Nova House, 1 Buckingham Gardens, Slough, SL1 1AY CAM/00MD/LSC/2018/0050
REASONS
[4]This is an application made by the owner of the property for this Tribunal to determine whether the costs of “the trained fire marshal/walking fire marshal” employed at the property are payable up to September 2018 by the long leaseholders of the 68 residential flats as part of their service charges.[5]Following the tragic events of the Grenfell disaster, investigations were made and it was found that the outside cladding on this building was similar to that at the Grenfell Tower. Further investigations revealed that there were also severe compartmentation issues which increased the risk of any fire spreading from flat to flat.[6]In consultation with the fire service and the local authority, safety conditions were imposed including the provision of fire wardens and a fire engine on site. Some measures have been undertaken including the provision of additional heat detectors in common parts and some flats. This has enabled the fire engine to be withdrawn although a smaller vehicle is still on site. It is now said (page 572 of the bundle supplied for the hearing) that the fire wardens will have to remain in place until “all required remedial works have been completed”. It is also said (page 35) that a provisional works programme should have been agreed by the middle of September 2018.[7]A brief history of the significant events is as follows: Early 1990’s property built with underground car park and commercial premises on ground to 3rd floors 2014/2015 conversion to residential use with additional 4th, 5th and 6th floors with new cladding - 68 apartments let on long leases 19.11.15 lease to PBIL ‘off plan’ 14.06.17 Grenfell Tower disaster 22.06.17 letter of advice from DCLG to local authorities (page 100) Unknown Ringley Chartered Surveyors cladding screening test result (page 97) (possibly 30.06.17 – page 920) 14.08.17 freeholder transfers property to Applicant 06.10.17 Slough Borough Council agree to acquire the shares of the Applicant 3 29.08 – 06.12.17 Bob Richard Associates fire compartmentation survey 24.10.17 Savills (UK) Ltd. building survey 07.03.18 Slough Borough Council acquire the shares of the Applicant at a cost of £1 21-23.03.18 Bob Richard Associates common parts compartmentation survey 21-23.03.18 RSK first survey and testing the fire rating to structure and floors 12-15.06.18 RSK second such survey and testing 02.08.18 this application The Lease[8]The bundle produced for the hearing included a copy of the lease to PBIL which is dated 19th November 2015 and is for 999 years commencing on 29th September 2015 with a ground rent of £260 per annum which is subject to review under clause 7 (not clause 8 as stated in the definitions clause). It is said that all the leases are in the same basic relevant terms.[9]A great deal is said by the only participating Respondent (PBIL) about the lease terms including a suggestion, without evidence, that they may not all be in the same basic relevant terms. However, those comments concede their lease terms and argue only about their relevance to this application.[10]In essence, the lease says that the landlord has to keep the structure in repair. Both parties agree that the structure includes the cladding and the compartmentalisation.[11]The contentious clauses are those which allow the landlord to include the cost of structural improvements in the service charge and, so far as services are concerned, to “extend vary or alter the services from time to time so long as in doing so the Landlord complies with the principles of good estate management and acts reasonably in all the circumstances”. PBIL’s case is that the wrong cladding was installed by the then landlord and the long leaseholders should not have to pay for either a repair or an improvement. Therefore, they should not be responsible for the costs of the wardens.[12]It is argued that there has been no good estate management or reasonable behaviour on the part of the Applicant, its predecessors in title and/or agents. It is further argued that the long leaseholders cannot possibly be responsible for the cost of the required work to the structure and therefore they cannot be liable for the fire watch costs. The Law[13]Section 18 of the 1985 Act defines service charges as being an amount payable by a tenant to a landlord as part of or in addition to rent for services, insurance or the landlord’s costs of management which varies ‘according to the relevant costs’.[14]Section 19 of the 1985 Act states that ‘relevant costs’, i.e. service charges, are payable ‘only to the extent that they are reasonably incurred’. This Tribunal has jurisdiction to make a determination as to whether such a charge is reasonable and, if so, whether it is payable. 4[15]Section 20 of the 1985 Act requires a landlord to consult with long leaseholders if ‘qualifying works’ are to be undertaken which involve a cost of more than £250 in a service charge year. Otherwise, the cost to the leaseholder is capped at £250. Section 20ZA allows this Tribunal to grant dispensation from consultation if an application is made. It also defines qualifying works as “works on a building or any other premises”. The Tribunal’s Directions Order[16]The application form submitted on behalf of the Applicant had virtually no information to support the application sought. On the 3rd August 2018 i.e. the same day as the application was received, a Directions order was made which included a requirement to provide the following information:- “(i) when was it discovered that the building needs recladding? (ii) if the present cladding is part of the structure and is defective, why it is being suggested that the long leaseholders have to pay for fire wardens? (iii) why is the cost so high i.e. what efforts have been made to reduce the cost? (iv) is the Applicant asking for a payment on account and, if so, what? (v) when is it anticipated that the costs will stop? (vi) if the Respondents are expected to pay for the cladding, when does the consultation process start?”[17]In the papers supplied to the Tribunal in the bundle, answers were provided which, in essence, said:-(i) No clear evidence supplied to say when the cladding was known to need replacing but presumed to be mid/late 2017(ii) The cladding can be replaced at the expense of the long leaseholders because the leases allow the landlord to recover the cost of repairs and improvements. As the work and wardens are safety requirements, the landlord can recover these addition services as part of good estate management(iii) There is no information about cost save for the invoices(iv) As for payments on account, the service charges which are the subject of this application are up to September 2018(v) In view of the answer to (iv) this is not relevant(vi) This was dealt with at the hearing The Hearing[18]The hearing was attended by the witnesses Messrs. England and Townson together with Simon Allison, counsel for the Applicant. Cheryl Jones and Antonida Kocharova appeared as counsel for the PBIL. This somewhat unusual arrangement was accepted by the Tribunal as it was clear that counsel for BPIL had been instructed late in the day and sharing the representation task with Ms. Jones as the lead was clearly in the interests of justice. A gentleman said to be a director (unidentified) of PBIL was also in attendance to give instructions. A number of others were present whose identity or purpose in attending was unknown. 