Landlord and Tenant Act 1985 — Service charges — Recoverability — Sections 20B and 20ZA of 1985 Act — Lease of residential premises — Lessee subletting individual units — Whether landlord complying with conditions for recovery of additional amount for previous service charge year — Whether contracts entered into by manager of building “qualifying long-term agreements” or agreements for “qualifying works” such that consultation requirements imposed — Whether cap on recovery for lack of consultation applying to entirety of lessee’s demise or each individual unit within it
In 2004, the defendant registered social landlord took a 125-year lease of premises within a building that was under construction. The claimant was party to the lease as the manager of the building. The defendant’s demise comprised 79 affordable housing units, which, following practical completion of the building in 2005, it sublet to individual tenants on terms requiring them to contribute to the service charges that it paid. A dispute arose between the claimant and the defendant concerning the amount of service charges. Preliminary issues were tried as to the recoverability of certain items, in principle, under the Landlord and Tenant Act 1985 and the Service Charges (Consultation Requirements)(England) Regulations 2003.
The issues were whether: (i) the claimant had made a valid demand, within the 18-month time limit prescribed by section 20B of the 1985 Act, such as to enable it to recover an additional sum for the 2005 service charge year on top of the estimated sums already paid by the defendant in advance; (ii) various contracts entered into by the claimant were “qualifying long-term agreements” or contracts for “qualifying works” within section 20ZA(2) of the 1985 Act such as to require the claimant to comply with the consultation requirements of the 2003 Regulations in respect of them; and (iii) if so, the effect of the claimant’s failure to comply with the consultation requirements was to cap the recovery of service charges in respect of those contracts at £100 pa for each contract or £100 pa for each dwelling comprised in the defendant’s demise. The contracts in question were: two contracts for building maintenance services, entered into in 2005 when the building was unoccupied; an agreement with a managing agent for an initial term of 12 months, continuing thereafter unless determined by three months’ notice; and a one-off contract for window-cleaning works.
Held: The preliminary issues were determined. (1) Any demand by a landlord for a contribution to service charge expenses incurred should be finalised within 18 months. In so far as errors need to be corrected, that correction should be made, and the additional sum demanded, within the 18-month period. A subsequent corrective demand made out of time cannot without more be treated as dating back to an earlier demand for less, made in time, so as to enable the landlord to recover any additional contribution that it might request. The claimant had not made a valid, timely demand such as to enable it to recover the additional sums it sought in respect of the 2005 service charge. The only demand that related to expenses actually incurred had been made out of time. Earlier correspondence either had not purported to be a demand, rather than merely an informative updating, or had failed to relate to actual as opposed to estimated expenses. Nor had any of the correspondence amounted to a timely “notification” of costs that had been incurred within section 20B(2) so as to preserve the landlord’s ability to claim sums subsequently. (2) The two 2005 contracts for building maintenance were qualifying long-term agreements in respect of which the claimant had been obliged to comply with the consultation requirements of the 2003 Regulations. The agreements did not fall within the exception provided by section 20ZA(3)(1)(d) of the 1985 Act for contracts entered into at a time when the building in question was not tenanted. The word “tenants” is there used generally and without qualification, and cannot be construed as being confined to the occupying residential tenants who will ultimately have to pay the service charge contributions. Therefore, that exception was not made out where the defendant held a lease of part of the building at the time of the contracts. (3) The contract with the managing agent was not a qualifying long-term agreement and the claimant had not been obliged to consult in respect of it. A contract for an initial period of 12 months and then from year to year subject to termination by notice is not an agreement for a term of “more than” 12 months within the meaning of section 20ZA(2). The relevant provisions apply only to those contracts in respect of which the tenants will definitely have to contribute for a period of more than 12 months. (4) The window-cleaning contract did not relate to “qualifying works” so as to engage the consultation requirements. Qualifying works are works on a building or other premises, comprising matters that would naturally be regarded as “building works”. Cleaning windows does not naturally fall within that concept. (5) The £100 cap on recovery for a failure to comply with the consultation requirements falls to be applied with regard to each separate dwelling in respect of which a tenant must contribute to service charges: see the definition of service charges in section 18(1). Therefore, it had to be applied to each individual unit within the defendant’s demise and then aggregated, resulting in a cap of roughly £7,900 for the defendant’s 79 units together.
The following cases are referred to in this report.
Gilje v Charlegrove Securities Ltd [2003] EWHC 1284 (Ch); [2004] 1 All ER 91; [2003] 3 EGLR 9; [2003] 36 EG 110
Haringey London Borough Council v Ball unreported 6 December 2004
Heron Maple House Ltd v Central Estates Ltd [2002] 1 EGLR 35; [2002] 13 EG 102
Islington London Borough Council v Abdel-Malek unreported 16 July 2007, LT
Oakfern Properties Ltd v Ruddy; sub nom Ruddy v Oakfern Properties Ltd [2006] EWCA Civ 1389; [2007] Ch 335; [2007] 3 WLR 524; [2007] 1 All ER 337; [2006] 3 EGLR 30; [2006] 49 EG 96
Westminster City Council v Hammond unreported 23 October 1995
This was a hearing of preliminary issues in a claim by the claimant, Paddington Walk Management Ltd, against the defendant, the Governors of the Peabody Trust, for the recovery of service charges under a lease of residential premises pursuant to the Landlord and Tenant Act 1985. |page:124|
Katherine Holland (instructed by Speechly Bircham LLP) appeared for the claimant; Ranjit Bhose (instructed by Housing & Property Law Partnership) represented the defendant.
Giving judgment, HH Judge Hazel Marshall QC said:
[1] This is a claim by Paddington Walk Management Ltd, as manager of parts of blocks D and E in Paddington Basin, for alleged unpaid service charges and interest made against the defendant, as tenant under the relevant lease of those premises.
