Judge D R WhitneyNapier Management Services Limited for the Applicant--- for the RespondentDate 26 July 2021Property: 25 Wellington Road, Bournemouth, Dorset BH8 8JHType of application: To dispense with the requirement to consult lessees about major works section 20ZA of the Landlord and Tenant Act 1985
DECISION
[1]The Applicant is granted dispensation under Section 20ZA of the Landlord and Tenant Act 1985 from the consultation requirements imposed on the landlord for works required to roof and brickwork conditional upon the Landlord serving a copy of this decision on all of the leaseholders. The application and the history of the case[2]The Applicants applied for dispensation under Section 20ZA of the Landlord and Tenant Act 1985 from the consultation requirements imposed on the landlord by Section 20 of the 1985 Act. The application sought dispensation from consultation in respect of works which had been identified to the roof and brickwork.[3]The Tribunal gave Directions on 2nd July 2021, explaining that the only issue for the Tribunal is whether, or not, it is reasonable to dispense with the statutory consultation requirements and is not the question of whether any service charge costs are reasonable or payable.[4]The Directions provided that any party who objects should complete a pro forma which was attached to the same. Only those parties who objected would remain listed as a Respondent. No response has been received from any leaseholder. The Law[5]Section 20 of the Landlord and Tenant Act 1985 (“the Act”) and the related Regulations provide that where the lessor intends to undertake major works with a cost of more than £250 per lease in any one service charge year the relevant contribution of each lessee (jointly where more than one under any given lease) will be limited to that sum unless the required consultations have been undertaken or the requirement has been dispensed with by the Tribunal. An application may be made retrospectively.[6]Section 20ZA provides that on an application to dispense with any or all of the consultation requirements, the Tribunal may make a determination granting such dispensation “if satisfied that it is reasonable to dispense with the requirements”.[7]The appropriate approach to be taken by the Tribunal in the exercise of its discretion was considered by the Supreme Court in the case of Daejan Investment Limited v Benson et al [2013] UKSC 14.[8]The leading judgment of Lord Neuberger explained that a tribunal should focus on the question of whether the lessee will be or had been prejudiced in either paying where that was not appropriate or in paying more than appropriate because the failure of the lessor to comply with the regulations. The requirements were held to give practical effect to those two objectives and were “a means to an end, not an end in themselves”.[9]The factual burden of demonstrating prejudice falls on the lessee. The lessee must identify what would have been said if able to engage in a consultation process. If the lessee advances a credible case for having been prejudiced, the lessor must rebut it. The Tribunal should be sympathetic to the lessee(s).[10]Where the extent, quality and cost of the works were in no way affected by the lessor’s failure to comply, Lord Neuberger said as follows: “I find it hard to see why the dispensation should not be granted (at least in the absence of some very good reason): in such a case the tenants would be in precisely the position that the legislation intended them to be- i.e. as if the requirements had been complied with.”[11]The “main, indeed normally, the sole question”, as described by Lord Neuberger, for the Tribunal to determine is therefore whether, or not, the Lessee will be or has been caused relevant prejudice by a failure of the Applicant to undertake the consultation prior to the major works and so whether dispensation in respect of that should be granted.[12]The question is one of the reasonableness of dispensing with the process of consultation provided for in the Act, not one of the reasonableness of the charges of works arising or which have arisen.[13]If dispensation is granted, that may be on terms.[14]The effect of Daejan has been considered by the Upper Tribunal in Aster Communities v Kerry Chapman and Others [2020] UKUT 177 (LC), although that decision primarily dealt with the imposition of conditions when granting dispensation and that the ability of lessees to challenge the reasonableness of service charges claimed was not an answer to an argument of prejudice arising from a failure to consult. Decision[15]The application explains that the subject Property is a detached converted house which now contains 6 flats. It is explained that scaffolding had been erected so that external redecorations and certain repairs could be undertaken. This work had been subject to a full consultation.[16]Following the erection of the scaffolding it became apparent that further repairs were required to the roof and the brickwork. It is said that the cost of these works will exceed the contingency sums allowed in the original contract. The application lists the proposed works and suggests that the additional costs are likely to be in the order of £12,000 plus vat and ay associated professional fees. The application explains that the contractor who is on site already has been instructed to undertake these works whilst the scaffolding is in place.[17]No leaseholder has objected. The Applicant’s representative has confirmed that they have served a copy of the application and the directions upon all 6 of the leaseholders.[18]In my judgment it is just and equitable to grant dispensation to the Applicant for the additional works required to the brickwork and roof as identified within the application form. I am satisfied that consultation should be dispensed with given there is already scaffolding in place and a contractor who can undertake these works together with those originally envisaged.[19]In reaching my decision I have taken account of the fact that no party has objected to the application. The leaseholders have had opportunity to raise any objection and they have not done so. I do however direct that the dispensation is conditional upon the Applicant or their agent sending a copy of this decision to all the leaseholders so that they are aware of the same.[20]For completeness I confirm in making this determination I make no findings as to the liability to pay or the reasonableness of the estimated costs of the works. RIGHTS OF APPEAL[1]A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application to the First-tier Tribunal at rpsouthern@justice.gov.uk being the Regional office which has been dealing with the case.[2]The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.[3]If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.[4]The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking