Adriatic Land 8 (GR2) LimitedApplicantVarious residential long leaseholdersRespondent
Before
Judge P ForsterMr N Swain MRICSJB Leitch Ltd. for the ApplicantDate 28 July 2022Property: 37 Potato Wharf, Saville Building, Castlefield, Manchester, M3 4BBType of application: S. 20ZA Landlord and Tenant Act 1985
DECISION
Compliance with the consultation requirements of s.20 of the Landlord and Tenant Act 1985 is dispensed with in relation to works specified in Schedule 1 hereto in respect of 37 Potato Wharf, Saville Building, Castlefield, Manchester, M3 4BB.
REASONS
[1]The First-tier Tribunal received an application dated 28 July 2021 under s.20ZA of the Landlord and Tenant Act 1985 (“the Act”) for a decision to dispense with the consultation requirements of s.20 of the Act. These requirements (“the consultation requirements”) are set out in the Service Charges (Consultation Requirements) (England) Regulations 2003 (“the Regulations”).[2]The application was made on behalf of Adriatic Land 8 (GR2) Limited (“the Applicant”), in respect of 37 Potato Wharf, Saville Building, Castlefield, Manchester, M3 4BB (“the Property”). The Respondents to the application are the long leaseholders of the flats within the building. A list of the Respondents is set out in Schedule 2 hereto.[3]The only issue for the Tribunal to determine is whether it is reasonable to dispense with the consultation requirements.[4]The application identifies the Property as a nine-storey building constructed in 2007 which includes a basement and ground levels and contains residential units together with underground parking. The height of the topmost storey is greater than 18 metres. The external elevations are constructed of a mixture of masonry, aluminium, timber and high-pressure laminate panels.[5]The works in respect of which a dispensation is sought as identified in the Applicant’s Reply dated 6 May 2022 are:(a) Aluminium – ensure adequate fire barriers at junctions with compartment floors and replace combustible insulation and replace with a product that achieves Class A2-s1,d0 or Class A1(b) High pressure laminate – ensure adequate fire barriers at junctions with compartment floors and replace combustible insulation and replace with a product that achieves Class A2-s1,d0 or Class A1.(c) Timber – ensure adequate ensure adequate fire barriers at junctions with compartment walls and treat timber to achieve Class 0 or replace timber.(d) Timber walkways – subject to the remediation of (c), no remediation works are required.(e) Inset balconies – no remediation works are required.[6]Works are required to the Property because of issues relating to the construction of the external wall systems. The construction comprises combustible materials which pose a risk of fire spread. Applicant’s statement of case[7]The Applicant’s statement of case is dated 28 July 2021. It provides a history of events leading to the application for dispensation. It states that in accordance with guidance issued by the Ministry of Housing, Communities and Local Government (MHCLG), a report dated August 2017 was obtained to establish the type of external cladding used on the Property. It was found that the cladding was not made of aluminium composite material, the type used on Grenfell Tower. The cladding appeared to be in good repair and installed in accordance with the manufacturer’s instructions.[8]A second report dated 29 September 2020 was commissioned to identify the external wall construction details and to provide an opinion as to whether an adequate standard was achieved to comply with fire safety regulations. It was found that the external wall construction did not comply with Approved Document B (ADB) which was relevant at the time of construction and defines the benchmark expectation for compliance with fire safety regulations and MHCLG guidance. The report identified the remediation measures required to ensure compliance.[9]A third report dated 8 October 2020 was obtained which together with the report of 29 September 2020 sets out the works necessary to comply with ADB.[10]The Applicant wishes to proceed with the works on a design and build basis where a main/supervising contractor is appointed to design and construct the works.[11]The Applicant’s case is that it is necessary to undertake these works quickly to adequately protect the occupants of the apartments in the Property and to secure funding from the BSF. By implication, the Applicant’s case is that the works relate to common parts of the Property which the landlord is obliged to maintain under the terms of the leases, with the costs associated therewith being recoverable from the tenants via service charge provisions incorporated within the leases. The Tribunal was provided with a specimen copy of the lease. Responses to the Applicant’s statement of case[12]The Applicant’s representatives have confirmed that all the Respondents were served with a copy of the application in accordance with the amended directions dated 8 April 2022.