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Wentworth residents sue owners

February 5, 2016

The Wentworth Residents Association regrets to announce that it has launched a formal legal challenge against Reignwood, the Chinese conglomerate owner of Wentworth Club.

Over the last month, negotiations have taken place between members, residents and the Club, in order to seek to find a mutually acceptable solution for a more inclusive membership structure that will neither ruin the Wentworth community nor change the character of the Club. With no prospect of a resolution being found during that time, the residents have been left with no option other than launching a series of challenges against the Club's radical proposals and have commissioned law firm Quinn Emanuel to act on their behalf.

Speaking on behalf of the Wentworth Residents Association, Chairman Eric Leon, said:

“It is an absolute tragedy that the situation remains so antagonistic whereas a fair and reasonable solution could easily have been found. We have made proposals for a membership scheme that does not alienate the vast majority of existing resident members but the Club appears to reject our principles outright. It makes us wonder whether the so-called consultation period in January was a serious endeavour by the Club and whether they intend to listen to their neighbours.

“Any concessions proposed by the Club over this period appear more like fiddling around the edges rather than addressing the fundamental – and reasonable – concerns of members on the prospect of being kicked out and asked to reapply for just 800 memberships whilst paying a £100,000 debenture.

“It has become plainly clear that the Club lacks the support of many existing members – who are already leaving in their droves - and that Reignwood appears intent on clearing out the membership, restricting accessibility to the Club even to many of its fellow residents and thereby changing the character of a great golfing institution. We will continue through every means to convince Reignwood to reconsider its actions.” 

Nigel Moss, resident member who participated in the negotiations with the Club, added:

“Every key principle for a more inclusive scheme that we proposed was ignored. Reignwood hasn't listened and is simply trying to ride roughshod over the Wentworth community.”

Details on legal challenge:

Law firm Quinn Emanuel has undertaken an extensive review of the residents' legal position over the last few weeks. They have subsequently written to the Club informing them of the legal objections including but not limited to:

·          Breach of the Wentworth Trust - The owners of the club have a duty to preserve the character and nature of the club under a formal Trust Deed. Therefore, implementing the proposed structure would be in breach of that Trust. The Wentworth Residents Association understands that the Trustees have also written to the Club making it clear that the proposed membership is in breach of the Trust.

·          Breach of restrictive covenants - The Wentworth Estate Roads Committee (whose members are elected by the Residents Association) is expressly entitled to enforce a number of restrictive covenants under a Deed. It believes that a number of restrictive Covenants are likely to be breached in the future. In particular, the prior approval of the Estate's Roads Committee is required for any future property development, use of sponsored advertising signage, erection of tents and grandstands and organization of rock concerts.

·          Breach of contractual rights – There are examples of where contractual rights have been breached. Members' contracts pre-October 2015 are subject to provisions under the Unfair Terms in Consumer Contracts Regulations 1999, and those post-October 2015 are covered under the Consumer Rights Act 2015, both of which are considered to have been breached.

No support from existing members:

In January, a survey was undertaken by the new Club Captain, Iain Scally, of which almost 400 golf members responded. The key question asked was whether members would take up the new membership structure:

·          From a population of 389 responses so far, there were 68 positive responses. This equates to 17%. However, when you exclude the "Age over 75+" category, who won't pay the debenture because they are exempt (22 respondents) and the families (Husband and Wife), the genuine re-joining member number is actually only 35 memberships.

·          Even allowing for a large number of the 'undecideds', this data would suggest even 100 members wanting to re-join in 2017 is ambitious. 35 Acceptances will drive just £2,975,000 of new revenue for the Club.

Background:

·          Chinese conglomerate Reignwood Holdings acquired Wentworth Golf Club in 2014 from Richard Caring. Out of nowhere and without proper consultation, the new owners announced at the AGM in October 2015 that the 4,000 members will have to reapply for just 800 membership places. For the pleasure of retaining their membership, they will be asked to pay £100,000 per so-called “debenture” plus an annual subscription hike per membership of £16,000 per year.

·          This “debenture” provides no equity, it bears zero interest and it demands severe restrictions on how and to whom it can be re-sold. Additionally, if re-sold, Reignwood will demand a 30% commission. This is within the context of a Club's finances which are already in good health. For 2014, the Club had a £19m turnover with a gross profit of £10m. The Club had £6.6m in working capital.

·          To fight the campaign, a group comprising passionate residents and members was formed to fight these proposals. This group is known as “Wet Feet” ( www.wetfeetwentworth.com ) and is named after an old Chinese proverb which says, “It never rains on your neighbours without getting your feet wet.”





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