5[19]The Tribunal chair started proceedings, after introductions, by setting out a number of queries he had arising from a consideration of the papers and counsel were helpful in clarifying their positions.[20]Mr. England then gave evidence. He formerly worked for Slough Borough Council and had been involved in matters at quite an early stage. He took over as a director of the Applicant after its shares had been acquired by the Council but had been liaising closely with the former directors since at least October 2017 when Slough Borough Council had agreed to take over the company. He was able to give evidence as to what had happened since the defects in the cladding had been identified.[21]Between September 2017 and March 2018 there had been a fire engine at the property paid for by Slough Borough Council together with the fire watch. Interim measures were put in place including the heat detectors which, in liaison with the fire service, permitted the removal of the fire engine and its replacement with something smaller and less expensive. That coincided with the change of providers of the fire watch from Abbatt Property Services to Event Fire Solutions Ltd.[22]The current situation is that an outline programme of works has been prepared but cannot be implemented without the approval of the fire service and a meeting has been arranged with them on the 5th December 2018. No specification has yet been prepared but if the fire service approves the programme, then he would anticipate the consultation process starting in the new year. Doing the best he can, and assuming that the fire service agrees the programme, he would anticipate the work starting in June/July 2019 and lasting about a year.[23]Dealing with the question of fire watch contracts with the service providers, he said that the contracts were for 3 months and then from month to month. In other words, they could be terminated on a month’s notice. For this reason the Applicant had not employed people under contracts of employment.[24]Mr. England was, quite properly, questioned at some length about whether there had been unjustified delays in commissioning reports and in the conduct of the claims against third parties and insurers. He denied this emphatically and explained that this was a complex and developing problem. Slough Borough Council had already paid over £200,000 in fees and expenses so far and had agreed a loan for the repair work.[25]Mr. Townson then gave evidence. He is a building surveyor. He, too, was challenged about the time taken for the investigations and work so far. He denied any undue delay and said that he agreed with Mr. England, particularly with regard to the estimated future timetable. Discussion[26]The Respondent PBIL has submitted its case upon the basis that the general conduct of the Slough Borough Council, the Applicant and its predecessors in title throughout should be considered by the Tribunal. It should also find that the Applicant and its predecessors in title have been in breach of contract because the cladding put on in 2014/15 was clearly wrong and this 6 should have been detected at the time. Finally, the Tribunal should find that as there has been mismanagement throughout, the long leaseholders should not have to pay either for the cladding or the fire wardens.[27]It should be recorded that 2 long leaseholders have written to the Tribunal at pages 1323 and 1328 in the bundle. The first claims to be the leaseholder owner of flat 16 and the second says that he is ‘Owner of Nova House, Slough’. Both complain about the fact that they are being required to pay for the fire wardens. They do not add anything to PBIL’s case.[28]The Tribunal can see that the 3 Respondents who have contacted them with regard to this case are frustrated about how matters are being handled. There has been a disaster with many people being killed in a fire in Grenfell Tower and, nearly 18 months later, they are being told that they have to pay large amounts of money both for fire wardens and, possibly, for cladding.[29]There are promises by the Applicant that efforts are being made to pursue third parties (including the firm which certified compliance with Building Regulations in relation to the conversion) and insurers with positive legal advice about the chances of such claims being successful.[30]The problem is that this Tribunal is not a civil court and it should not get involved in matters which may turn out to be determined by a civil court judge in due course – almost inevitably in the High Court. All this Tribunal can do is make a determination as to(a) whether, contractually, the cost of these wardens can form part of a service charge, i.e. are they payable on the face of the contract, and, if so,(b) whether the cost indicated is reasonable. Obviously, this decision will not determine how any court would resolve the issue of a possible breach of contract arising from the conversion to apartments and the installation of the cladding. It will also not affect any insurance claim.[31]If any Respondent wants to claim under the insurance mentioned in the bundle, seek an injunction or claim damages from the Applicant or anyone else, that is entirely a matter from them. This is an expert Tribunal, not a court, and it cannot be expected to adjudicate on a complex breach of contract dispute when little, if any, evidence has been produced upon which such an adjudication could take place. Equally, this application has been made and the Tribunal does not see that it is just and equitable to just dismiss it or put off a decision which is within its jurisdiction.[32]PBIL says that the application should be struck out because either(a) the Tribunal should not make any determination until it is known whether the developers, the Applicant or its predecessors or insurers will have to pay the bills or(b) as it is clear that the long leaseholders who bought ‘off plan’ cannot be liable to pay anything, they should not have to contribute to the fire watch. It also alleges that the specification of the cladding was changed at the time of the conversion with the consent of the Borough Council.