[2] Although the total claim is now for more than £160,000, including service charge and interest, the trial before me has concerned preliminary issues of law with regard to the claimant’s right to recover these in the light of the provisions of the Landlord and Tenant Act 1985, as amended, and the associated statutory regulations, and in the events that have happened. I am therefore not concerned with figures, except in principle.
Background
[3] The background history is as follows. Paddington Basin is a large development including a single edifice comprising five linked blocks of flats (which I will call “the building”). Parts of this were sold off on long leases to private residents, but a section (which I will call “the premises”) comprising principally parts of blocks D and E and including 79 affordable housing units and 10 car-parking spaces was let to the defendant, which is a registered social landlord. This was by a lease dated 19 October 2004 for a term of 125 years, commencing on 29 September 2004. The claimant was party to the lease as manager.
[4] The lease to the defendant provided in a conventional way for the defendant to pay a service charge to the manager in accordance with the detailed terms of the lease. In essence, its obligation was to contribute a fixed percentage, approximately 25%, of the total cost of provision of relevant services to the entire building. These, of course, were services such as repair, maintenance, cleaning and so forth. There were mechanisms for the payment of estimated service charge sums to be made on account twice in each year, and then for adjustment after the ascertainment of the actual expenditure after the end of the service year, which was 31 December in each year.
[5] Practical completion of the building occurred on 17 August 2005. At that time, under the terms of its lease, the defendant was required to pay a £5m premium and also half of the estimated service charge for that service year. It did so. It then proceeded to grant around 15 shared ownership subleases and 64 assured periodic tenancies to individual tenants in respect of the individual housing units. Each tenant is required to pay a service charge to the defendant under his sublease of whatever type, although the basis for recovery of these service charges differs as between the different kinds of subtenancy. I also understand that the percentages that are attributed to individual subtenancies may differ according to, perhaps, the size of the flat or so forth. The details are not material.
[6] The managing agent for the building is Gross Fine. The claimant appears to have had some trouble with it and collection of service charges did not go smoothly. Gross Fine delayed unacceptably in preparing service charge accounts and invoices. Therefore, on 15 May 2006, the claimant decided to dismiss Gross Fine and instead to appoint Pembertons as managing agent .
[7] The service charges recoverable from the defendant being in respect of residential premises, their amount and collection is regulated by the Landlord and Tenant Act 1985, as subsequently amended (which I will call “the Act”). The Service Charge (Consultation Requirements) (England) Regulations 2003 (which I will call “the 2003 Regulations”) also apply.
[8] Broadly, this legislation provides that, in respect of the charges to which it applies, there are time limits on the landlord’s ability to recover expenditure from tenants, and where intended expenditure on particular matters is likely to be high, there is a duty to consult with the tenants involved, failing which the landlord’s right to recover is limited in amount. It is the effect of this legislation that has given rise to the disputes between the parties, encapsulated in the preliminary issues that I have to decide.
[9] The actual issues in the case can be summarised as follows:
(a) First, is the claimant entitled, in the events that have happened, to recover further payments in respect of the 2005 service charge year or has it become debarred from doing so through failing to demand such payments within the relevant time limits? If so, the effect is that an outstanding claim by the claimant for £8,605.65 is barred, although I am told that the defendant is not seeking to recover any sums that it has actually paid to the claimant as an estimated on account charge in respect of this period.
(b) Second, in respect of two contracts made with Jubilee Buildings Services Ltd (JBS) on 20 June 2005 and 11 July 2005 for the provision of building maintenance services to the entire building, including the defendant’s premises, each contract being for three years at annual amounts respectively of £24,948 plus VAT and £6,963 plus VAT, are these agreements within the definition of “qualifying long-term agreement” under section 20ZA(2) of the Act? The defendant says that they were, but the claimant says that, in the circumstances, they fell under an exception, and were not.
(c) Third and similarly, was the management agreement made with Pemberton Residential Ltd (Pembertons) dated 1 June 2006, which was for an initial term of 12 months but thereafter to continue subject to three months’ notice on either side, a “qualifying long-term agreement” within that definition? The defendant says that it was, and the claimant says it was not.
(d) Fourth, if either of the JBS and the Pemberton contract did come within the relevant statutory descriptions, what is the effect of the statutory consultation requirements admittedly not having been complied with? The defendant says that they limit the claimant’s recovery to £100 pa in respect of each contract. The claimant says that, in each case, the limit is £100 pa per dwelling included in the defendant’s premises (79 in total), and on the facts the resultant aggregate limit of £7,900 is not reached.
(e) This fifth short issue is whether window-cleaning works, referred to in an invoice dated 13 December 2005 for £19,493.25, and again for the entire building, are “qualifying works” for the purposes of sections 20 and 20ZA of the Act. The defendant says that they were within this concept; the claimant says that they were not. The same point then arises with regard to limits on the claimant’s possible recovery, except that, in this instance, the item in question is a single item of recovery rather than an annual one and, consequently, the limit is £250 rather than £100. Once again, the issue is whether this limit is to be applied as a single sum or as the total of that sum multiplied by the number of dwellings within the defendant’s lease.
[10] I will examine each issue in turn after referring to the general statutory background. I would like, at this point, to pay tribute to both counsel appearing before, me, namely Ms Katherine Holland, for the claimant, and Mr Ranjit Bhose, for the defendant, for the clarity and excellent presentation of their arguments, both in skeleton form and orally. I have found these of great assistance.
Legislative background
[11] To indicate the general background of this statutory scheme, section 18 of the Act provides the following definitions of “service charge” and “relevant costs”:
(1) In the following provisions of this Act “service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent —
(a) which is payable, directly or indirectly, for services, repairs, maintenance or insurance or the landlord’s costs of management, and
(b) the whole or part of which varies or may vary according to the relevant costs.
