Rope Quays (Harlequin Court) RTM Company LimitedApplicantThe Lessees- see schedule Wilson Connelly Limited 2 Taylor Wimpey Southern Counties The Tenants’ AssociationRespondent
Before
Judge J DobsonKarla- Jean Bailey for the ApplicantDate 3 September 2021Property: Harlequin Court, Rope Quays, Mumby Road, Gosport, Hampshire, PO12 1EQType 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 by Section 20 of the 1985 Act in respect of major works, being works to a lift and related. The Tribunal has made no determination on whether the costs of the works are reasonable or payable. The application and the history of the case[2]The Applicant 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.[3]The Tribunal gave Directions on 18th August 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. The Directions Order listed the steps to be taken by the parties in preparation for the determination of the dispute, if any.[4]The Directions further stated that Tribunal would determine the application on the papers received and that having considered the application the Tribunal was satisfied that the matter is urgent, it is not practicable for there to be a hearing and it is in the interests of justice to make a decision disposing of the proceedings without a hearing (rule 6A of the Tribunal Procedure Rules 2013 as amended by The Tribunal Procedure (Coronavirus) Amendment Rules 2020 SI 2020 No 406 L11.[5]This the Decision made on that basis and following a paper determination. The Law[6]Section 20 of the Landlord and Tenant Act 1985 (“the Act”) and the related Regulations provide that where the lessor undertakes qualifying works with a cost of more than £250 per lease 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.[7]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”.[8]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.[9]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”.[10]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).[11]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.”[12]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.[13]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.[14]If dispensation is granted, that may be on terms. Consideration[15]The Applicant explained in the application that the Property is a fourteen- storey purpose- built apartment block. It stated that work is required to a/ the lift, which requires supply and fitting of an upgraded Kone KDL32 drive, said to be a major component and the failure of which could not be foreseen. In addition, due to the size of the drive unit, 2 engineers are said to be required to complete the installation. The estimated cost is £13270.14 plus VAT and additional work of brake adjustment at cost of £977.54 plus VAT.[16]The application is described as “incredibly urgent” as a/the lift has completely failed. It is said that many residents have medical conditions, such that use of the stairs is a health and safety concern, and that nurses and carers are in attendance in relation to certain of the residents. The Application states that the Lessees have been informed of the position, including that the cost will not be covered by insurance.[17]The Applicant sought dispensation from consultation because of the stated urgency of the works.[18]A sample lease was provided with the application (“the Lease”). The Tribunal understands that the leases of the other properties are in the same or substantively the same terms.[19]The Lease names four parties, which do not include the Applicant. At the time, most repairing obligations fell to the “Company” as termed, being the then management company. The Applicant has acquired the right to manage subsequently.[20]The Applicant is now responsible for repairs and other services. The relevant provisions are particularly contained in clauses 1.9, 3 and 4 and the Third, Fourth and Fifth Schedules of the Lease.[21]There has been no response from any of the Lessees opposing the application. Indeed, each of the twenty-seven Lessees who have responded have agreed to the application.[22]None of the Lessees have therefore asserted that any prejudice has been caused to them. The Tribunal finds that nothing different would be done or achieved in the event of a full consultation, except for the potential delay and potential problems.[23]Accordingly, the Tribunal finds that the Respondents have not suffered any prejudice by the failure of the Applicant to follow the full consultation process.[24]The Tribunal consequently finds that it is reasonable to dispense with all of the formal consultation requirements in respect of the major works to the lift of the building.[25]This decision is confined to determination of the issue of dispensation from the consultation requirements in respect of the qualifying long-term agreement. The Tribunal has made no determination on whether the costs are reasonable or payable. If a Lessee wishes to challenge the reasonableness of those costs, then a separate application under section 27A of the Landlord and Tenant Act 1968 would have to be made. 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 by email to rpsouthern@justice.gov.uk to the First-tier Tribunal at 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.