William May Holdings Limited (freeholder) Acme Asset Management LimitedApplicantLeaseholders of Cambridge House, Stapleford listed in ScheduleRespondent
Before
Judge D BarlowMs J Rossiter MRICSShakespeare Martineau LLP, Acme Asset Management Limited for the ApplicantDate 9 July 2025Hearing 2025-05-29Property: Cambridge House, Nottingham Road, Stapleford, Nottingham, NG9 8ABType of application: An application under section 20ZA of the Landlord and Tenant Act 1985 for dispensation from the consultation requirements in respect of qualifying works
DECISION
The Tribunal determines under section 20ZA of the Landlord and Tenant Act 1985 to dispense with any of the consultation requirements that have not been complied with in relation to the relevant works specified in a quote from Ipsum UK Limited for the rendering of external walls of Cambridge House. Dispensation is however subject to the conditions specified in paragraph 42 below. Explanatory note This decision relates solely to the statutory consultation requirements, as explained below. It does not concern the issue of whether any service charge costs for the relevant costs of the works will be, or are, reasonable or payable. Any such issue might be the subject of an application by the landlord or leaseholders in future under section 27A of the 1985 Act. INTRODUCTION[1]This case concerns remediation works to the external walls of Cambridge House following the removal of external cladding deemed by the Applicant to present an unacceptable fire risk. The remediation works are those specified in a quote from Ipsum UK Limited. The total cost of the works is £289,407.36. The estimated contribution per leaseholder is £6,887.71.[2]Cambridge House is a 4-storey block of residential flats. The building was converted from offices in 2017 to provide 42 residential flats. As part of the conversion works the external windows were reduced in size and the walls were predominantly finished with Vitrabond ACM PE cladding over blockwork with some areas of curtain walling. Some smaller areas were finished with render over blockwork.[3]In April 2024 Nottingham Fire & Rescue Service (“the FRS”) served an enforcement notice on the landlord which required fire safety works to be completed by 29 July 2024. In response to the enforcement notice the landlord obtained a fire risk assessment (“FRA”) from Cerberus Limited (“Cerberus”) dated 25 June 2024; and a fire risk assessment for the external walls (”FRAEW”) from BEFS Limited dated 1 August 2024. The landlord also arranged for the ACM cladding to be removed in two stages. The first commencing in August 2024. In January 2025 the FRS lifted the enforcement notice. The landlord formally appointed Exeid Support Limited (“Exeid”) as managing agents as from 20 September 2024, in place of MBM Management Limited (“MBM”). Exeid had however been advising informally throughout August 2024. The landlord has paid all costs in connection with cladding removal and stated that it will not seek to recover the costs from the leaseholders.[4]Cladding removal has left the exterior of the building vulnerable to water leaks which have caused damage to the fabric of the building. Consequently, Exeid were asked to consider with the landlord how the building should best be remediated to prevent water ingress. The landlord decided that it would render the exterior walls of the building rather than replace the cladding and seek to recover the costs from the leaseholders through the service charge. Three quotes were obtained for this. The landlord intends choosing what it submits is overall the cheapest quote for the entire project.[5]The height of the building is uncertain. The FRAEW report measures it at 10.5 meters, just under the height required for it to be a ‘relevant building’ for the purposes of Schedule 8 of the Building Safety Act 2022 (“the 2022 Act”) - i.e. 11 meters, or 5 or more storeys. However, according to Mr Harell, the FRA assessed the building at just over 11 meters as did the FRS. It is important for the parties to verify the height measurement to ensure that no part of the building is of the requisite height. Additional requirements under the 2022 Fire Safety England Regulations may be required and the building may be a ‘relevant building’ for the purposes of Schedule 8 to the 2022. Act Nothing in this decision takes away any protection conferred on leaseholders by the 2022 Act.[6]All flats have been let on 125-year leases which are substantially similar. All leases contain an obligation on William May Holdings Limited (“the landlord”) to provide services. Services include the repair maintenance and replacement of the structure of the buildings and the common parts, including the remediation of any inherent defects. There is a corresponding obligation on the leaseholders to pay a proportion of the costs of such services as part of the service charge. The right of a landlord to recover such service charges depends on the terms of the lease, but there are also certain statutory requirements and restrictions on a landlord, which affect its ability to recover service charges.