[13]Two of the Respondents, Ms Wilkinson of Apartment 106 and Mr Hanson of Apartment 614, responded to the Applicant’s statement of case. Their responses are similar in content. Although they express some reservations about the need to make the application for dispensation, they do not object to it in principle.[14]The Applicant obtained a further report, dated 5 August 2021,after the application for dispensation was made. This report includes a revised list of remediation measures required to comply with ADB. Ms Wilkinson and Mr Hanson asks the tribunal to grant dispensation only in respect of the recommended remediation works set out in the revised report. The Applicant’s response[15]In its response to Ms Wilkinson and Mr Hanson, the Applicant acknowledges that a further report was obtained dated 5 August 2021. It confirms that the recommended works differ slightly from the early reports and those set out in the Applicant’s statement of case. Ms Wilkinson and Mr Hanson wanted the statement of case to be amended. The Tribunal agrees with the Applicant’s submission that this is not necessary. The Tribunal’s decision will reflect the current position. A revised list of the works in respect of which dispensation is requested is provided by the Applicant. The Tribunal is aware that the MHCLG has abolished the funding deadline and takes this into account in the decision it makes. The Law[16]Section 18 of the Act defines what is meant by “service charge”. It also defines the expression “relevant costs” as: the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charge is payable.[17]Section 19 of the Act limits the amount of any relevant costs which may be included in a service charge to costs which are reasonably incurred, and section 20(1) provides: Where this section applies to any qualifying works … the relevant contributions of tenants are limited … unless the consultation requirements have been either–(a) complied with in relation to the works … or(b) dispensed with in relation to the works … by the appropriate tribunal.[18]“Qualifying works” for this purpose are works on a building or any other premises (section 20ZA(2) of the Act), and section 20 applies to qualifying works if relevant costs incurred in carrying out the works exceed an amount which results in the relevant contribution of any tenant being more than £250.00 (section 20(3) of the Act and regulation 6 of the Regulations).[19]Section 20ZA(1) of the Act provides: 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 … the Tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.[20]Reference should be made to the Regulations themselves for full details of the applicable consultation requirements. In outline, however, they require a landlord (or management company) to:• give written notice of its intention to carry out qualifying works, inviting leaseholders to make observations and to nominate contractors from whom an estimate for carrying out the works should be sought.• obtain estimates for carrying out the works, and supply leaseholders with a statement setting out, as regards at least two of those estimates, the amount specified as the estimated cost of the proposed works, together with a summary of any initial observations made by leaseholders.• make all the estimates available for inspection; invite leaseholders to make observations about them; and then to have regard to those observations.• give written notice to the leaseholders within 21 days of entering into a contract for the works explaining why the contract was awarded to the preferred bidder if that is not the person who submitted the lowest estimate. Conclusions[21]The Tribunal must decide whether it is reasonable for the works to proceed without the Applicant first complying in full with the s.20 consultation requirements. These requirements ensure that tenants are provided with the opportunity to know about the works, the reason for the works being undertaken, and the estimated cost of those works. Importantly, it also provides tenants with the opportunity to provide general observations and nominations for possible contractors. The landlord must have regard to those observations and nominations.