London Borough of LambethApplicantCharlie CroweRespondent
Before
Judge ShepherdDate 23 May 2023
DECISION
Dispensation is refused.
REASONS
[1]In this case the Applicant seeks dispensation from the consultation requirements provided for by section 20ZA of the Landlord and Tenant Act 1985. The Applicant is London Borough of Lambeth (“The Applicant”), The Applicant is the freeholder of premises at 81 Danbrook Road, London, SW165JY (“The premises”). The premises are described as an “on street” building. The Respondent is the one leaseholder in the building. The application was originally made against generic- “leaseholders” until they discovered that Mr Crowe was the only leaseholder. They also originally indicated that the consist of the works for which dispensation was sought would be shared by a number of leaseholders. In fact Mr Crowe is liable for a large proportion of the works – about 61% of the total bill of £5,428.50.[2]Dispensation is said to be sought for carrying out urgent works These works were to remedy a leak under the flooring at 81 Danbrook Road. The works in summary are as follows: trace services, set up safety barrier, excavate boundary, install isolation valve, carry out further excavations, cut out and remove old supply and replace with MDPE, locally chlorinate, construct valve chamber, backfill, permanently reinstate area and remove surplus materials. The cost of the works was £5,428.50. The works were carried out by the Council’s qualifying long-term contractor on 28 September 2022 and were described as urgent. Originally the works were described as a temporary repair. It now appears that the repair was permanent.[3]Mr Crowe objects to the dispensation being granted. He challenges whether the works were really urgent and he also challenges the payability and reasonableness of the cost of the works involved. The former issue is (despite the Applicant’s protestations) relevant to the question of dispensation. The latter is not, however Mr Crowe retains the right to challenge the issue of the reasonableness and payability of the charges via a s.27A Landlord and Tenant Act 1985 challenge in the Tribunal – although this is no longer necessary in light off this decision. The current application deals solely with the issue of dispensation from consultation. The law Landlord and Tenant Act 1985,s.20ZA 20ZA Consultation requirements: supplementary(1) Where an application is made to [the appropriate 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.(2) In section 20 and this section— “qualifying works” means works on a building or any other premises, and “qualifying long term agreement” means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months.(3) The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement— (a) if it is an agreement of a description prescribed by the regulations, or (b) in any circumstances so prescribed.(4) In section 20 and this section “the consultation requirements” means requirements prescribed by regulations made by the Secretary of State.(5) Regulations under subsection (4) may in particular include provision requiring the landlord— (a) to provide details of proposed works or agreements to tenants or the recognised tenants' association representing them, (b) to obtain estimates for proposed works or agreements, (c) to invite tenants or the recognised tenants' association to propose the names of persons from whom the landlord should try to obtain other estimates, (d) to have regard to observations made by tenants or the recognised tenants' association in relation to proposed works or agreements and estimates, and (e) to give reasons in prescribed circumstances for carrying out works or entering into agreements.(6) Regulations under section 20 or this section— (a) may make provision generally or only in relation to specific cases, and (b) may make different provision for different purposes.(7) Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. Daejan[4]In Daejan Investments v Benson [2013] UKSC 14, the landlord was the freehold owner of a building comprised of shops and seven flats, five of which were held by the tenants under long leases which provided for the payment of service charges. The landlord gave the tenants notice of its intention to carry out major works to the building. It obtained four priced tenders for the work, each in excess of £400,000, but then proceeded to award the work to one of the tenderers without having given tenants a summary of the observations it had received in relation to the proposed works or having made the estimates available for inspection. The tenants applied to a leasehold valuation tribunal under section 27A of the Landlord and Tenant Act 1985 , as inserted, for a determination as to the amount of service charge which was payable, contending inter alia that the failure of the landlord to provide a summary of the observations or to make the estimates available for inspection was in breach of the statutory consultation requirements in paragraph 4(5) of Schedule 4 to the Service Charges (Consultation Requirements) (England) Regulations 2003 so as to limit recovery from the tenants to £250 per tenant, as specified in section 20 of the 1985 Act and regulation 6 of the 2003 Regulations in cases where a landlord had neither met, nor been exempted from, the statutory consultation requirements. The landlord applied to the tribunal under section 20(1) of the Act for an order that the paragraph 4(5) consultation requirements be dispensed with, and proposed a deduction of £50,000 from the cost of the works as compensation for any prejudice suffered by the tenants, which offer they refused. The tribunal held that the breach of the consultation requirements had caused significant prejudice to the tenants, that the proposed deduction did not alter the existence of that prejudice, and that it was not reasonable within section 20ZA(1) of the Act, as inserted, to dispense with the consultation requirements. The Upper Tribunal (Lands Chamber) dismissed the landlord's appeal and the Court of Appeal upheld the Upper Tribunal's decision.