[7]The current statutory requirements are contained in regulations made under the Landlord and Tenant Act 1985 (“the 1985 Act”), as amended by the Commonhold and Leasehold Reform Act 2002. All references in this decision to sections are to sections of the 1985 Act as amended unless the contrary is stated. Detailed regulations made under section 20 set out the precise procedure a landlord must follow, these are the Service Charges (Consultation Requirements) (England) Regulations 2003 (“the Regulations”)[8]Section 20(1) provides that unless certain ‘consultation requirements’ are(a) “complied with” by the landlord, or(b) “dispensed with” by the First-tier Tribunal (“FTT”), the landlord cannot recover through the service charge more than a specified sum in respect of certain ‘qualifying works. The specified sum is currently £250.00.[9]‘qualifying works’ are works of repair, maintenance or improvement on a building (or other premises) the estimated costs of which exceeds £250.00 per contributing leaseholder.[10]Section 20ZA(1) provides that: “Where an application is made to an [FTT] for a determination to dispense with all or any of the consultation requirements in relation to any ‘qualifying works’ …, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.”[11]The quote from Ipsum UK Limited is for qualifying works within the meaning of section 20 because the total estimated cost of the works exceeds the £250 contribution threshold. This means it is subject to the ‘consultation requirements’ contained in Schedule 4 of the Regulations. Failure to comply with those requirements has the effect of limiting to £250 the amount that any leaseholder must pay for the qualifying works unless dispensation has been granted by a Tribunal under section 20ZA.[12]Schedule 4 imposes three stages for consultation. Under stage 1 (the notice of intention and pre-tender stage) the leaseholders must be invited to nominate a contractor. Under stage 2 (tender and estimates stage) the landlord obtains and provides at least two estimates for the works which should be sent to the leaseholders with responses to their observations. Stage 3 (award of contract stage) requires notification of the award of the contract to leaseholders within 21 days, unless it is awarded to the lowest tender, or a contractor nominated by the leaseholders.[13]The landlord has not complied with these stages. It has obtained three quotations for the works but has not carry out any consultation as required by Schedule 4. The leaseholders have had no opportunity to nominate their own contractor or consider and comment on the quotes obtained by the landlord. Instead, the landlord proposes accepting the quotation from Ipsum UK Limited and has notified the leaseholders of that proposal through service of this application. It is not the lowest quote of the three, but the landlord submits that in overall terms it is the cheapest quote. This is because Ipsum will manage the whole project from start to finish. The other tenders would need to be managed by the managing agents who lack specialism in this field but would be entitled to charge management fees. Those fees would largely off-set any advantage in going with the other quotes. The works have not yet commenced. The landlord’s position appears to be that if dispensation is refused it will then undertake the consultation process. That would however seriously delay commencement of the works and risk further deterioration of the fabric of the building.[14]The landlord seeks dispensation from all the requirements of Schedule 4. The reason submitted is that the works are urgently required to stop further deterioration of the building through water ingress. Removal of the cladding has left the building vulnerable to damage from water ingress which would further deteriorate if the landlord was required to comply with the notice periods set out in the Regulations.[15]A hearing took place on 29 May 2025. The Applicant was represented by Michelle Caney of counsel instructed by Shakespeare Martineau LLP, also attending on behalf of the landlord was Kelvyn Harell of Exeid Support Ltd, the landlord’s managing agent. Leaseholders Mr Gary Slade and Mr Ian Philips attended the hearing. Dr Chandru Raman Chandrasekar attended on behalf of his wife Mrs Sahana Chandrasekar. Mr Slade represented the participating leaseholders objecting to the application at the hearing. Case for Landlord[16]Mr Harell filed a witness statement and gave oral evidence. He explained that the risks of ACM cladding were not widely known in 2017, the cladding was compliant with the regulations in force at that date and signed off by the Fire Authority in 2017. In 2019, following Grenfell, the landlord instructed the previous managing agents to undertake a survey of the cladding, but this was not done. An FRA was carried out in 2020 which made a number of recommendations concerning means of access and egress, evacuation, fire doors, fire alarm systems and compartmentation issues. The report did not consider the external walls.[17]The FRS inspection in March 2024 led to service of an enforcement notice requiring certain actions to be completed by 29 July 2024. The notice highlighted concern about the ACM cladding and in particular the lack of clarity about the type of core within the panels. It also raised concerns about the adequacy of compartmentation. The notice required the landlord to arrange for an invasive FRAEW following PAS99880:2022 to determine the appropriate fire strategy for the building. There are some other requirements including ensuring that a sufficient FRA was retained on the premises for inspection.