(2) The Relevant costs are 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.
(3) For this purpose —
(a) “costs” includes overheads, and
(b) costs are relevant costs in relation to a service charge whether they are incurred, or to be incurred, in the period for which the service charge is payable or in an earlier or later period. |page:125|
[12] Authority establishes that a tenant who holds a lease of a number of dwellings together with common parts is “a tenant of a dwelling” for the purpose of section 18(1) and thereby entitled to the benefits of the Act: see Oakfern Properties Ltd v Ruddy [2006] EWCA Civ 1389; [2006] 3 EGLR 30*. This is because, endorsing a dictum of HH Judge Cooke in Heron Maple House Ltd v Central Estates Ltd [2002] 1 EGLR 35†, the protection applies where a party is the tenant of “a” dwelling, whether or not he is also the tenant of other dwellings or other premises under the same lease. Therefore, the defendant in this case is entitled to invoke the Act, in principle.
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* Editor’s note: Also reported at [2006] 49 EG 96
† Editor’s note: Also reported at [2002] 13 EG 102
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(1) Is the claimant too late to recover in respect of the 2005 service charge year?
[13] This argument turns on the correct interpretation of what is now section 20B of the Act, which provides as follows:
Limitation of service charges: time limit on making demands
(1) If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2)), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred.
(2) Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.
[14] With regard to service charge demands validly made under a lease for estimated amounts on account, that is, before the costs have been incurred, the section has no application if the landlord operates that procedure, so long as its actual expenditure does not exceed the payment demanded on account so that no further payments are demanded from the tenants: see Gilje v Charlegrove Securities Ltd [2003] EWHC 128 (Ch)‡. However, the section will apply where there is a demand made for actual expenditure, for example, if there is a demand for the balance of actual costs incurred because they exceed any sums previously demanded and paid on account.
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‡ Editor’s note: Also reported at [2003] 3 EGLR 9; [2003] 36 EG 110
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[15] As I have already mentioned, the defendant paid a demand for the initial estimated service charge issued by Gross Fine on 17 August 2005. This was in the sum of £11,520.85. It was based on an estimate of projected expenditure for the period to 31 December 2005, although nobody is now able to work out how Gross Fine arrived at this figure.
[16] Following the problems with Gross Fine, the claimant sent an e-mail to the defendant on 21 August 2006 in which it said:
We believe Gross Fine undercalculated your 2005 service charge, which according to our calculation should be £27,127.33. The amount invoiced by Gross Fine was £11,520.48. At present we would ask you to pay the lower amount as we are contacting Gross Fine for an explanation. It may however be some time before they respond and I think you should assume the higher amount is correct for the purpose of charging your tenants.
[17] The claimant also forwarded to the defendant by attachments, which it is accepted the defendant did receive, two relevant documents that constituted “Service charge estimates, year ending 31 December 2005 (building and car park)” and “Calculation of amount due for the period ending 31 December 2005”.
[18] The former is a schedule comprising two sheets of paper and setting out Gross Fine’s estimate of the total service costs for the building and car park until 31 December 2005, dated 13 April 2005. The latter is a five-line document setting out the calculation of the defendant’s 25% (roughly) contribution to the sum set out in the total estimates, as an examination of the figures used demonstrates and as the claimant’s witness, Mr Kierneker, agreed in evidence. It raised the potential service charge to the sum of £27,127.33.
[19] On 13 August 2007, the claimant demanded an additional sum of £15,606.87 in respect of the 2005 service charge year under cover of a letter that stated: “We now enclose an invoice for the amount undercharged by Gross Fine.” The accompanying documents were the same as those above. The defendant did not pay this demand.
[20] On 11 October 2007, the claimant’s accountant ultimately provided a certificate for the 2005 service charge year in accordance with section 21 of the Act, although this ought to have been produced within six months of the end of the service charge year: see section 21(4).
[21] On 14 December 2007, the claimant sent a demand to the defendant applying a credit to the defendant’s account, in the sum of £7,001.20, in respect of the 2005 service charge year because the actual expenditure had turned out to be less than the estimate claimed in the demand of 13 August 2007. The defendant did not pay this, and it is the amount of that demand, applying this credit, that the claimant now therefore claims.
[22] It is at once apparent that as the 18-month time limit in the Act expired by 30 June 2007 at the latest, the claimant must either show that it made a demand within section 20B(1) of the Act before that date for the relevant costs incurred or it must show that it had protected its ability to do so subsequently by giving to the defendant a notification within the terms of section 20B(2) of the Act.
[23] For the claimant, Ms Holland put her primary case as being that the amount stated in the demand of 17 August 2005 was an amount stated in error, which was subsequently corrected and set out clearly. She argued that, on the true interpretation of section 20B(1) of the Act, the statutory time limit cannot have been intended to have the effect of preventing subsequent corrections to a figure that is stated on a demand made in time.
[24] Mr Bhose submitted that this argument is misconceived in principle. The point of the time limit is that any demand for contribution to actual service charge expenses incurred should be finalised within 18 months, and in so far as any errors need correction the landlord must also achieve this within 18 months. Any out-of-time demand for payment has to be analysed on its merits and substance. If it in fact constitutes a demand for expenses incurred, that demand is made at the time it is made and it cannot be deemed to operate retrospectively simply because it refers to and purports to correct an insufficient demand made within time. He also challenged this analysis as the correct interpretation of the terms of the e-mail of June 2006 in any event, pointing out that the original “demand” itself did not purport to be a demand for expenses actually incurred, but was only an estimate. It had therefore not amounted to a demand qualifying under section 20B in the first place.
