Talisman Homes (West) LimitedApplicantThe Leaseholders Flats 1-10Respondent
Before
Judge N JuttonResidential Management Group Limited for the ApplicantDate 3 December 2024
DECISION
[1]The Applicant is granted dispensation under Section 20ZA of the Landlord and Tenant Act 1985 from the consultation requirements in respect of works undertaken to repair the roof at the Property which (for the purpose of identifying those works) are understood to have cost £8523.08. The application and the history of the case[2]The Applicant applies 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.[3]The Applicant says that the Property is a two-storey block of 10 residential units comprising six flats and four houses. The Property was built circa 1900, converted into a children’s home in 1954 and then to its present composition in 1994.[4]The Applicant says that in or about 2022 it was in the process of undertaking a tendering process in respect of proposed works of external redecoration to the Property. It consulted with the leaseholders in respect of those proposed works. The most competitive tender received for the external redecoration was from a company called The Complete Property Group. It was a minded appoint that company to carry out the work. However it then became aware of leaks from the roof affecting two of the flats. That was seen as an urgent matter. The Applicant instructed surveyors to prepare an amended specification of works to cover both the external redecoration works and the works to repair the roof. In December 2023 it served on the leaseholders an amended notice of intention to undertake both the external redecoration works and the works to the roof. The leaseholders were invited to provide their comments and observations.[5]The Applicant says that it had completed its ‘due diligence’ as regards the consultation relating to the external works of redecoration. That it considered the question of the delay that would be caused whilst it obtained further quotations from other contractors in respect of the works required to the roof. That process would delay not only the external redecoration work but also the work to repair the leaks to the roof. The Applicant further took the view that it would be sensible to appoint The Complete Property Group to undertake works of repair to the roof at the same time as it undertook the external redecoration works.[6]For those reasons the Applicant decided to proceed to instruct The Complete Property Group to undertake the works to repair the roof at the same time as undertaking the external redecoration work. It did not in the circumstances obtain quotes for the cost of the works to the roof from any other contractors. It did not therefore complete the statutory section 20 consultation process in respect of the proposed works to the roof.[7]The Applicant says that all of the work has been completed to its satisfaction. The Applicant says that it believes that it adopted a fair and ethical approach in respect of both sets of work as regards the leaseholders. It contends that the leaseholders have not suffered any prejudice by reason of it not completing the section 20 consultation process in respect of the works to the roof. The total cost of the works to the roof was £8523.08.[8]The Tribunal made Directions on 23 October 2024. The Directions provided that the Tribunal was satisfied that the application may be determined on the papers without an oral hearing and that it would proceed accordingly unless a party objected in writing within 14 days of receipt of the Directions. No objections have been received accordingly the Tribunal proceeds to determine the application on the papers.[9]The Directions also provided for the Applicant to send to each Respondent the application and the Directions. The Directions made provision for the Respondents to complete a reply form and return that to the Tribunal and to the Applicant stating whether or not the application was opposed, and if so stating why. No objections have been received from the Respondents. The Tribunal has received a reply forms from the leaseholder of flat 4 consenting to the application.[10]The Directions made it clear that this application does not concern the issue of whether or not service charge costs arising from the Works will be payable and if so reasonable in amount or of the possible application or effect of the Building Safety Act 2022. That the Respondent leaseholders have the right to make a separate application to the Tribunal under section 27A of the Landlord and Tenant Act 1985 to determine the reasonableness of the costs of the proposed works, and the contribution payable through the service charges both in general and in particular because of the provisions of and the protections provided by the Building Safety Act 2022. The Law[11]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.[12]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”.[13]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.[14]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”.[15]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).[16]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.”[17]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.[18]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.[19]If dispensation is granted, that may be on terms.[20]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[21]The Applicant in summary says that it completed a consultation process in respect of proposed works to redecorate the external parts of the Property. It selected a particular contractor to carry out those works. However before those works could commence, it discovered a leak to the roof of the Property that was affecting two of the flats. That it took the view that it would be sensible to instruct the same contractor to address the leak to the roof at the same time as undertaking the works of external redecoration. That to undertake a complete consultation process in respect of the repair works to the roof as required by section 20 of the Act would cause unnecessary delay to both the external redecoration works and the works to the roof.[22]There was no prejudice caused to the Respondent leaseholders, the Applicant says, by its failure to complete the consultation process in respect of the works to the roof. It had communicated its intention to carry out both sets of work at the same time to the leaseholders and allowed an opportunity for the leaseholders to provide any comments or observations.[23]None of the Respondent leaseholders have objected to the application for dispensation from the statutory consultation requirements. One of the Respondents has replied consenting to the application.[24]There is no evidence before me to the effect that the Respondents are prejudiced by the failure on the part of the Applicant to complete the statutory consultation process in respect of the works to repair the roof. In my judgment it is just and equitable to grant dispensation from the statutory consultation requirements in respect of works carried out to repair the roof. Those being works understood to have cost £8523.08.[25]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.[26]For completeness I confirm that in making this determination I make no findings as to the costs of the works and whether they are recoverable form leaseholders as service charges, whether they are reasonable in amount or of the possible application or effect of the Building safety Act 2022. 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 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