[33]As far as quantum is concerned, Mr. Allison referred the Tribunal to another First-tier Tribunal decision involving Cypress Place and Vallea Court in Manchester (MAN/00BR/LSC/2018/0016) dated 18th July 2018 where the market was tested with regard to the rates paid for this sort of fire watch. 7 They are set out at paragraph 8.2.8(vi) of the decision. These cannot, of course, be ‘evidence’ in this case but it is noted that the rates recorded as being charged in the north west of England are remarkably similar to those being paid in Slough.[34]PBIL may want to challenge the rates paid and/or the qualifications of the people working on the fire watch but they have not produced any evidence to support their challenge either to show that a lesser form of qualification would suffice, and be acceptable to the fire service, or that the rates paid would or should be less. It is trite law to say that the Applicant is not required to seek out the cheapest possible quote.[35]The Tribunal raised the issue of whether there should have been a section 20 (of the 1985 Act) consultation with regard to the fire watch claims now being made. Conclusions[36]It is clear to the Tribunal that the leases do allow for this claim to be made, as was, in effect, agreed by counsel for both parties at the outset of the hearing. The landlord must not only keep the structure in repair but it can claim for improvements and additional services provided that reasonableness and good estate management can be established.[37]Grenfell was a national disaster and, at the time of this hearing, the public enquiry is still in progress without any determinations having been made. Before June 2017, no purchaser of a flat ‘off plan’ would have investigated the nature or construction of the cladding to a block of flats. Such a purchaser would have just assumed that the ‘authorities’ would have set safety standards to protect occupiers. Even on the day after the disaster, people allegedly in authority were denying that the cladding was to blame. That misunderstanding was soon challenged and shown to be wrong.[38]The public perception of the evidence at the moment seems to be that the fire authority’s ‘stay put’ policy for residents was thwarted because the cladding let fire encapsulate much of the building very quickly. That policy had to be changed during that night to enable people to be evacuated but many people still lost their lives. The reason why it is necessary to set this scene is to show that the cladding problem seems not to have been understood even by the fire authorities. They now have an understanding and in respect of Nova House the ‘stay put’ policy has been changed to an ‘evacuate’ policy.[39]It is clear that a number of blocks of flats throughout the country, such as Nova House, have been found to have the same or similar problems as those at Grenfell. Any reasonable and sensible owner of a block of flats must cooperate with its local authority and fire service to resolve any problem. Apart from anything else, Slough Borough Council is obliged to take enforcement action under section 5 of the Housing Act 2004 should it find a category 1 hazard in respect of a dwelling.[40]Arguably, this type of cladding could constitute a category 1 hazard and, despite the protestations of PBIL, they could have been faced with a prohibition order preventing them allowing the flat to be occupied with an 8 obvious affect on their income from the flat.[41]It seems clear to this Tribunal that the landlord of Nova House has already incurred a huge debt as a direct result of the problems arising from the cladding at Grenfell which were even unknown to the fire service at the time the conversion took place at Nova House some 2/3 years before the disaster. The actions which have been taken and are being taken are with the full cooperation of, and sometimes at the direction of, the relevant authorities. The only focus is on the safety of the occupants.[42]The Tribunal accepts that the lack of progress to date in beginning a scheme of remedial works is due to the need to carry out extensive investigations in order to establish exactly what works are required. Following the meeting with the fire service in December, the Applicant ought to be able to move things forward more quickly.[43]For these reasons, the Applicant is acting reasonably, responsibly and in the interests of good estate management. It is unfortunate that no competitive quotes have been obtained for the work involved, but there are no competing quotes produced by PBIL and the information available would tend to suggest that the rates charged are not unreasonable. As the contracts are individual and short term involving less than £250 per flat per year per contract, the Tribunal is satisfied that no section 20 consultation was necessary for ‘qualifying works’. Clearly the contracts are not qualifying long term agreements. Costs[44]PBIL put in a late application for an order pursuant to section 20C of the 1985 Act which would, in effect, prevent the Applicant from including its costs of representation before this Tribunal in any future service charge demand. The test is whether such an order is ‘just and equitable’.[45]It is quite clear that the Applicant is taking matters extremely seriously and this includes taking legal advice. This has been a complex case. No arguments have been considered as to whether such costs would form part of the ‘sweep up’ provisions in paragraph 2 of Part II of the Sixth Schedule but it would seem, on the face of it, that they would.[46]It would be hoped that these costs would not be demanded immediately but the Tribunal does not consider it to be just and equitable for the order to be made as requested. …………………………………… Bruce Edgington Regional Judge 3rd December 2018 9 Amended pursuant to Rule 50 of the Tribunal Procedure (Firsttier Tribunal)(Property Chamber) Rules 2013 by changing the amount due up to September 2018 in paragraph 1 of the decision from £277,518.16 to £404,007.76 due to an accidental slip on the part of the Tribunal. …………………………………… Bruce Edgington Regional Judge 11th January 2019 ANNEX - RIGHTS OF APPEAL i. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) then a written application for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case. ii. The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application. iii. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit. iv. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal, and state the result the party making the application is seeking. --- decision_2.pdf --- 1 First-tier Tribunal Property Chamber (Residential Property) Case Reference : CAM/00MD/LSC/2018/0050 Property : Nova House, 1 Buckingham Gardens, Slough, SL1 1AY Applicant : Ground Rent Estates 5 Ltd. Represented by Simon Allison of counsel (JB Leitch Ltd.) Respondents : The long leaseholders listed in the Application Represented by Pell Buy It Investments Ltd, represented by Cheryl Jones & Antonida Kocharova of counsel (direct access) Date of Application : 2nd August 2018 Type of Application : to determine reasonableness and payability of service charges and/or administration charges The Tribunal : Bruce Edgington (Lawyer Chair) David Brown FRICS Date and place of : 28th November 2018 at 10 Alfred Place Hearing London WC1E 7LR ____________________ DECISION _______________ Crown Copyright ©[1]The Tribunal determines that the costs of the trained fire marshals/walking fire marshals at the property (known as fire watch or waking watch) up to September 2018 , amounting to £277,518.16, are recoverable from the long leaseholders as service charges under the terms of the long leases held by the Respondents.[2]The Tribunal has made no determination in contract or tort as to who may be ultimately responsible for the cost of rectifying existing and admitted defects to the structure of the property which may or may not include the costs referred to in paragraph 1 of this decision. 2[3]The Tribunal refuses the application by Pell Buy It Investments Ltd. (“PBIL”) for an order that the Applicant’s costs of representation before this Tribunal shall not be a relevant cost when determining service charges (section 20C Landlord and Tenant Act 1985 (“the 1985 Act”)). Reasons Introduction[4]This is an application made by the owner of the property for this Tribunal to determine whether the costs of “the trained fire marshal/walking fire marshal” employed at the property are payable up to September 2018 by the long leaseholders of the 68 residential flats as part of their service charges.[5]Following the tragic events of the Grenfell disaster, investigations were made and it was found that the outside cladding on this building was similar to that at the Grenfell Tower. Further investigations revealed that there were also severe compartmentation issues which increased the risk of any fire spreading from flat to flat.[6]In consultation with the fire service and the local authority, safety conditions were imposed including the provision of fire wardens and a fire engine on site. Some measures have been undertaken including the provision of additional heat detectors in common parts and some flats. This has enabled the fire engine to be withdrawn although a smaller vehicle is still on site. It is now said (page 572 of the bundle supplied for the hearing) that the fire wardens will have to remain in place until “all required remedial works have been completed”. It is also said (page 35) that a provisional works programme should have been agreed by the middle of September 2018.[7]A brief history of the significant events is as follows: Early 1990’s property built with underground car park and commercial premises on ground to 3rd floors 2014/2015 conversion to residential use with additional 4th, 5th and 6th floors with new cladding - 68 apartments let on long leases 19.11.15 lease to PBIL ‘off plan’ 14.06.17 Grenfell Tower disaster 22.06.17 letter of advice from DCLG to local authorities (page 100) Unknown Ringley Chartered Surveyors cladding screening test result (page 97) (possibly 30.06.17 – page 920) 14.08.17 freeholder transfers property to Applicant 06.10.17 Slough Borough Council agree to acquire the shares of the Applicant 29.08 – 06.12.17 Bob Richard Associates fire compartmentation survey 24.10.17 Savills (UK) Ltd. building survey 3 07.03.18 Slough Borough Council acquire the shares of the Applicant at a cost of £1 21-23.03.18 Bob Richard Associates common parts compartmentation survey 21-23.03.18 RSK first survey and testing the fire rating to structure and floors 12-15.06.18 RSK second such survey and testing 02.08.18 this application The Lease[8]The bundle produced for the hearing included a copy of the lease to PBIL which is dated 19th November 2015 and is for 999 years commencing on 29th September 2015 with a ground rent of £260 per annum which is subject to review under clause 7 (not clause 8 as stated in the definitions clause). It is said that all the leases are in the same basic relevant terms.[9]A great deal is said by the only participating Respondent (PBIL) about the lease terms including a suggestion, without evidence, that they may not all be in the same basic relevant terms. However, those comments concede their lease terms and argue only about their relevance to this application.[10]In essence, the lease says that the landlord has to keep the structure in repair. Both parties agree that the structure includes the cladding and the compartmentalisation.[11]The contentious clauses are those which allow the landlord to include the cost of structural improvements in the service charge and, so far as services are concerned, to “extend vary or alter the services from time to time so long as in doing so the Landlord complies with the principles of good estate management and acts reasonably in all the circumstances”. PBIL’s case is that the wrong cladding was installed by the then landlord and the long leaseholders should not have to pay for either a repair or an improvement. Therefore, they should not be responsible for the costs of the wardens.[12]It is argued that there has been no good estate management or reasonable behaviour on the part of the Applicant, its predecessors in title and/or agents. It is further argued that the long leaseholders cannot possibly be responsible for the cost of the required work to the structure and therefore they cannot be liable for the fire watch costs. The Law[13]Section 18 of the 1985 Act defines service charges as being an amount payable by a tenant to a landlord as part of or in addition to rent for services, insurance or the landlord’s costs of management which varies ‘according to the relevant costs’.[14]Section 19 of the 1985 Act states that ‘relevant costs’, i.e. service charges, are payable ‘only to the extent that they are reasonably incurred’. This Tribunal has jurisdiction to make a determination as to whether such a charge is reasonable and, if so, whether it is payable.[15]Section 20 of the 1985 Act requires a landlord to consult with long leaseholders if ‘qualifying works’ are to be undertaken which involve a cost 4 of more than £250 in a service charge year. Otherwise, the cost to the leaseholder is capped at £250. Section 20ZA allows this Tribunal to grant dispensation from consultation if an application is made. It also defines qualifying works as “works on a building or any other premises”. The Tribunal’s Directions Order[16]The application form submitted on behalf of the Applicant had virtually no information to support the application sought. On the 3rd August 2018 i.e. the same day as the application was received, a Directions order was made which included a requirement to provide the following information:- “(i) when was it discovered that the building needs recladding? (ii) if the present cladding is part of the structure and is defective, why it is being suggested that the long leaseholders have to pay for fire wardens? (iii) why is the cost so high i.e. what efforts have been made to reduce the cost? (iv) is the Applicant asking for a payment on account and, if so, what? (v) when is it anticipated that the costs will stop? (vi) if the Respondents are expected to pay for the cladding, when does the consultation process start?”