[18]MBM, the previous managing agents, procured the FRA from Cerberus and the FRAEW from BEFS. Mr Harell was then brought in due to a perceived lack of progress by MBM on the remedial actions recommended. He negotiated an extension of time to comply with the enforcement notice. For reasons unclear to the Tribunal no copy of the Cerberus FRA was provided within these proceedings, just the FRAEW. Mr Harell told the Tribunal that the FRA, which assessed the building height to be over 11 meters and high risk, recommended a waking watch until fire safety remediation works inside of the building had been carried out. A waking watch was in place for a short period from August 2024 and paid for by the landlord. Mr Harell said there was no intention to seek recovery of the costs from the leaseholders. He said that fire safety measures recommended by Cerberus in the FRA were materially less costly if the cladding was removed. He added that fire safety and management costs are generally much hight for buildings over 11 meters.[19]The FRAEW report differs from the FRA with regard to the height of the building. It determined the risks posed by the external wall systems to be Medium (High) risk which could be reduced to a Medium (Low) risk by undertaking two medium term measures. First by providing cavity barriers within each decorative vertical section to reduce the ‘chimney effect’; and secondly by removing the cladding from the areas immediately around the means of escape or entry for the fire service. The landlord instructed a contractor t0 undertake removal of cladding from the fire escape areas in August 2024. Mr Harell said the FRAEW was provided to Cerberus who did not think this would be sufficient for the FRS to lift the enforcement notice because compartmentation issues remained unaddressed. Cerberus also recommended a much higher specification of fire alarm systems if the cladding was retained. The FRS was not however consulted on the adequacy of the partial removal of the cladding around the fire escape areas or more generally on the recommendations of the FRAEW report.[20]At this point, and in part because the cladding removal company were still on-site, the landlord instructed them to remove all the remaining cladding from the entire building. This was done without first obtaining any overall survey, specification or programme for the removal of the cladding and the remediation of the external walls. Mr Harell said that the landlord had not appreciated that removal of the cladding would cause a problem.[21]Once it became clear that the building was no longer watertight the landlord considered whether to re-clad the building or render it. The landlord determined that rendering was likely to be the better option and obtained three quotes – all from independent contractors:• Sail Construction (all works and scaffolding) – £309,407.36• Ipsum UK Limited (all works and scaffolding) – £289,288.83+VAT• Plasterpro Limited £173,000+VAT (rendering), plus window flashing by Flashing Services (Nottingham) Limited - £23,200+VAT and scaffolding to be provided separately for £38,400+VAT or £36,269+VAT[22]The landlord intends to instruct Ipsum UK Limited to undertake the works in part because it includes all costs, including project management, which Mr Harell candidly explained he was not competent to oversee.[23]Ms Carey submitted that the failure to consult did not cause any material financial prejudice to the leaseholders. The landlord had already paid for the waking watch and the costs of removing the risky cladding. It was only seeking to recover from the leaseholders the remediation costs (i.e. of the rendering works). The landlord obtained three quotes and intended selecting the one which overall was the most cost effective without impairing quality. Following the principles expressed in Daejan Investments Ltd v Benson [2013] 1 W.L.R. 854, no prejudice would therefore be suffered if unconditional dispensation was granted. Case for the Leaseholders[24]Seven of leaseholders actively participating in the proceedings object to the grant of unconditional dispensation on various grounds. The core objections are set out in the witness statements filed by the leaseholders who were represented at the hearing by Mr Slade. There were numerous other complaints and objections from leaseholders who did not in the end participate by filing statements and evidence. Much of the evidence does not directly address the central issue of financial prejudice caused by the failure to consult. The relevant evidence of the participating leaseholders is as follows:[25]Dana Dreyer flat 30 submitted that:a. the leaseholders were deprived of an opportunity to propose alternative solutions for targeted cladding or retrofitting fire barriers which may have saved costs.b. The scope of the works exceeds what was reasonably required to mitigate the risks to an acceptable standard. The fire authority enforcement notice emphasises the need to review and reinstate compartmentation which might have been a cheaper solution.c. The leaseholders had no opportunity to scrutinise the estimates and the contract selection or the landlord’s reasons for choosing the Ipsum quote.d. The urgency was caused by the landlord removing the cladding without any temporary measure to prevent water ingress. Water ingress was minimal before the cladding was removed. Protective coverings could have been provided while a proper consultation was carried out. There is no evidence that full cladding removal was required.