[25] I accept Mr Bhose’s arguments on all these points. It was not, in fact, perfectly clear to me what Ms Holland was relying on as the alleged “corrective” demand because she had first relied on the e-mail of 21 August 2006, which was not out of time at all, but subsequently in oral argument she sought to apply the same principle in respect of the later demands made in August 2007 and then finalised definitively in December 2007, which latter were definitely out of time. The statutory time period must have expired, at the latest, by 30 June 2007, although, of course, it runs from the time the expenditure is incurred and not necessarily from the end of the service charge year.
[26] None of these further documents, in my judgment, avails Ms Holland, for any one of the reasons given by Mr Bhose. In my judgment, the e-mail of 21 August 2006 cannot fairly be characterised as a demand in any event, corrective or otherwise. It was merely an informative updating. In addition, it was certainly not a demand for actual expenses incurred on the flats because it was based on estimates. It forewarned of a possible demand later, and this was made in August 2007. However, since this latter demand was neither for actual expenses nor within time, it was not a valid demand and therefore could not be classed, on any basis, as a “corrective” demand within the requirements of the Act, even if it had been in time.
[27] On any basis, only the ultimate demand of 14 December 2007 was a demand related to actual expenses incurred, in so far as they could |page:126| be ascertained. Given that there was never a demand within the terms of section 20B(1) within the relevant time limit, there was nothing for this demand to relate back to retrospectively and to “correct” at all. However, I would in any event reject the notion that a subsequent corrective demand made out of time could without more be treated as dating back to the date of an earlier demand for less made within time, so as to enable the landlord to recover any additional contribution it might request. In my judgment, Mr Bhose is right that any correction, if it is to enable a landlord to recover any further sums by way of service charge contribution to expenses incurred, must itself be made and demanded within the relevant 18-month period, which I would add is, in my view, a generous period in itself.
[28] Ms Holland’s alternative argument was that the e-mail of 21 August 2006 constituted an appropriate notification within the meaning of section 20B(2) to the defendant that those costs had been incurred and that a subsequent demand for contribution to them would be made. Relying on Islington London Borough Council v Abdel-Malek unreported 16 July 2007, a decision of Mr Andrew Trott FRICS, she argued that the point of the time limit on demanding service charges was that the tenant should not be faced with a sudden and unexpected demand for sums payable long after the event, and that consequently the point of notification was to warn the tenant of the sums that he might later be required to pay so as to enable him to budget appropriately. She submitted that the e-mail provided exactly such adequate warning, and therefore complied with section 20B(2).
[29] She suggested that dicta in Westminster City Council v Hammond unreported 23 October 1995, HH Judge Reynolds, to the effect that any such notice in writing ought to be the equivalent of a demand and contain all the detail necessary to enable a tenant to consider his attitude to the reasonableness of the expenditure, went too far. The somewhat less demanding approach of HH Judge Cooke in Haringey London Borough Council v Ball unreported 6 December 2004 was to be preferred as being more in line also with the approach of the Lands Tribunal in Abdel-Malek. All that was required was to “identify the costs that had been incurred”. The defendant was thus given the necessary information in this case, and this paved the way for the subsequent finalised demand to be valid, even outside the 18-month period.
[30] Mr Bhose argued that the e-mail of 21 August 2006 simply does not comply with the statutory requirements. The essence of the notification is that within the 18-month period after the actual incurring of the costs in question, the tenant must be “notified in writing that those costs
had been incurred” (emphasis added). The e-mail did not refer to any costs that had been incurred because it referred only to the April 2005 estimates. It therefore simply did not qualify as a written notification under the statutory provisions, even if it were conceded, as I think Mr Bhose was minded to do, that the fact that it referred to the tenant’s contribution rather than to the total costs could be cured by reference to the attachments that came with it.
[31] In my judgment, Mr Bhose’s argument is correct. The notification in the e-mail of 21 August 2006 simply does not qualify under the section because it did not give the notification specified in the Act. The claimant therefore fails on this point and I rule that it is too late for any further sums to be recovered in respect of the service charge year 2005.
Further issues: Limits on recovery
[32] I turn therefore to the further issues. By way of additional background, it is important to note that the original section 20 of the Act imposed a set of procedural requirements in respect of the carrying out of works on a building. The effect of these was to require a landlord to obtain estimates and to consult the tenants before commencing such works if the costs of such works would exceed a particular amount. If these requirements were not complied with, the section imposed a financial cap on the amount that the landlord could recover in respect of such works by way of service charges.
[33] New statutory requirements were brought in by section 151 of the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). This amended the original section 20 of the Act, which itself had already been amended somewhat in 1987. The 2002 Act substituted a new section 20 and added section 20ZA. These provisions apply to a landlord that intends on or after 31 October 2003 (the date on which the 2002 Act came into force) either: (a) to enter into a “qualifying long-term agreement” to which section 20 applies; or (b) to carry out “qualifying works” to which that section applies. In any such case, the landlord must comply with the consultation requirements prescribed in regulations made by the Secretary of State, to which I will refer later, or its right to recovery will be capped.
[34] Section 20ZA(2) of the Act now defines qualifying long-term agreements as follows:
“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.
[35] Section 20(3) is not material. The provisions continue:
(4) The Secretary of State may by regulations provide that this section applies to a qualifying long term agreement —
(a) if relevant costs incurred under the agreement exceed an appropriate amount, or
(b) if relevant costs incurred under the agreement during a period prescribed by the regulations exceed an appropriate amount.
(5) An appropriate amount is an amount set by regulations made by the Secretary of State. …
[36] Whereas the appropriate amount under the former regulations was related to the overall costs of particular works or projects being charged under the service charge relative to the number of dwelling units being charged contributions, the approach under the new, widened regime is different. The appropriate amount is now related to costs that will be recoverable from a tenant by the following means. Regulation 4 of the 2003 Regulations provides that the relevant amount is a figure of more than £100, incurred in respect of any accounting period that is, in principle, a year. Regulation 4 says:
4(1) Section 20 shall apply to a qualifying long term agreement if relevant costs incurred under the agreement in any accounting period exceed an amount which results in the relevant contribution of any tenant, in respect of that period, being more than £100.