[17]In the papers supplied to the Tribunal in the bundle, answers were provided which, in essence, said:-(i) No clear evidence supplied to say when the cladding was known to need replacing but presumed to be mid/late 2017(ii) The cladding can be replaced at the expense of the long leaseholders because the leases allow the landlord to recover the cost of repairs and improvements. As the work and wardens are safety requirements, the landlord can recover these addition services as part of good estate management(iii) There is no information about cost save for the invoices(iv) As for payments on account, the service charges which are the subject of this application are up to September 2018(v) In view of the answer to (iv) this is not relevant(vi) This was dealt with at the hearing The Hearing[18]The hearing was attended by the witnesses Messrs. England and Townson together with Simon Allison, counsel for the Applicant. Cheryl Jones and Antonida Kocharova appeared as counsel for the PBIL. This somewhat unusual arrangement was accepted by the Tribunal as it was clear that counsel for BPIL had been instructed late in the day and sharing the representation task with Ms. Jones as the lead was clearly in the interests of justice. A gentleman said to be a director (unidentified) of PBIL was also in attendance to give instructions. A number of others were present whose identity or purpose in attending was unknown.[19]The Tribunal chair started proceedings, after introductions, by setting out a number of queries he had arising from a consideration of the papers and counsel were helpful in clarifying their positions. 5[20]Mr. England then gave evidence. He formerly worked for Slough Borough Council and had been involved in matters at quite an early stage. He took over as a director of the Applicant after its shares had been acquired by the Council but had been liaising closely with the former directors since at least October 2017 when Slough Borough Council had agreed to take over the company. He was able to give evidence as to what had happened since the defects in the cladding had been identified.[21]Between September 2017 and March 2018 there had been a fire engine at the property paid for by Slough Borough Council together with the fire watch. Interim measures were put in place including the heat detectors which, in liaison with the fire service, permitted the removal of the fire engine and its replacement with something smaller and less expensive. That coincided with the change of providers of the fire watch from Abbatt Property Services to Event Fire Solutions Ltd.[22]The current situation is that an outline programme of works has been prepared but cannot be implemented without the approval of the fire service and a meeting has been arranged with them on the 5th December 2018. No specification has yet been prepared but if the fire service approves the programme, then he would anticipate the consultation process starting in the new year. Doing the best he can, and assuming that the fire service agrees the programme, he would anticipate the work starting in June/July 2019 and lasting about a year.[23]Dealing with the question of fire watch contracts with the service providers, he said that the contracts were for 3 months and then from month to month. In other words, they could be terminated on a month’s notice. For this reason the Applicant had not employed people under contracts of employment.[24]Mr. England was, quite properly, questioned at some length about whether there had been unjustified delays in commissioning reports and in the conduct of the claims against third parties and insurers. He denied this emphatically and explained that this was a complex and developing problem. Slough Borough Council had already paid over £200,000 in fees and expenses so far and had agreed a loan for the repair work.[25]Mr. Townson then gave evidence. He is a building surveyor. He, too, was challenged about the time taken for the investigations and work so far. He denied any undue delay and said that he agreed with Mr. England, particularly with regard to the estimated future timetable. Discussion[26]The Respondent PBIL has submitted its case upon the basis that the general conduct of the Slough Borough Council, the Applicant and its predecessors in title throughout should be considered by the Tribunal. It should also find that the Applicant and its predecessors in title have been in breach of contract because the cladding put on in 2014/15 was clearly wrong and this should have been detected at the time. Finally, the Tribunal should find that as there has been mismanagement throughout, the long leaseholders should not have to pay either for the cladding or the fire wardens. 6[27]It should be recorded that 2 long leaseholders have written to the Tribunal at pages 1323 and 1328 in the bundle. The first claims to be the leaseholder owner of flat 16 and the second says that he is ‘Owner of Nova House, Slough’. Both complain about the fact that they are being required to pay for the fire wardens. They do not add anything to PBIL’s case.[28]The Tribunal can see that the 3 Respondents who have contacted them with regard to this case are frustrated about how matters are being handled. There has been a disaster with many people being killed in a fire in Grenfell Tower and, nearly 18 months later, they are being told that they have to pay large amounts of money both for fire wardens and, possibly, for cladding.[29]There are promises by the Applicant that efforts are being made to pursue third parties (including the firm which certified compliance with Building Regulations in relation to the conversion) and insurers with positive legal advice about the chances of such claims being successful.[30]The problem is that this Tribunal is not a civil court and it should not get involved in matters which may turn out to be determined by a civil court judge in due course – almost inevitably in the High Court. All this Tribunal can do is make a determination as to(a) whether, contractually, the cost of these wardens can form part of a service charge, i.e. are they payable on the face of the contract, and, if so,(b) whether the cost indicated is reasonable. Obviously, this decision will not determine how any court would resolve the issue of a possible breach of contract arising from the conversion to apartments and the installation of the cladding. It will also not affect any insurance claim.