Grays Inn Capital LimitedApplicantThe LeaseholdersRespondent
Before
Judge N JuttonBelmont Management Services (South West) Limited for the ApplicantDate 1 December 2024Property: Flat 4-44 Powhay Mills, Tudor Street, Exeter, Devon, EX4 3BTType 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 in respect of works to be undertaken at the Property to install a drive unit upgrade to the lift that serves flats 4 – 16 at the Property. 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 purpose built block of 41 flats.[4]The Applicant says that works are required to supply and install a drive unit upgrade to the lift that serves flats 4–16. That a power surge caused a circuit board to break down such that the lift was unable to work. That the malfunction to the circuit board in turn caused a malfunction to the main drive of the lift. The main drive being that part of the lift that changes the frequency convertor that controls the speed of the lift. That the cost of the works to supply and install a drive unit upgrade is £13,964 plus VAT.[5]The Applicant says that it was due to carry out the statutory consultation process required by section 20 of the Landlord and Tenant Act 1985 which would take it some 60 days. That however most leaseholders do not wish to wait for over 60 days until the work is carried out and be denied the use of the lift in the meantime. That the lift needs to be in service most particularly for residents who for health reasons could not use the stairs.[6]The Tribunal made Directions on 7 November 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 7 days of receipt of the Directions. No objections have been received accordingly the Tribunal proceeds to determine the application on the papers.[7]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 reply forms from 10 Respondent leaseholders consenting to the application.[8]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[9]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.[10]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”.[11]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.[12]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”.[13]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).[14]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.”[15]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.[16]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.[17]If dispensation is granted, that may be on terms.[18]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[19]The Applicant explains that a lift at the Property that serves flats 4 to 16 has broken down. That a power surge to the Property caused a circuit board to break down and in turn a malfunction that stopped the lift from working. In particular, a drive unit upgrade needs to be installed to enable the lift to work again. The cost of doing so is £13,964 plus VAT.[20]The Applicant, quite properly intended to carry out a consultation process with Respondents as required by section 20 of the Act. That process would take some 60 days during which the lift would remain out of operation. That no doubt would cause some difficulty for those leaseholders who rely upon the lift to gain access to and from their flat and who may find it problematic if not impossible to use the stairs. As such, the Applicant says, most leaseholders have expressed a wish not to wait over 60 days before the lift is repaired whilst a consultation process is carried out.[21]None of the Respondent leaseholders have objected to the application for dispensation from the statutory consultation requirements. 10 of Respondents have replied saying that they consent to the application. There is no evidence before me to the effect that the Respondents will be prejudiced by a failure on the part of the Applicant to undertake the statutory consultation process.[22]In my judgment it is just and equitable to grant dispensation from the statutory consultation requirements in respect of the proposed works to repair the lift. Those being works to install a drive unit upgrade to the lift at a cost of some £13,964 plus VAT. In particular, having regard to those leaseholders who are unable to make use of the stairs or have difficulty in doing so, I am satisfied that those works should be carried out as a matter of some urgency to assist those leaseholders to gain access to and from their flat.[23]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.[24]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 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 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