[5]The Supreme Court , allowing the appeal (Lord Hope of Craighead DPSC and Lord Wilson JSC dissenting), held that the purpose of a landlord's obligation to consult tenants in advance of qualifying works, set out in the Landlord and Tenant Act 1985 (as amended) and the Service Charges (Consultation Requirements) (England) Regulations 2003 , was to ensure that tenants were protected from paying for inappropriate works or from paying more than would be appropriate; that adherence to those requirements was not an end in itself, nor was the dispensing jurisdiction under section 20ZA(1) of the 1985 Act a punitive or exemplary exercise; that, therefore, on a landlord's application for dispensation under section 20ZA(1) the question for the leasehold valuation tribunal was the extent, if any, to which the tenants had been prejudiced in either of those respects by the landlord's failure to comply; that neither the gravity of the landlord's failure to comply nor the degree of its culpability nor its nature nor the financial consequences for the landlord of failure to obtain dispensation was a relevant consideration for the tribunal; that the tribunal could grant a dispensation on such terms as it thought fit, provided that they were appropriate in their nature and effect, including terms as to costs; that the factual burden lay on the tenants to identify any prejudice which they claimed they would not have suffered had the consultation requirements been fully complied with but would suffer if an unconditional dispensation were granted; that once a credible case for prejudice had been shown the tribunal would look to the landlord to rebut it, failing which it should, in the absence of good reason to the contrary, require the landlord to reduce the amount claimed as service charges to compensate the tenants fully for that prejudice; and that, accordingly, since the landlord's offer had exceeded any possible prejudice which, on such evidence as had been before the tribunal, the tenants would have suffered were an unqualified dispensation to have been granted, the tribunal should have granted a dispensation on terms that the cost of the works be reduced by the amount of the offer and that the landlord pay the tenants' reasonable costs, and dispensation would now be granted on such terms. Per Lord Neuberger of Abbotsbury PSC, Lord Clarke of Stone-cum-Ebony and Lord Sumption JJSC.(i) Where the extent, quality and cost of the works were unaffected by the landlord's failure to comply with the consultation requirements an unconditional dispensation should normally be granted (post, para 45).(ii) Any concern that a landlord could buy its way out of having failed to comply with the consultation requirements is answered by the significant disadvantages which it would face if it fails to comply with the requirements. The landlord would have to pay its own costs of an application to the leasehold valuation tribunal for a dispensation, to pay the tenants' reasonable costs in connection of investigating and challenging that application, and to accord the tenants a reduction to compensate fully for any relevant prejudice, knowing that the tribunal would adopt a sympathetic (albeit not unrealistically sympathetic) attitude to the tenants on that issue (post, para 73).[6]Lord Neuberger giving the leading judgment stated inter alia the following:[56]More detailed consideration of the circumstances in which the jurisdiction can be invoked confirms this conclusion. It is clear that a landlord may ask for a dispensation in advance. The most obvious cases would be where it was necessary to carry out some works very urgently, or where it only became apparent that it was necessary to carry out some works while contractors were already on site carrying out other work. In such cases, it would be odd if, for instance, the LVT could not dispense with the requirements on terms which required the landlord, for instance,(i) to convene a meeting of the tenants at short notice to explain and discuss the necessary works, or(ii) to comply with stage 1 and/or stage 3, but with (for example) five days instead of 30 days for the tenants to reply. Determination[7]The question here is whether it was necessary to carry out the works in question very urgently? Mr Crowe suggests that the works were not urgent or only became urgent because the Applicants delayed in dealing with the issue. Specifically, he says that it is not correct that the Applicants found out about the leak on the 28th September 2022 because he told them about it on the 20th July 2022 by phone. He was given a response time of 6 weeks. Pausing here, this appears to be a very slow projected response time when the complaint was an audible leak. Mr Crowe then had to chase up the work. He was told that there was no record of the original job reference number he had been given and he was given another one. It appears then that the council’s surveyor only became involved towards the end of September.[8]On any account this is unjustifiable delay. Had the Applicants visited the premises when the leak was originally reported and repaired it and then sought dispensation it probably would have been granted by the Tribunal. Instead, the Applicants delayed unreasonably and in these circumstances dispensation is not appropriate. If I granted dispensation the onus would shift to Mr Crowe requiring him to make an application under s.27A. This would be unfair. It is not his fault that the council has unreasonably delayed.[9]I accept that dispensation is primarily an issue of prejudice but the passage from Daejan I have highlighted above makes clear that cases of very urgent works being carried out pre-emptively can be the type of case where dispensation is required. Here the council did not treat the works as urgent at all. Accordingly, it is not appropriate to grant dispensation. Put simply they could have carried out the relevant consultation during the period of delay. Judge Shepherd 23rd May 2023 ANNEX - RIGHTS OF APPEAL Appealing against the tribunal’s decisions[1]A written application for permission must be made to the First-tier Tribunal at the Regional tribunal office which has been dealing with the case.[2]The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.[3]If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the Tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.[4]The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers[5]Any application to stay the effect of the decision must be made at the same time as the application for permission to appeal.