As provided in the Act itself by section 20(7), a failure to consult in respect of a qualifying long-term agreement will limit a tenant’s relevant contribution to costs payable in respect thereof to the currently set appropriate amount, that is, presently £100 per service charge year.
[37] Section 20ZA(3) of the Act permits the Secretary of State to make regulations excluding classes of agreement from being qualifying long-term agreements. This power has been exercised in para 3 of the 2003 Regulations, which lists a number of agreements that are not to be treated as qualifying long-term agreements, including the following exception in para 3(1)(d). This is if:
(i) when the agreement is entered into, there are no tenants of the building or other premises to which the agreement relates; and
(ii) the agreement is for a term not exceeding five years.
In that instance, the agreement is not a qualifying long-term agreement.
(2) Were the JBS contracts “qualifying long term agreements”?
[38] The next issue, then, is whether the two JBS contracts were qualifying long-term agreements. It is accepted that even though the two agreements referred to blocks A and B and blocks C and D respectively, the actual content of the obligations in each agreement referred to the entire building, including blocks A to E, and therefore each agreement “related to” the whole of the building and the premises at the time it was entered into.
[39] Ms Holland submitted that, on the facts of this case, the two JBS contracts were not qualifying long-term agreements, even though made for more than one year, because they fell within the “no tenants” exemption of regulation 3(1)(d) already quoted. She submitted that, |page:127| given that the point of the consultation requirements is to protect the residential occupiers who actually have to pay the contributions, the relevant “tenants” referred to (and it is to be noted that this is plural) can be intended to be only the occupying residential tenants. There was none at the time of these agreements. The building had not then even achieved practical completion. Therefore, on its true construction, she submitted that the exception applies.
[40] Mr Bhose submitted that this is wrong. The meaning of the word is clear and it refers to “tenants” without any qualification. At the time of these agreements, the defendant was itself a “tenant” of premises to which the agreement related, having taken its lease of part of blocks D and E in October 2004. In addition, the title registers show that several users of individual flats in other parts of the building as a whole had already been granted leases before these dates and they also, therefore, were tenants of premises to which the agreements related. There was and is no requirement that any such tenants should be “occupying” any part of the property, let alone occupying residentially. They merely have to be existing “tenants”.
[41] Mr Bhose’s argument means construing the word “tenants” as effectively meaning “tenant”, but, in my judgment, he is correct. I prefer his argument to the major alteration to the otherwise clear and simple meaning of the words that Ms Holland’s construction requires, and for which I can see no justification.
[42] Her point in fact requires the word “tenants” to mean only “tenants who will be required to make contributions to the payments under the agreement”. However, even on that construction, the exception would not apply in this case. The defendant and others were already tenants with such an obligation, even if they were not yet in occupation.
[43] I admit that I have a little difficulty seeing exactly where this exception was intended to apply, even though, in general, the point of it seems to have been to enable landlords to enter into agreements to arrange future maintenance of buildings where they could not comply with consultation procedures because they had not as yet effected any lettings. I have not considered this aspect closely, but I have none the less, as I have indicated, come to the clear conclusion that Mr Bhose’s construction is to be preferred to Ms Holland’s. Consequently the JBS contracts were in principle, in my judgment, “qualifying long-term arrangements”.
(3) Is the Pembertons contract a “qualifying long term agreement”?
[44] The next issue then is whether the Pembertons contract was also a qualifying long-term agreement. This agreement was entered into on 1 June 2006:
for an initial period of one year from 1 June 2006 and will continue on a year-to-year basis with the right to termination by either party on giving three months’ written notice at any time.
The short point, therefore, is: is this an agreement “for a term of more than 12 months” within the meaning of section 20ZA(2) of the Act?
[45] Neither counsel has been able to find any relevant authority, perhaps quite surprisingly. Ms Holland said that the agreement is not within the definition because it is for a term of exactly 12 months, even though it might in practice continue. It is not for a term of more than 12 months because that is the only certain term for which it is granted. Mr Bhose said that it is for a term of more than 12 months because it is capable, according to its terms, of continuing for more than 12 months, and it will in practice continue beyond 12 months unless something more is done.
[46] This is a matter of impression and I have found it quite a difficult one despite being short.
[47] The point of the provision is of course to bring major periodic contracts into the consultation regime where it is proportionate to do so. It seems to me, though, that the question of what is a “qualifying long-term agreement” cannot depend simply on the fact that the agreement could continue beyond the stated period if unabated. For example, it would then apply to an agreement for six months and thereafter until terminated on one month’s notice because such an arrangement could clearly continue beyond 12 months. So, even, could a contract for one month that was then continued on a month-by-month basis until terminated on a week’s notice. Mr Bhose’s argument appears to me to apply equally to contracts in those terms, and it seems to me that it therefore proves too much.
[48] In my judgment, an agreement for a year certain and then from year to year to continue subject to not being terminated is not “an agreement for a term of more than 12 months” (emphasis added) within the meaning of this part of the statute. I reach this conclusion with a little hesitation, but it is still a conclusion that Ms Holland’s argument is correct. In other words, the structure of the Act is that the definition of qualifying long-term agreement is to apply to a contract in which the tenants would definitely have to contribute in respect of a period of more than 12 months.