[31]If any Respondent wants to claim under the insurance mentioned in the bundle, seek an injunction or claim damages from the Applicant or anyone else, that is entirely a matter from them. This is an expert Tribunal, not a court, and it cannot be expected to adjudicate on a complex breach of contract dispute when little, if any, evidence has been produced upon which such an adjudication could take place. Equally, this application has been made and the Tribunal does not see that it is just and equitable to just dismiss it or put off a decision which is within its jurisdiction.[32]PBIL says that the application should be struck out because either(a) the Tribunal should not make any determination until it is known whether the developers, the Applicant or its predecessors or insurers will have to pay the bills or(b) as it is clear that the long leaseholders who bought ‘off plan’ cannot be liable to pay anything, they should not have to contribute to the fire watch. It also alleges that the specification of the cladding was changed at the time of the conversion with the consent of the Borough Council.[33]As far as quantum is concerned, Mr. Allison referred the Tribunal to another First-tier Tribunal decision involving Cypress Place and Vallea Court in Manchester (MAN/00BR/LSC/2018/0016) dated 18th July 2018 where the market was tested with regard to the rates paid for this sort of fire watch. They are set out at paragraph 8.2.8(vi) of the decision. These cannot, of course, be ‘evidence’ in this case but it is noted that the rates recorded as being charged in the north west of England are remarkably similar to those 7 being paid in Slough.[34]PBIL may want to challenge the rates paid and/or the qualifications of the people working on the fire watch but they have not produced any evidence to support their challenge either to show that a lesser form of qualification would suffice, and be acceptable to the fire service, or that the rates paid would or should be less. It is trite law to say that the Applicant is not required to seek out the cheapest possible quote.[35]The Tribunal raised the issue of whether there should have been a section 20 (of the 1985 Act) consultation with regard to the fire watch claims now being made. Conclusions[36]It is clear to the Tribunal that the leases do allow for this claim to be made, as was, in effect, agreed by counsel for both parties at the outset of the hearing. The landlord must not only keep the structure in repair but it can claim for improvements and additional services provided that reasonableness and good estate management can be established.[37]Grenfell was a national disaster and, at the time of this hearing, the public enquiry is still in progress without any determinations having been made. Before June 2017, no purchaser of a flat ‘off plan’ would have investigated the nature or construction of the cladding to a block of flats. Such a purchaser would have just assumed that the ‘authorities’ would have set safety standards to protect occupiers. Even on the day after the disaster, people allegedly in authority were denying that the cladding was to blame. That misunderstanding was soon challenged and shown to be wrong.[38]The public perception of the evidence at the moment seems to be that the fire authority’s ‘stay put’ policy for residents was thwarted because the cladding let fire encapsulate much of the building very quickly. That policy had to be changed during that night to enable people to be evacuated but many people still lost their lives. The reason why it is necessary to set this scene is to show that the cladding problem seems not to have been understood even by the fire authorities. They now have an understanding and in respect of Nova House the ‘stay put’ policy has been changed to an ‘evacuate’ policy.[39]It is clear that a number of blocks of flats throughout the country, such as Nova House, have been found to have the same or similar problems as those at Grenfell. Any reasonable and sensible owner of a block of flats must co- operate with its local authority and fire service to resolve any problem. Apart from anything else, Slough Borough Council is obliged to take enforcement action under section 5 of the Housing Act 2004 should it find a category 1 hazard in respect of a dwelling.[40]Arguably, this type of cladding could constitute a category 1 hazard and, despite the protestations of PBIL, they could have been faced with a prohibition order preventing them allowing the flat to be occupied with an obvious affect on their income from the flat.[41]It seems clear to this Tribunal that the landlord of Nova House has already 8 incurred a huge debt as a direct result of the problems arising from the cladding at Grenfell which were even unknown to the fire service at the time the conversion took place at Nova House some 2/3 years before the disaster. The actions which have been taken and are being taken are with the full cooperation of, and sometimes at the direction of, the relevant authorities. The only focus is on the safety of the occupants.[42]The Tribunal accepts that the lack of progress to date in beginning a scheme of remedial works is due to the need to carry out extensive investigations in order to establish exactly what works are required. Following the meeting with the fire service in December, the Applicant ought to be able to move things forward more quickly.[43]For these reasons, the Applicant is acting reasonably, responsibly and in the interests of good estate management. It is unfortunate that no competitive quotes have been obtained for the work involved, but there are no competing quotes produced by PBIL and the information available would tend to suggest that the rates charged are not unreasonable. As the contracts are individual and short term involving less than £250 per flat per year per contract, the Tribunal is satisfied that no section 20 consultation was necessary for ‘qualifying works’. Clearly the contracts are not qualifying long term agreements. Costs[44]PBIL put in a late application for an order pursuant to section 20C of the 1985 Act which would, in effect, prevent the Applicant from including its costs of representation before this Tribunal in any future service charge demand. The test is whether such an order is ‘just and equitable’.[45]It is quite clear that the Applicant is taking matters extremely seriously and this includes taking legal advice. This has been a complex case. No arguments have been considered as to whether such costs would form part of the ‘sweep up’ provisions in paragraph 2 of Part II of the Sixth Schedule but it would seem, on the face of it, that they would.[46]It would be hoped that these costs would not be demanded immediately but the Tribunal does not consider it to be just and equitable for the order to be made as requested. …………………………………… Bruce Edgington Regional Judge 3rd December 2018 ANNEX - RIGHTS OF APPEAL 9 i. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) then a written application for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case. ii. The application for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application. iii. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit. iv. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal, and state the result the party making the application is seeking. --- decision_3.pdf --- 1 First-tier Tribunal Property Chamber (Residential Property) Case Reference : CAM/00MD/LSC/2018/0050 Property : Nova House, 1 Buckingham Gardens, Slough, SL1 1AY Proposed Appellant : Pell Buy It Investments Ltd. Proposed Respondent : Ground Rent Estates 5 Ltd. Date of Application : 4th January 2019 (rec’d 7th) Type of Application : For permission to appeal the Tribunal’s determination of the reasonableness and payability of service charges and/or administration charges The Tribunal : Bruce Edgington (Lawyer Chair) David Brown FRICS ____________________ DECISION _______________ Crown Copyright ©[1]The tribunal has considered the proposed Appellant’s request for permission to appeal dated 4th January 2019 and determines that:(a) it will not review its decision as a result of the application; and(b) permission be refused.[2]In accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007 and rule 21 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, the proposed Appellant may make further application for permission to appeal to the Upper Tribunal (Lands Chamber). Such application must be made in writing and be received by the Upper Tribunal (Lands Chamber) no later than 14 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for permission to appeal. Reasons[3]The reasoned decision in this case was sent to the parties on or before the 5th December 2018 which is when the time for making an application for 2 permission to appeal started. This application for permission to appeal is dated 4th January 2019 and was received by the Tribunal on the 7th January. It is therefore outside the 28 day time limit for such applications as was set out in the decision itself.[4]Nevertheless, the Tribunal will accept the application out of time. It is refused because such an application must set out the grounds of appeal (rule 52(5)(b) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013). The only ground of appeal set out in the application states that the grounds “are obvious” but makes no reference to any specific paragraph or determination in the decision made by the Tribunal. In other words, there is no means by which this Tribunal or the Upper Tribunal can make any judgment as to whether the grounds have any merit.[5]The ground also seems to assume that the decision against which the application for permission to appeal is lodged was made by Judge Edgington whereas it was, of course a decision of the Tribunal.[6]In fact, an accidental error was made in respect of one figure in the decision and the Tribunal’s attention has been drawn to this by the proposed Respondent’s solicitors. An amended decision will therefore be issued shortly and the proposed Appellant will therefore have another opportunity to apply for permission to appeal.[7]As the proposed Appellant was represented by 2 counsel at the hearing and the person who signed the application for permission to appeal was not present, it may be helpful to perhaps suggest that counsel’s assistance be obtained when drafting any grounds for appeal. …………………………………… Bruce Edgington Regional Judge 9th January 2019 --- decision_4.pdf --- 1 First-tier Tribunal Property Chamber (Residential Property) Case Reference : CAM/00MD/LSC/2018/0050 Property : Nova House, 1 Buckingham Gardens, Slough, SL1 1AY Proposed Appellant : Pell Buy It Investments Ltd. Proposed Respondent : Ground Rent Estates 5 Ltd. Date of Application : 5th February 2019 (rec’d 7th) Type of Application : For permission to appeal the Tribunal’s determination of the reasonableness and payability of service charges and/or administration charges The Tribunal : Bruce Edgington (Lawyer Chair) David Brown FRICS ____________________ DECISION _______________ Crown Copyright ©[1]The tribunal has considered the proposed Appellant’s request for permission to appeal dated 5th February 2019 and determines that:(a) it will not review its decision as a result of the application; and(b) permission be refused.[2]In accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007 and rule 21 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, the proposed Appellant may make further application for permission to appeal to the Upper Tribunal (Lands Chamber). Such application must be made in writing and be received by the Upper Tribunal (Lands Chamber) no later than 14 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for permission to appeal. Reasons[3]The original reasoned decision in this case was sent to the parties on or before the 5th December 2018. An application for permission to appeal was 2 made by the proposed Appellant just outside the 28 day period but was accepted. The application was refused because there were no grounds for appeal set out.[4]In fact, an accidental error was made in respect of one figure in the decision and the Tribunal’s attention had been drawn to this by the proposed Respondent’s solicitors. An amended decision was issued on the 11th January 2019 and this application for permission is in time.[5]In refusing the first application, the Tribunal referred to the proposed amended decision and made the point that a further application for permission to appeal could be made when that arrived. It added these words “As the proposed Appellant was represented by 2 counsel at the hearing and the person who signed the application for permission to appeal was not present, it may be helpful to perhaps suggest that counsel’s assistance be obtained when drafting any grounds for appeal.” This further application for permission to appeal is signed by the same person, i.e. Rita Pell, who was not present at the hearing.[6]This application for permission consists of some 16 pages. It seeks to re- argue matters which were before the Tribunal at the hearing. It should be remembered that, according to the Land Registry, there are some 68 long leases of flats in this building over 6 floors. Of those long leaseholders, only 1, the proposed appellant, took part in the proceedings and 2 others wrote in. These 2 others did not argue matters of law but just said that it was wrong that they were being asked to pay for fire wardens (paragraph 27 of the decision).[7]It is necessary for the Tribunal to consider the grounds of appeal in general terms because it would be wrong both in terms of cost and justice, to either just dismiss the application without reasons or just allow the application and let the parties re-argue their cases before the Upper Tribunal.