[22]The consultation requirements are intended to ensure a degree of transparency and accountability when a landlord or management company decides to undertake qualifying works. It is reasonable that the consultation requirements should be complied with unless there are good reasons for dispensing with all or any of them on the facts of a particular case.[23]It follows that, for the Tribunal to decide whether it was reasonable to dispense with the consultation requirements, there needs to be a good reason why the works should and could not be delayed. In considering this, the Tribunal must consider the prejudice that is caused to tenants by not undertaking the full consultation while balancing this against the risks posed to tenants by not taking swift remedial action. The balance is likely to be tipped in favour of dispensation in a case in which there is an urgent need for remedial or preventative action, or where all the leaseholders consent to the grant of a dispensation.[24]The Applicant sent a stage 1 notice of intention to the Respondents dated 15 October 2020 in respect of the works. Responses were received from the Potato Wharf Cladding Action Group about the level of detail included and the Applicant answered this by providing a statement of frequently asked questions. The Applicant states that it has provided the Respondents with regular updates and has held residents’ meetings. Therefore, it appears that the Respondents have been informed and are aware of the need for the works to be done and what is intended to be done.[25]Relevant guidance in respect of the BSF was significantly updated in April 2022. The Government recognises that deadlines previously set may not be achievable in all cases. The updated guidance removes both the paragraph in which deadlines were set and the reference to case by case discretion. Eligibility assessments have been considerably delayed but they have never been a necessary precursor to carrying out the required works. Applicants have been required to carry out the required works regardless.[26]It is unclear whether there is a residual discretion that remains in operation in respect of completion of the works, beyond the date of the updated Guidance, though given the delay in processing it is to be hoped that it will be extended. It remains the case that it seems that there will be a number of registrations in which the full application will require exercise of discretion, the building owner having delayed procurement and/or commencement of works beyond the published deadline date of 30 September 2021 pending a decision on eligibility.[27]In deciding to grant a dispensation, the Tribunal has had regard to the fact that no objections were raised by the Respondent leaseholders in compliance with the Tribunals Amended Directions of 8 April 2022.[28]The design and build procurement route does not fit with the s.20 consultation process and if followed the process would considerably extend the time before the works are completed.[29]If dispensation were not granted the Property might lose funding from MHCLG under the BSF which would result in significant prejudice to the Respondents notwithstanding the recent enactment of parts of the Building Safety Act 2022.[30]In the present case there is no doubt that the works are necessary and pressing for the occupiers of the apartments. The Tribunal finds that it is reasonable for these works to proceed without the Applicant first complying in full with the s.20 consultation requirements. The balance of prejudice favours permitting such works to have proceeded without delay.[31]The Tribunal would emphasise the fact that it has solely determined the question of whether or not it is reasonable to grant dispensation from the consultation requirements. This decision should not be taken as an indication that the Tribunal considers that the amount of the anticipated service charges resulting from the works is likely to be recoverable or reasonable; or, indeed, that such charges will be payable by the Respondents. The Tribunal makes no findings in that regard and, should they desire to do so, the parties will retain the right to make an application to the Tribunal under s.27A of the Landlord & Tenant Act 1985 as to the recoverability of the costs incurred, as service charges. 