[49] In my judgment, the whole flavour of the provisions extending to these agreements is “long-term”. I cannot see how a periodic contract for, for example, a month and thereafter from month to month, could be regarded as long term as a matter of impression, even though on Mr Bhose’s analysis it would be caught. What seems to me to be the deciding factor is the length of the commitment. A line has to be drawn somewhere, and it has been drawn at a commitment that exceeds 12 months. A commitment of 12 months only is on the non-qualifying side of the “long term” line.
[50] A contract initially for one year and thereafter on a year-to-year basis subject to a right to terminate on three months’ notice is terminable at the end of the initial period or any subsequent year on three months’ notice and does not entail a commitment for more than 12 months. There is thus no such commitment in this case and I conclude therefore that the Pembertons contract is not a qualifying long-term arrangement.
(4) Application of the limit on recovery
[51] The next issue is perhaps the most far-reaching one in the case. It is the question of the limit in respect of each of the contracts that I have referred to above, in terms of the cap on the expenditure for which recovery can be made. The question is whether, in the light of the fact that no consultation has taken place, the recoverable amount is limited simply to £100 in total or to £100 per dwelling within the premises. It is necessary to go back once again to the terms of the Act in order to consider this.
[52] Under section 20 of the Act, it is provided:
(1) Where this section applies to any qualifying works or qualifying long term agreement, the relevant contributions of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either —
(a) complied with in relation to the works or agreement, or
(b) dispensed with in relation to the works or agreement by (or on appeal from) a Leasehold Valuation Tribunal.
Then comes subsection (2), which is very important:
(2) In this section “relevant contribution”, in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement.
[53] I have already cited subsections (3) and (4), but I repeat their effect. Subsection (3) is applied to “qualifying works” if relevant costs incurred on carrying out the works exceed the appropriate amount. Under subsection (4), provision is made for the Secretary of State by regulations to provide for the application of the section to “qualifying long-term agreements” if either the relevant costs incurred under the agreement exceed the appropriate amount or if the relevant costs incurred under the agreement during the period prescribed by the regulations exceed the appropriate amount.
[54] Subsection 20(5) provides:
(5) An appropriate amount is an amount set by regulations made by the Secretary of State; and the regulations may make provision for either or both of the following to be an appropriate amount — |page:128|
(a) an amount prescribed by, or determined in accordance with, the regulations, and
(b) an amount which results in the relevant contribution of any one or more tenants being an amount prescribed by, or determined in accordance with, the regulations.
(6) Where an appropriate amount is set by virtue of paragraph (a) of subsection (5), the amount of the relevant costs incurred on carrying out the works or under the agreement which may be taken into account in determining the relevant contributions of tenants is limited to the appropriate amount.
(7) Where an appropriate amount is set by virtue of paragraph (b) of that subsection, the amount of the relevant contribution of the tenant, or each of the tenants, whose relevant contribution would otherwise exceed the amount prescribed by, or determined in accordance with, the regulations is limited to the amount so prescribed or determined.
[55] The 2003 Regulations have subsequently provided for appropriate amounts in respect of relevant contributions, as I have indicated, to be £100 in respect of qualifying long-term agreements, and I refer again to regulation 4, which is the applicable regulation here, and which says:
Section 20 shall apply to a qualifying long term agreement if relevant costs incurred under the agreement in any accounting period exceed an amount which results in the relevant contribution of any tenant, in respect of that period, being more than £100.
The appropriate amount was thus set under subsection 20(5)(b).
[56] The issue is whether, under the above provisions as they apply to this case of premises held on a headlease including 79 individual dwelling units, the financial cap there stated is assessed by reference to each individual flat or unit within the defendant’s lease or rather by reference to the defendant’s being a single “tenant” of its premises and therefore to its contribution as a whole.
[57] Ms Holland said that it is the former. It is very much, she said, a matter of impression. Mr Bhose said that it is the latter. He said that the words are clear under the new regime, it is a contribution of “a tenant” as referred to in regulation 4, relating back to references in section 18(1) to a “service charge” being a charge payable by “a tenant of a dwelling” — which the defendant is, even though by virtue of being a tenant of 79 dwellings: see Oakfern Properties. Consequently, on the plain meaning of the words, the limit is to be applied solely on the basis that it is the defendant that is the relevant “tenant” whose contribution is to be reviewed — and since the defendant’s contribution to service charges payable for services to the entire building comprising blocks A-E will be higher than the appropriate amount of £100, its contribution is therefore limited to that amount.
[58] Ms Holland’s argument, as I have indicated, was largely one of impression. She supported her contention that the limit applies to each individual flat by reference to a dictum in Heron Maple. That was a case in which the court decided that the head lessee was to be treated as the tenant of each flat comprised in the lease, and the then limit was applied accordingly. She submitted, therefore, that the statutory cap must be intended to be applied consistently with this, so as to relate to each individual flat rather than to the block as a whole.
[59] She also pointed to the fact that the reason behind this conclusion was the low financial limit that was imposed, and refers to a dictum of Judge Cooke, in [24] of the judgment:
(i) Section 20(3): sets low financial limits on the application of the Act, which would be unlikely to apply to commercial tenants of multiple/mixed property. He bases this upon a figure of so much per tenant, but this is not actually so. The language of the subsection, to my mind, is clearly so much per dwelling, which does not have the effect he contends for at all;
This is a paragraph of Judge Cooke’s judgment in which he is actually quoting the argument of Mr Peacock of counsel, but it plainly weighed with the learned judge, and Ms Holland relied on the same argument.
[60] It is correct (and immediately Mr Bhose pointed out) that the section 20(3) to which Judge Cooke was referring was in different terms from the present section 20. Section 20(1) as it originally read, related to the “Limitation of service charges — estimates and consultation” and provided as follows:
Where relevant costs incurred in the carrying out of any qualifying works exceed the limit specified in subsection (3), the excess shall not be taken into account in determining the amount of a service charge unless the relevant requirements [that is consultation] have been either —
(a) complied with, or
(b) …
and the amount payable shall be limited accordingly
The limit, which was then set in the statute in section 20(3), rather than in regulations, was:
(a) £25, or such other amount as might be prescribed by order of the Secretary of State, multiplied by the number of dwellings let to the tenants concerned; or
(b) £500 or such other amount as may be so prescribed.
