Paragraph 9 of schedule 8 to the Building Safety Act 2022 is applicable to costs of the relevant services proscribed by that provision regardless of whether the costs of those services were incurred or became payable after the date the provision came into force on 28 June 2022.
In Adriatic Land 5 Ltd v Leaseholders at Hippersley Point [2023] UKUT 271 (LC); [2023] PLSCS 189 the Upper Tribunal (Lands Chamber) was asked to consider whether the First-tier Tribunal had been correct to impose a costs condition as part of its grant of dispensation from the consultation requirements.
The appellant was a freeholder of a mixed-use building. The respondents were the residential long leaseholders of the flats in the building. Remedial works were required to remedy fire safety risks in the building. Those works constituted qualifying works within the meaning of section 20ZA(2) of the Landlord and Tenant Act 1985 and the appellant applied for dispensation from the consultation requirements.
As the FTT found that the respondent had not suffered any prejudice and it was important the works were done quickly, unconditional dispensation was granted. Additionally, the FTT made an order under section 20C preventing the appellant from recovering its costs of the application through the service charge. The FTT reversed its decision on the section 20C order on review, but instead granted dispensation on condition that the appellant could not recover its costs of the application through the service charge. The appellant appealed.
The FTT was found by the UT to have erred both procedurally and substantively. Procedurally, the parties had been denied the opportunity to make submissions in respect of the section 20C order and the costs condition before they were made. Substantively, there was no general rule that the imposition of a costs condition was necessary when a dispensation application was made. It was a matter for the tribunal to consider whether on the facts of each application that the imposition of such a condition was necessary.
Importantly, the UT found that the appellant was precluded from recovering its costs by virtue of paragraph 9 of schedule 8 to the Building Safety Act 2022. It provided that no service charge was payable under a qualifying lease in respect of legal or other professional services relating to the liability (or potential liability) of any person incurred as the result of a relevant defect. The UT was satisfied that “the liability of any persons” included a landlord.
Additionally, the UT found the phrase “relating to” was broad enough to encompass the costs of a dispensation application. Lastly, although paragraph 9 did not have retrospective effect, it applied to the costs of the prescribed relevant services if they related to the liability or potential liability incurred by any person as a result of a relevant defect regardless of when those costs were incurred or became payable.
Elizabeth Dwomoh is a barrister at Lamb Chambers