26 July 2022 Judge P Forster SCHEDULE 1 Aluminium – ensure adequate fire barriers at junctions with compartment floors and replace combustible insulation and replace with a product that achieves Class A2-s1,d0 or Class A1 High pressure laminate – ensure adequate fire barriers at junctions with compartment floors and replace combustible insulation and replace with a product that achieves Class A2-s1,d0 or Class A1. Timber – ensure adequate ensure adequate fire barriers at junctions with compartment walls and treat timber to achieve Class 0 or replace timber. Aluminium – remove spandrel panels containing combustible insulation and replace with a product that achieves Class A2-s1,d0 or Class A1 SCHEDULE 2 Leaseholder Apartment No. Richard Tyrrell Apt 3.07 Saville Simon Neil Lewis Evans Apt 7.06 Saville Robert Anthony Steele Apt 2.06 Saville Annalisa Tirella Apt 3.09 Saville Anthony Alfred Froggatt & Janet Froggatt Apt 1.07 Saville Oi Lan Chan Apt 2.14 Saville Ivory Antoinette Sinclair Apt 4.11 Saville Robert Andrew Smith & Teresita Agaid Smith Apt 4.12 Saville Simon Bentley & Johnathan Mansfield Apt 3.02 Saville William John Patrick Savin & Isabella Andrea Savin Apt 7.03 Saville Phillip William Scott & Susan Jane Scott Apt 0.10 Saville Thomas Keith Rolt Apt 5.12 Saville Lorna Catherine Jane Sissons Apt 7.10 Saville Anjali Gupta Apt 1.03 Saville Abhay & Asmita Vaidya Apt 1.13 Saville Paul Bayliss Apt 3.11 Saville Tamsin Camilla Jane Silvester Apt 4.02 Saville Adam John Clarke Apt 5.02 Saville Ying Zhu Apt 5.01 Saville Emma Buckley Apt 0.08 Saville David Livingstone Apt 2.08 Saville David Livingstone Apt 0.11 Saville Kim Elizabeth Greene Apt 0.03 Saville Paul Joseph Tomkow Apt 7.05 Saville Peter Robertson Apt 2.09 Saville Jonathan Paul Hardy Apt 3.01 Saville Simon Lewis Apt0.01 Saville Miss Yi Yang Apt 5.13 Saville Alexander James Wates Apt 2.02 Saville Nicholas Adam Bates Apt 6.12 Saville Eamonn Sheffron Apt 1.11 Saville Matthew James Fear Apt 0.04 Saville Peter Williams & Heidi Spencer Apt 6.06 Saville Ying Wang Apt 7.02 Saville Emily Sarah Cowan & George Terry Pindar Apt 5.07 Saville Elizabeth Arkell Apt 7.09 Saville Amin Amiri Apt 4.14 Saville Amin Amiri Apt 4.13 Saville Neha Sihra Apt 5.14 Saville Lucy Clare Foster Apt 3.14 Saville Matthew James Ritchie Apt 3.13 Saville Uzair Osman Apt 1.10 Saville Piers Laurence John Hunter Apt 5.10 Saville Sarah Capes Apt 7.14 Saville Kim Elizabeth Greene Apt 4.06 Saville Kim Elizabeth Greene Apt 4.05 Saville Alan Anguisola Kretzschmar & Lynne Anguisola Kretzschmar Apt 5.11 Saville Luke Oliver Almond Apt 2.10 Saville Peter Horton & Wendy Horton Apt 0.13 Saville Nicola Joanna Thompson Apt 1.14 Saville Ka Man Cheng Apt 6.11 Saville Sukhbinder Atwal Apt 6.02 Saville Shan Fang Apt 7.12 Saville Matthew James Smethurst Apt 1.05 Saville Nan Zhang Apt 7.01 Saville Matthew John Plummer Apt 7.13 Saville John Alan Duffy & Isabelle Marie Francoise Duffy Apt 3.03 Saville Sarah Capes Apt 7.11 Saville Robert Anthony Steele Apt 7.07 Saville Oliver Charles Dickin Apt 7.04 Saville Janet Wilkinson Apt 6.14 Saville Heng Yuan Bai Apt 6.13 Saville Gillian Coralie Marples Apt 6.10 Saville Katie Elizabeth Bunting Apt 6.09 Saville Pui Yan Wong Apt 6.08 Saville Jessica Britten Apt 6.05 Saville Stephen James Rourke Apt 6.07 Saville Patrick Veitch Apt 6.04 Saville Martin Solomon & Dawn Parker Apt 6.01 Saville Ho Yin Yip Apt 5.08 Saville Patrick Veitch Apt 5.06 Saville Andrew James Bowler Apartment 504 Saville Point Properties Ltd Apt 5.05 Saville Carol Ann Davies Apt 4.01 Saville Neil Warren Davies Apt 4.03 Saville Steven M Hill Apt 3.10 Saville Tze Kwong Ho & Yee Mei Susanna Mok Apt 4.07 Saville James Dunne Apt 3.08 Saville Lena Bipin Mistry Apt 4.08 Saville Dean Paul Langan Apt 4.09 Saville Marie Frazer Apt 4.10 Saville James David Wyatt & Katrina Jane David Apt 3.06 Saville Michael Anthony Gavaghan Apt 3.05 Saville Colin Paul Adams & Haiwa Li Apt 3.04 Saville Robert Kyran Ellerby Apt 2.13 Saville Wai Ching Ip Apt 2.11 Saville Cara Heaney Apt 1.02 Saville Kirti & Jayantilal Ganatra Apt 1.12 Saville Derek Bernard Boon & Margaret Elizabeth Boon Apt 2.03 Saville Rafferty Lettings Ltd Apt 1.01 Saville Leon Pickersgill Apt 0.06 Saville Carl Daniel Smith & Stephanie Nicole Smith Apt 0.05 Saville Giles Storey Apt0.02 Saville Mitchell John Jones & Samantha Frances Grainger Apt 2.04 Saville Charles Ekram Gadallah Apt 2.05 Saville Helen Elizabeth Kinloch Apt 2.07 Saville Kevin Khoi Hung Dieu Apt 4.04 Saville George Lee Walkden Apt 6.03 Saville Keith Elmitt & Eileen Annice Elizabeth Elmitt Apt 2.12 Saville Chun Kit Philip Chong Apt 2.01 Saville Ian David Smith & Johanna Elizabeth Smith Apt 3.12 Saville Lauren Nicholls Apt 1.08 Saville Clare Judith Pollard Apt 0.07 Saville Christopher John Hanson Apt 1.06 Saville Mitchell John Jones & Samantha Francis Grainger Apt 7.08 Saville Caroline Hague-Lenihan & Paul Edward Lenihan Apt 0.09 Saville Paul Dickinson & Carly Jane Dickinson Apt 1.04 Saville Stuart Glyn Williams Apt 0.12 Saville Patrick Veitch Apt 5.03 Saville Andrew Quinn Apt 5.09 Saville Sameera Naz Apt 1.09 Saville