The requirements that were then set out under subsection (4), and were requirements for at least two estimates to be obtained for works, for notices of the estimates to be given to each of the tenants and various requirements for dates by which the tenant might make observations in the course of the consultation requirements and so forth. So, it is in the context of that language that Judge Cooke spoke when he talked about the language being language that naturally related to a sum per dwelling rather than a sum per tenant. This, Mr Bhose submitted, means that this dictum can really carry no weight under the new statutory regime.
[61] Ms Holland observed that a subtenant has a right to apply to determine the reasonableness of the service charge imposed by the head landlord on the head tenant on the ground that the head tenant is paying the service charge as tenant of “a” dwelling even though also a tenant of other property, citing Oakfern Properties. She asked rhetorically how a subtenant can get to take the benefit of the legislation by the argument that the head tenant, its own landlord, is the tenant of an individual dwelling as well as other property, so as to found jurisdiction, and then put that argument entirely on one side with regard to the cap on recovery. She suggested that there is a serious inconsistency between subtenants and head tenants if that is correct.
[62] This is an inconsistency which was alluded to by Judge Rich at first instance in Oakfern
Properties. He referred to an argument made by Mr Tanney of counsel, who was appearing for the head landlord against (then) Mr Ruddy in person as subtenant. The point made by Judge Rich, in [7], is that:
By regulation 6 of The Service Charges (Consultation Requirements)(England) Regulations 2003 the amount is fixed at £250 per tenant not per dwelling, so that the effect of treating the mesne landlord of 24 flats as a tenant for the purposes of section 20 is to require consultation in respect of expenditure of less than £10 per dwelling. I think that it would be within the power given by section 20(5) to set the amount by reference to the contribution of any tenant “in occupation of a dwelling”, and it is to be hoped that the Secretary of State may consider revising this regulation rather than leaving landlords who inadvertently fail to consult in regard to trivial sums dependent on the LVT’s exercising its dispensing power under s20(1)(b) of the Act of 1985. I accept, however, that this regulatory provision can be taken as an indication of the understanding of the legislation, of the maker of the regulation. That does not, however, have any force in its proper construction by the courts. I do accept however that the anomalous results of one or another construction of the Section should equally not be treated as determinative of its proper construction.
[63] That decision was given on 6 February 2006, after the revision of the Regulations in 2003, to bring into force the new section 20 of the Act. Ms Holland submitted, though, that although Judge Rich apparently accepted this inconsistency or anomaly to be the case, in fact it was never investigated but was simply assumed, since it did not deter Judge Rich from his conclusion, which was on a different point, namely whether the court and the leasehold valuation tribunal had jurisdiction to hear an application by a subtenant to challenge the reasonableness of a service charge payable by its landlord, as head lessee, to the freeholder.
[64] The Court of Appeal also alluded to this inconsistency in its judgment in [52] as a description of part of the “surprising” result that was relied on by Mr Tanney in support of his argument on appeal against the decision of Judge Rich. Ms Holland submitted that this |page:129| alleged inconsistency was again not investigated nor considered and that it formed no part of the consideration that the Court of Appeal gave, in [72] to [79] of its judgment, to the question of whether the possible effects of its preferred conclusions on other sections of the Act should cause it to reconsider those conclusions.
[65] As part of its general discussion, the Court of Appeal noted that the picture that emerged from the legislative history appeared not to be “entirely coherent” (see the judgment of Jonathan Parker LJ, in [69]), and that a decision either way in the case before it would lead to anomalies. In that context, it was said that the right approach was that the court should, after reaching a conclusion provisionally with regard to the true construction of the Act on the basis of its view of the meaning of the words, test that meaning against the practical consequences to which this might give rise in other areas and ask itself whether such apparent consequences might cause it to revise its view because they would be clearly wrong or absurd.
[66] Ms Holland submitted that the particular anomaly with which I am concerned here (that is, the alleged anomaly that Mr Tanney pointed out and that Judge Rich seems to have accepted as a consequence of the way in which regulations have been devised) was not one to which the Court of Appeal turned its attention when reviewing its conclusions in Oakfern
Properties. It cannot therefore, she submitted, be suggested that the Court of Appeal approved or endorsed that anomalous construction of the regulations and the section.
[67] Equally, of course, Mr Bhose said that there is nothing in the judgment to suggest that the Court of Appeal disapproved that construction or regarded it as incorrect. Mr Bhose’s argument, as I have said, is that the words of the regulation and of section 18(1) are clear. He pointed out that Judge Cooke in Heron Maple was dealing (as I have said) with a statutory scheme before the amendments that were made by the 2002 Act. Consequently, he submitted that his view can be of no real assistance in respect of the meaning of the current statutory provisions. He also pointed out that the passage on which Ms Holland placed reliance, in [24] of Judge Cooke’s judgment, was itself obiter, even in that case.
[68] His third objection is that the construction for which Ms Holland contended requires, as he put it, an unreasoned — and indeed incorrect — assumption to be made, namely that each subtenant of a dwelling is required, under the terms of his subtenancy, to pay the same amount by way of service charge to the landlord. Mr Bhose said that that would ordinarily not be the case. Indeed, it is likely to be the case only where subtenancies are on identical terms and of identical flats.
