Landlord and tenant – Service charge – Consultation – Section 20 of Landlord and Tenant Act 1985 – Service Charges (Consultation Requirements) Regulations 2003 – Appellant landlord consulting with respondent leaseholders on proposed works to roof of block of flats – Copies of estimates and other documents made available for inspection at appellant’s registered office on 48 hours’ prior notice to managing agent – Agent unaware of those arrangements and leaseholders having difficulty in arranging inspection – Whether appellant failing to comply with requirements of para 2of Part 2 of Schedule 4 to 2003 Regulations regarding inspection of documents – Appeal dismissed
The respondents were leaseholders of flats in a block in Rickmansworth, Hertfordshire, under long leases that provided for the payment of a service charge. In 2011, the appellant company acquired the right to manage the block pursuant to Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002.
In 2012, the appellant decided to carry out substantial works to the roof of the property and initiated a process of consultation with the leaseholders in respect of those works as required by the Landlord and Tenant Act 1985 and the Service Charges (Consultation Requirements) Regulations 2003. At stage 2 of that process, the appellant wrote to the leaseholders informing them that three tenders, specifications and other relevant documents could be inspected at its registered office between 9am and midday on any weekday during the one-month consultation period; leaseholders were asked to contact the appellant’s managing agent by telephone or email at least 48 hours in advance of their visit to ensure that someone was available to meet them. No contact details were provided for the managing agent. When one of the respondents succeeded in contacting the agent by email, it replied that it was acting only as a “post box” with regard to the consultation and that the respondent should contact the secretary of the appellant at its registered office. Ten days before the consultation period was due to close, a director of the appellant emailed leaseholders, offering to provide electronic copies of the relevant documents on request; he later sent the documents to three of the respondents.
The respondents asserted that the appellant had not complied with the consultation requirements with regard to inspection of documents. They applied under section 27A of the 1985 Act for a determination of whether they could be required to contribute to the cost of the works through the service charge. Finding in the respondents’ favour, the first-tier tribunal (FTT) held that the appellant had not complied with the requirement, in para 2 of Part 2 of Schedule 4 to the 2003 Regulations, to specify a reasonable place and hours at which the estimates could be inspected. It accordingly held that the appellant’s recovery was limited to £250 per leaseholder in accordance with section 20 of the 1985 Act. The appellant appealed.
Held: The appeal was dismissed.
The question for the FTT was whether the place and hours specified for inspection were “reasonable”. In determining what was reasonable, the FTT should have regard not merely to the leaseholders’ position but should take into account the nature and resources of both the landlord and the leaseholders. The notice should specify a location which the leaseholders could, within the period specified, visit in order to inspect the estimates. The location had to be relatively convenient to them, so as not to frustrate the purpose of inspection, but the leaseholders had themselves to be reasonably accommodating. If a leaseholder lived some distance away, as was the case with at least one of the respondents, it would be reasonable for the landlord to offer facilities that gave the opportunity to most leaseholders to visit at times reasonably convenient both to them and the landlord and to offer some alternative means of inspection for leaseholders who could not visit at those times.
The need for “contact details”, rather than simply an address, and the relevance of how easy or difficult the address given was to locate, were not considerations set out in the 2003 Regulations. However, in determining whether para 2 of Part 2 of Schedule 4 to the 2003 Regulations had been complied with, the FTT had to consider all the information that was provided by the landlord in the course of its stage 2 notice. The difficulty with the appellant’s notice, namely its letter of June 2012, was that it sought to offer to the leaseholders arrangements for inspection which had not been communicated to the appellant’s own managing agent. The location of the documents was a sufficient distance from the block of flats itself that leaseholders would not go to the trouble of travelling that distance if there was a possibility that the office was not open and the documents not therefore available for inspection. It might therefore have ben sensible for the appellant to make the suggestion it did for 48 hours’ notice in order to ensure that someone was available to meet the leaseholders. However, it was apparent that the agent had not been given the requisite authority and that, as far as the agent was concerned, the consultation process was being managed by the appellant itself. In light of those matters, the FTT’s finding that the arrangements for inspection had not been properly set up could not be impugned. The effect of the confusion and difficulties occasioned was that the respondents had to make repeated attempts to secure inspection of the estimates, and their enquiries eventually had to be directed to the appellant when its agent indicated that it was not able to assist. The appellant was finally obliged, in the last fortnight of the consultation period, to engage in a damage limitation exercise, sending the estimates and other relevant documents electronically to those tenants who, through no fault of their own, had not been able to inspect them previously.
The FTT was therefore entitled to find, on the evidence before it, that the appellant had not complied with the 2003 Regulations. There were two specific breaches of the consultation requirements: first, the “place and hours” specified in the stage 2 notice for inspection of the estimates were not reasonable; and, second, the estimates were not in fact “available for inspection, free of charge, at that place and during those hours”.
It made no difference that the appellant might have done its best and substantially complied with the 2003 Regulations, or that the leaseholders might not have been seriously prejudiced by such failures as there had been in the consultation process. Substantial compliance was not enough and, to the extent that there had been non-compliance, the question of whether any serious prejudice had been occasioned to the leaseholders was a material consideration only if the landlord made an application under section 20ZA of the 1985 Act to dispense with the consultation requirements, which the appellant had not done.
John Kendall and David Backinsell, directors of the appellant, appeared on its behalf; the second, third and fifth respondents appeared in person for the respondents.
Sally Dobson, barrister
