Club members get tired of fighting to save their Resort.

The Club has a new Spanish Administrator: Sr. Hiro Bulchand. The Club has a Company that will run the resort. This Company is not-for-profit so all the money goes to the Club, not to any shareholders, Directors or Committee Members.

The Club will employ a Club Manager to manage all relevant Club affairs on the Resort.

The Club has made continuous efforts to liaise with WimPen/Onagrup managers to ensure a smooth running of both Club and Escritura affairs, but there has been no positive response to date.

Your Club Committee’s vision for a healthy future for your Los Claveles Resort is to have a resort run truly on behalf of owners for the benefit of all owners.

Club Members, i.e.owners, are being encouraged to keep strong and united as they are close to regaining control of their Resort.

 AEJF Signature
Mr A.E.J. Fletcher JP
Chairman, Club Los Claveles
98 Bleak Hill Road
B23 7BT
Tel: 0121 350 3326
Email: albertejfletcher@msn.com

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