[8]Of necessity, the points made and this Tribunal’s responses are summaries only:(1) It is said that the tribunal failed to consider “if, by whom, when and how any amount is payable by the Respondents”. The Tribunal was simply asked whether the costs of fire marshals up to September 2018, i.e. a finite amount already incurred, were recoverable as service charges under the terms of the leases, which is what it did.(2) The propose Appellant wants the Tribunal to consider a separate challenge to many other unrelated service charges. It wanted that separate application to be consolidated with this application and the Tribunal refused to do so because (a) it was an entirely separate application with completely different evidence and (b) that separate application is proceeding and will be heard in due course.(3) The Tribunal has made it clear in its decision that as an expert Tribunal it would not be drawn into determining a dispute between the leaseholders, the landlord and others as to who may ultimately be liable to pay for the conditions set by the Fire Service and other relevant 3 authorities and the replacement of the cladding. Those issues are likely to arise from either the contracts to sell the leases or the tort of negligence involving several potential third parties. The amounts will run into millions of pounds and, if not settled amicably, will inevitably have to be determined by a High Court Judge, at the least. These matters are quite separate from the matter raised in the application. This was one of the points raised by the Tribunal chair at the outset of the hearing (paragraph 19 of the decision) and neither counsel for the proposed Appellant sought to challenge the point i.e. that the Tribunal could not determine the ultimate liability. The proposed Appellant considers that all these issues should be decided at the same time.(4) The proposed Appellant says that subsection 18(2) of the Landlord and Tenant Act 1985 (“the 1985 Act”) was not considered by the Tribunal and should have been. That subsection deals with the costs or estimated costs to be incurred by a landlord. The application specifically related to costs which had actually been incurred which means that subsection 18(2) is not relevant to this particular application.(5) The proposed Appellant sets out a number of written statements made by Rita Pell prior to the hearing which were not dealt with in the decision. The problem with this is that the proposed Appellant was represented by 2 counsel at the hearing. The case, by agreement of all counsel and the Tribunal, was dealt with on the basis of evidence called by the Applicant landlord and then submissions. No evidence was called by the proposed Appellant and Rita Pell was not present, although her statements were in the bundle and were considered by the Tribunal. The decision deals in full with all the points raised by counsel at the hearing and any other matters it considered relevant. All counsel expressed satisfaction that the members of the Tribunal had read and understood all the points being raised.(6) As Ms. Pell was not at the hearing it is necessary to record that during the hearing, the Tribunal chair interrupted Ms. Kocharova, one of the proposed Appellant’s counsel, in her cross examination of one of the witnesses as she repeated the same question in different ways. After the case had finished and whilst everyone was still present, the chair apologised to Ms. Kocharova if she felt that he was being rude. Ms. Jones, her senior, immediately stepped in and said that there was no need for an apology and added that she thought that the hearing had been conducted entirely appropriately.(7) A complaint is made about the Tribunal refusing to consider evidence submitted after the hearing. As the Tribunal explained to the proposed Appellant at the time, the hearing had taken place and the Tribunal simply could not then re-open the case in correspondence.(8) There is a complaint about the amendment to the decision when the Tribunal changed the amount of cost incurred up to September 2018 from £277,518.16 to £404,007.76. The proposed Appellant denies that it was an accidental slip and says that such an amendment would have been contested. The original statement of case by the landlord Applicant set out the figure as at the 1st May 2018 and that was 4 £277,518.16. The witness statement of Michael England, who gave evidence at the hearing, says that the further costs up to 30th September were £126,489.60 i.e. the total amount was £404,007.76. That written statement was dated 9th November 2018 and was served and included in the bundle for the hearing nearly 3 weeks later – including the invoices in support. The skeleton argument for the landlord repeated the point and it was not commented upon or challenged by counsel for the proposed Appellant. The original decision contained the first figure and did not add the second figure. This was an accidental slip and was corrected.(9) There are repeated suggestions that case management decisions were wrong. As an example, a time estimate for the hearing of one day was given by the Tribunal chair which, the proposed Appellant says, is an example of the Tribunal’s “intent on dealing with the case quickly”. Two days were requested. The actual hearing lasted much less than a day and neither of the 2 counsel representing the proposed Appellant made any representations about the time estimate or complained or even hinted that they had insufficient time to present their client’s case. Accordingly, the Tribunal does not understand the comment that “the Tribunal categorically refused to consider a more appropriate timetable to fully consider all of the issues highlighted to the Tribunal long before the hearing”.(10) Finally, the proposed Appellant says that the issues raised in this case have ‘potentially wide implication’. With respect to the proposed Appellant, the only issue which has wide implication is the vexed question of who pays for the ultimate cost of removing and replacing cladding and the resulting further expense such as fire watches. The decision in this case does deal with this point very clearly by saying that this is not a matter for a First-tier Tribunal using its jurisdiction under the 1985 Act. The issue actually raised in this case depends entirely on the wording of the leases and the Tribunal’s view as to whether any costs claimed are reasonable and payable. The wording of these particular leases is very wide and, according to the decision reached, include the fire watch or waking watch costs. Each of these cases will depend on the lease wording and can, and should be, determined on a case by case basis.[9]In all the circumstances, the Tribunal does not consider that any appeal is likely to succeed. …………………………………… Bruce Edgington Regional Judge 8th February 2019