[26]Gary Slade and Elizabeth Slade filed a witness statement submitting that:a. The leaseholders were deprived of a valuable opportunity to make representations and suggest measures that might mitigate the expense of remediating the risks.b. The FRAEW did not recommend stripping out all cladding. It recommended removal to review compartmentation and re-instate as necessary. The leaseholders had no opportunity to consider the most appropriate method of addressing the findings of the reports because by the time they were made aware of the issues the cladding had been removed.c. In oral evidence Mr Slade confirmed that he had over 44 years’ experience in property construction including fire safety. He had discussed building and fire strategy with tenants and is familiar with relevant building regulations. The landlord did not seek expert input on implementing the recommendations of the fire risk assessments and those leaseholders that have expertise on relevant areas of fire and building safety were deprived of the opportunity of making submissions by the landlord’s failure to consult.d. The height of the building is an important factor in that regulations for ACM cladding on buildings under 11 meters is less stringent, and the existing cladding might have been compliant.e. That said Mr Slade and other respondents acknowledge that they want the rendering works to go ahead because they recognise the importance of re-instating the building without delay. Their issue is the suggestion that the landlord’s failure to consult has not been to their detriment.[27]Sadhana Chandrasekar, Robin Woodward, Ian Philips, Adelaide Millar and Caroline Doyle all filed witness statements making similar submissions. For the sake of brevity, I will not set these out in detail, but they were fully considered.[28]Futures Housing Group, own 27 flats in Cambridge House. They support the application but did not wish to file a witness statement or participate at the hearing. Law of Dispensation[29]Under section 20ZA of the 1985 Act, the tribunal has jurisdiction to dispense with all or any of the consultation requirements in relation to any qualifying works “…if satisfied that it is reasonable…” to dispense with the requirements. The circumstances in which applications for dispensation are made: “…could be almost infinitely various, so any principles that can be derived should not be regarded as representing rigid rules.” …..the tribunal: “…has power to grant a dispensation on such terms as it thinks fit - provided, of course, that any such terms are appropriate in their nature and their effect.” Daejan, Lord Neuberger [at 40-41 and 54].[30]The obligation to consult tenants in advance about works is intended to allow some consideration of the need for the works to be of an appropriate quality and price (as required under the protection afforded by section 19 of the 1985 Act). In Daejan, Lord Neuberger explains [at 44] that this intention must inform the issue the tribunal needs to determine on an application for dispensation. The issue on which tribunals should focus “…must be the extent, if any, to which the tenants were prejudiced … by the failure … to comply …” and [at 45]: “…in a case where it was common ground that the extent, quality and cost of the works were in no way affected by … failure to comply with the Requirements, I find it hard to see why the dispensation should not be granted (at least in the absence of some very good reason)...”.[31]In relation to relevant prejudice Lord Neuberger states [at 65] that the only disadvantage of which tenants “…could legitimately complain is one which they would not have suffered if the Requirements had been fully complied with, but which they will suffer if an unconditional dispensation were granted.”[32]He also noted [at 67] that the factual burden of identifying some relevant prejudice was on the leaseholders, but the landlord had little grounds for complaint if the FTT was sympathetic to leaseholders’ arguments by, for instance, resolving in their favour any doubts about whether the costs could have been less if they had been given a proper opportunity to make their points.[33]The recent Upper Tribunal case of Marshall v Northumberland & Durham Property Trust Ltd [2022] UKUT 92 (LC) emphasises the need to establish causation. As a first step this requires the tribunal to identify the landlord’s failure before considering whether any prejudice had been caused by the failure to consult. Discussion[34]There has been a clear undisputed failure to carry out any of the required consultation steps in Schedule 4 of the Act. The issue for the Tribunal is whether any material prejudice has been caused by that failure that would not have been caused if the landlord had consulted fully.[35]The leaseholders’ argument, briefly summarised, is that had they been properly consulted they would have sought to persuade the landlord to consider other less expensive options that did not involve removal of all the cladding.[36]The assumptions underpinning this argument were unsurprisingly not supported by much evidence other than the leaseholders’ belief that would have been the case. By the time they were aware of the need for relevant works to the building the cladding was, as Mr Slade pithily put it, ‘in the skip’.[37]We found Mr Slade’s evidence of his own competence in building and fire safety issues to be credible and have no reason to doubt there are other leaseholders who could also have offered useful insight. Neither do we doubt that given the opportunity one or more leaseholders would have made observations and recommendations that the landlord would have considered and possibly acted upon.[38]The relevant works in this case are the programme of works to remediate fire safety risks in the external wall systems. Reinstatement is the final part of a programme of works designed to satisfy the recommendations of the FRA and FRAEW. The programme began with the removal of the cladding. Although the landlord has agreed to pay for this, the removal works cannot be divorced from the overall programme of works when considering the appropriate time to consult the leaseholders. Removal of the cladding ruled out any consideration of less extensive remediation works and created an urgency to make to the building watertight. It is no different to a landlord stripping the roof covering at his cost and then seeking urgent dispensation for the cost of reinstatement because the rain is pouring in. In considering prejudice it must be right that the period under consideration begins when the landlord takes the decision to undertake replacement of the roof regardless of whether he intends passing on only part of the costs. Remediation of defective cladding/compartmentation in external walls is no different.[39]In this case the participating leaseholders are quite clearly saying that some of them have relevant expertise, and had they been consulted, they would have made observations and recommendations on what was the appropriate scope of the remediation works that they were being asked to pay for. They dispute wholesale removal of the cladding was appropriate or necessary. The Tribunal finds that the landlord’s relevant evidence, which comprised just a copy of the FRAEW report and Mr Harell’s statement and oral evidence, to be insufficient to establish that wholesale removal of the cladding was necessary, which by extension casts doubt on whether re-rendering of the entire building is an appropriate or necessary step. If the landlord obtained advice from a surveyor or other suitably qualified contractor confirming that wholesale removal of the cladding was necessary or the most appropriate remedial action to take, it was not shared with the Tribunal.[40]We therefore find it entirely possible that the failure to consult leaseholders at the appropriate time will result in their being asked to pay for inappropriate works.[41]That said it is now impossible for the landlord to consult the leaseholders on anything other than the final stage of the programme of works i.e. reinstatement. On this, the leaseholders’ latest plea is for the landlord to just get on with it. It would not therefore serve any parties best interests for the Tribunal to do other than grant dispensation from the consultation requirements in relation to the proposed rendering works.[42]However, having determined that it is entirely possible the leaseholders will suffer financial prejudice which they would not have suffered had they been fully consulted at the appropriate time the Tribunal is making dispensation subject to the following conditions.(i) That the landlord pays the reasonable costs of a fully qualified competent member of a relevant professional body within the construction industry with sufficient expertise (to be selected and instructed by the participating respondents who have objected to the application) to:a. Measure and confirm the height of the building for the purposes of the 2022 Act;b. Consider and advise the leaseholders on what would have been the appropriate remediation measures to adopt in response to the FRA and FRAEW reports and the likely overall cost of the most appropriate programme of works that would, if undertaken, have reduced the fire safety risks inherent in the external wall systems to an acceptable level of risk.(ii) That the costs of this application (including the experts report) are not charged to the leaseholders under the service charge.[43]These conditions are imposed because the Tribunal find that had the leaseholders been properly consulted they would have had something to say on the programme of relevant works that could have been of value in identifying what were the most appropriate works. Any dispute concerning whether the remediation costs have been reasonably incurred or reasonable in amount will now have to be settled or determined under s27A of the 1985 Act. The conditions are intended to redress the prejudice caused to the leaseholders in not having the opportunity to settle these matters during the consultation process. D Barlow Deputy Regional Judge Schedule of participating Respondents 1 Gary Slade Collette Slade Flats 14,17,21,26,29,36 and 41 2 Carolyne Doyle Flats 18 and 32 3 Ian and Jane Philips Flat 32 4 Adelaide Miller Flat 33 5 Robin Woodward Flat 42 6 Sadhana Chandrasekar Flat 39 7 Dana Dreyer Flat 30 8 Futures Housing Group (Helen Munslow) 26 Flats (unspecified)