Landlord and tenant – Service charge – Qualifying long-term agreements – Section 20ZA of Landlord and Tenant Act 1985 – Paras 4 and 5 of Schedule 2 to Service Charges (Consultation Requirements) (England) Regulations 2003 – Proposal – Whether appellant landlords complying with requirements of para 4 in respect of information to be contained in proposal for QLTA – Whether entitled to dispensation from requirements – Appeal allowed
The respondents were the tenants of the appellant local authority. The appellants proposed to enter into five major works agreements with five contractors for substantial repair and renewal works to their housing stock with an annual budget of approximately £85m. Each of the agreements would be a qualifying long-term agreement (QLTA) within the meaning of section 20 of the Landlord and Tenant Act 1985 and was therefore subject to the statutory consultation requirements of that section and the Service Charges (Consultation Requirements) (England) Regulations 2003.
The appellants served on tenants the requisite notices of intention to enter into QLTAs. However, they considered that they would be unable to provide a proposal containing the information as to estimated expenditure required by para 4 of Schedule 2 to the regulations; they took the view that this could not be done until individual housing blocks had been surveyed and the packages of work drawn up and that the details would further be affected by the availability of funding for the works. Prior to giving notice of their proposal to tenants under para 5, they applied to the leasehold valuation tribunal (LVT), pursuant to section 20ZA of the 1985 Act, for dispensation from the requirements of para 4.
The LVT refused to grant dispensation, taking the view that there was scope for the appellants to provide more information to their tenants and that they might in future be able to comply with the requirements. The appellants proceeded to serve notices of proposal on all tenants. They appealed against the LVT’s decision.
By that appeal, which was determined by way of rehearing, the appellants contended that: (i) where an application for dispensation was prospective, the relevant date at which to apply the “reasonably practicable” test was the date of the hearing, such that it was an error of law, or irrelevant, for the LVT to find that the appellants might be able to provide information in future; and (ii) they had in fact now complied with para 4(6)(b) as to the current unit cost or hourly or daily rate applicable to the works under the proposed agreements.
Held: The appeal was allowed.
The requirements in the subparagraphs of para 4 formed a cascading sequence. It if was not reasonably practicable to make an estimate of the tenant’s contribution pursuant to para 4(4), then an estimate of the total expenditure had to be given under para 4(5). If that was not reasonably practicable, then para 4(6) applied to require ascertainment of the unit cost or hourly or daily rate. If that also was not reasonably practicable, then, by para 4(7), the landlord had only to state the reasons why it was unable to comply and the date by which it expected to be able to provide the information under para 4(4), (5) or (6). No question of reasonable practicality arose under para 4(7); its requirements were absolute.
On a prospective application for dispensation, the question of dispensation could only arise in relation to para 4(7). If it would be reasonably practicable for the landlord to comply with para 4(4), (5) or (6) by the time when it intended to give its notice of proposal, then it was inconceivable that the requirement to do so could properly be dispensed with. It was also open to an LVT to consider whether, although it would not be reasonably practicable for the landlord to comply with paras 4(4) to (6) at the proposed date of the notice, it might be able to do so at a later date.
The LVT in the instant case had erred in addressing dispensation in general, rather than specifically in relation to para 4(7). Its view that there was ample scope for the council to provide clearer information was not explained in terms of the requirements of para 4. Moreover, it had confused what had to be contained in the proposal itself, which was governed by para 4, with what had to go into the notice of proposal to be served on all tenants under para 5. It had not addressed the question of the time at which it would be reasonable for the council to give the notice of proposal or identified, even in general terms, the information, as compared with that contained in the para 4 statement, that it considered should be made available. Its reasoning was therefore inadequate and its decision had to be set aside. The question of dispensation now fell to be considered anew, in retrospect, following the giving of the notices of proposal by the appellants.
Para 4(6)(b) required the provision of the costs and rates applicable to those works for which the proposed QLTA would provide such costs and rates. Non-standard items that were not covered by the QLTA would inevitably arise and their cost or rate did not have to be stated. That being so, the appellants had provided the relevant information under para 4(6)(b) and accordingly there was now no need for dispensation.
Sally Dobson, barrister
