Judge C A RaiArquero Management Limited for the ApplicantDate 10 December 2024
DECISION
This is a formal order of the Tribunal which must be complied with by the parties. Communications to the Tribunal MUST be made by email to rpsouthern@justice.gov.uk. All communications must clearly state the Case Number and address of the premises. Summary of the 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 relation to the works outlined in the notice of intention to leaseholders dated 15 August 2024. The Tribunal has made no determination on whether the costs of the works are reasonable or payable. Background[2]The Applicant seeks dispensation under Section 20ZA of the Landlord and Tenant Act 1985 and from the consultation requirements imposed on the landlord by Section 20 of the same Act. The application was received on 15 August 2024.[3]The Property is described in the application as comprising one block within a development of three blocks of flats - Sea Pines, Osborne Court and Totland Court - in total containing 30 flats.• Each leaseholder of Sea Pines is also a member of the freehold company, Milcliff Court Ltd.• MIlcliff [sic] Court are responsible for the external common works to the estate, but each block is responsible for their common internal repairs as such, the party who are responsible for the internal common repairs for the Sea Pines block is Sea Pines Residents Association [sic]. The Sea Pines block of flats contains 12 flats, in two cores -Flats 1-6 and Flats 7-12.• under the terms of the leases, each leaseholder has an equal liability for• service charges to the common estate and an equal liability for the• common internal maintenance. Sea Pines has a lift in each core (two lifts in total), and all costs for the repair of the lift are equally split between the Sea Pines leaseholders.[4]The Applicant explains in the application that the lift in one of the blocks containing flats 1 -6 stopped working. Following and inspection by the lift maintenance company the Applicant was advised that the lift motor had failed. Due to the age of the lift and its components the lift motor is no longer supported by the manufacturer. As such, the lift maintenance company advised the only repair option was to send the motor to an approved 3rd party company to rewind. The only other option would be to completely replace the motor, which was significantly more expensive. The Tribunal has been advised that the estimated cost to rewind the motor is £3,944 inclusive of VAT. That amount exceeds the amount that can be recovered from the leaseholders without a prior section 20 consultation (which the Tribunal was told would be £3,000). The motor was collected on 4 March 2024 and was at the date of the application with the rewind company. The lessees were contacted by the Applicant when the lift went out of service. The options for repair have been discussed with them and collectively they opted for the cheaper option of the rewind. The proposed repair matter was discussed at the recent AGM. . Dispensation is sought retrospectively from the Tribunal to enable the Applicant to recover the costs of the repairs from the lessees. The work was urgent due to the limited mobility of a number of residents, the lift needed to be repaired and put back into service as quickly as possible. Until the lift is working residents are unable to access their properties. The information provided to the Tribunal is that upon acceptance of the quotation from the lift maintenance company the proposal would be that the lift is restored to working order within two weeks. The initial cost of the repair will be funded from the retained reserve fund held on behalf of the lessees.[5]The Tribunal gave Directions on 24 October 2024 listing the steps to be taken by the parties in preparation for the determination of the dispute, if any.[6]The Directions stated that Tribunal would determine the application on the papers received unless a party objected in writing to the Tribunal within 7 days of the date of receipt of the Directions. No party has objected to the application being determined on the papers.[7]The only issue for the Tribunal is whether or not it is reasonable to dispense with the statutory consultation requirements. This application is not about the proposed costs of the works, and whether they are recoverable from the leaseholders as service charges or the possible application or effect of the Building Safety Act 2022. The 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, and the contribution payable through the service charges. The Law[8]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.[9]The relevant section of the Act reads as follows: S.20 ZA Consultation requirements: Where an application is made to a Leasehold Valuation Tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long-term agreement, the Tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.[10]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.[11]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.[12]The factual burden of demonstrating prejudice falls on the lessee. The lessees 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 lessees.[13]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.[14]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.[15]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.[16]If dispensation is granted, that may be on terms.[17]There have been subsequent Decisions of the higher Courts and Tribunals of assistance in the application of the Decision in Daejan but none are relied upon or therefore require specific mention in this Decision. Consideration[18]The Directions attached a reply form for the Respondents to complete to confirm whether they agreed with the application or not and if opposed, to provide a statement setting out why they oppose.[19]The lessee of Flat 12 (Neil Saunders) has returned the reply form confirming his agreement with the application. The attorney for the lessee of Flat 5 has also returned the reply form confirming agreement with the application (together with a copy of the power of attorney authorising him to consent on behalf of that lessee). The Tribunal has not received any other replies from the lessees of the remaining ten flats.[20]Having considered the application and prior to undertaking this determination, I am satisfied that a determination on the papers remains appropriate, given that the application remains unchallenged.[21]The reason why dispensation from consultation requirements is said to be required is to facilitate the Applicant ensuring that the repair to the lift was carried out as quickly as possible given the vulnerability dependence of some of the lessees who need the lift in order to gain access their flats. I am satisfied that the qualifying works are of an urgent nature and that it reasonable for the Tribunal to dispense with the consultation requirements.[22]No objection to the dispensation of the consultation requirements has been received by the Tribunal from any of the Lessees.[23]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 with the Lessees, except for the potential delay and potential problems.[24]The Tribunal finds that the Respondents have not suffered any prejudice by the failure of the Applicant to follow the full consultation process.[25]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 building described in this Decision. This dispensation is conditional upon the Applicant serving a copy of this Decision on all of the Lessees within 14 working days of it receiving this Decision.[26]This Decision is confined to determination of the issue of dispensation from the consultation requirements in respect of the qualifying works to repair the lift as outlined in paragraph 4. The Tribunal has made no determination on whether the costs are payable or reasonable. If a Lessee wishes to challenge the payability or reasonableness of those costs, then a separate application under section 27A of the Act would have to be made.[27]In reaching my decision I have taken account of the fact that no party has objected to the application. The lessees have had opportunity to raise any objection, and they have not done so. Judge C A Rai 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 the Regional office which has been dealing with the case by email at rpsouthern@justice.gov.uk[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.