[69] Fourth, and he put this most importantly, he said that Ms Holland’s case is inconsistent with the regulations, since regulation 4 makes it clear that the trigger to apply is “that the relevant contribution of any tenant is affected and increased”. It is thus unequivocally, he argues, a contribution of a tenant, and not a contribution per dwelling (or, formerly “flat”). He therefore even relied on the judgment of Judge Rich in Oakfern Properties, and his apparent acceptance without demur (in [7]) of this and thus the anomaly to which I have referred above.
[70] As to Ms Holland’s point that the low value put on the “appropriate amount” is an indication that it cannot have been intended that this amount should apply to a headlease of several flat units, Mr Bhose’s answer is that this provision is an incentive provision to get landlords to consult with tenants, and he asks rhetorically: “What is wrong with a bit more consultation even at a lower figure?”
[71] Although this is a knotty point, I have ultimately come to the firm conclusion that Ms Holland’s construction is right. In my judgment, the key to this issue of interpretation lies in the careful application of the various definitions in the Act, an approach that Ms Holland took up in the course of her argument.
[72] The starting point is regulation 4, which refers to the “relevant contribution of any tenant” (emphasis added). It is that which has to be found to be likely to amount to more than [£100] before the consultation provisions are brought into play and the 2003 Regulations, and the statutory cap imposed if they are not complied with, will bite.
[73] “Relevant contribution” is defined in section 20(2). Although this definition opens “In this section…”, the meaning in regulation 4, made under the powers contained in the section, cannot be any different. The definition, as already mentioned, is that:
“relevant contribution” in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement.
(Emphasis added.)
Thus, it is expressly a contribution by the payment of service charges to relevant costs that is the subject of scrutiny. (I see no significance in the plural of “service charges”, which seems to me to have been used clearly because a tenant will make many/several such payments during a lease, and which is, in any event, neutral as regards the competing contentions before me.)
[74] One must then therefore look at the definition of “service charge”. This is found in section 18(1). There it is said that, in respect of “the following provisions” of the Act (to which I have been referring):
“service charge” means an amount payable by a tenant of a dwelling as part of or in addition to the rent…
(Emphasis added.)
The word “dwelling” was introduced in place of the word “flat” in previous legislation, but that is not material. “Dwelling” has, however, its own definition. “Dwelling” is defined in section 38. It says there:
“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling together with any yard, garden, outhouses and appurtenances belonging to it or usually enjoyed with it;…
[75] In my judgment, it follows therefore that the “relevant contribution of a tenant” in regulation 4 is what he is paying as a “service charge”, which is (by definition) a charge in respect of a “separate dwelling”. Consequently, this rubric refers to the contribution payment of “a tenant of a dwelling”, but looking at the payment he is making in respect of “a” dwelling that is a separate dwelling, that is, an individual dwelling unit within his lease. This is so albeit the tenant may at the same time be a tenant of a several other “dwellings” under the lease in question (which is the route by which he and therefore his subtenant is able to invoke the protection of the Act). In other words, the “relevant” contribution is that of a tenant of a dwelling (whether or not also a tenant of other dwellings) that is made for services in respect of “a” (that is, “any”) individual dwelling in respect of which he is being charged, whether or not he is also being charged in respect of other dwellings.
[76] This construction, to my mind, actually gets rid of the anomaly that concerned Judge Rich but that he accepted without full investigation or argument in Oakfern Properties, while at the same time preserving coherence between the position of a head lessee whose premises comprise several dwellings and a tenant whose premises comprise only one dwelling.
[77] It also, in my judgment, keeps the consultation requirements at a sensible level, as must surely have been intended.
[78] It is also, in my judgment, consistent with what is, after all, the real point at the end of the day, namely what is a tenant — meaning the individual tenant of a residence with whom the payment buck stops — going to have to pay? How will it affect individual tenants in their pockets? In the present case, it would seem that, on Mr Bhose’s construction, any expenditure that would affect individual occupiers who are tenants of the defendant to the tune of as little as £1.30 pa would be expenditure to which the landlords would have to go to the trouble of consultations in respect of services being supplied, possibly to the whole of the building comprising blocks A-E. In that context, the effects of implementing the consultation process would be quite likely in themselves to increase the cost of actual expenditure for the subtenant by a comparable amount, and even possibly by more than the increase for which the consultation process was being invoked. The |page:130| disproportionateness of imposing that sort of requirement seems to me to be a potentially absurd consequence.
[79] It also seems to me that the construction that I prefer keeps the requirements concerning consultation consistent with the general philosophy behind the Act and its predecessors. I accept that, in 2002, because of the extension of the principles of the Act to long-term agreements as well as individual works contracts, the Act gained a wider application. However, it does not seem to me that that is reason to think that it was intended to sweep away the previous general approach of the Act, which was to require consultation only in cases where an individual residential occupier was, on the face of it, likely to be called on to pay a sum in excess of an amount that might be regarded as significant for an ordinary person. I see no reason why that approach should somehow have been revised.
[80] The only matter that has really caused me concern on this subject is Mr Bhose’s point that this construction imposes a requirement to make an assessment, or even (he would say) a guess, at the level of individual contributions among underlying subtenants to see whether a relevant contribution being made by the head tenant, as tenant of a dwelling, as an element of its total contribution, is going to be exceeded.
[81] My immediate reaction to this point is that it is unlikely to arise and, indeed, I question whether it really arises at all. First, in the usual situation, one is likely to know what the percentage contributions in respect of individual units in fact are, and the head tenant, or an individual subtenant, can invoke the Act on the basis of any contribution in respect of any unit that was going to exceed the amount in question, even though it might be the case that not all units would be so affected, but only higher-value units. It seems to me that that is by far the most likely situation that will arise.
[82] However, Mr Bhose then posed the question of what would happen if the relative contributions between subtenants had not been ascertained. It seems to me that this is a situation that is most unlikely to arise in practice, and if this is the only problem that would arise from the construction that I favour, I would regard it as a lesser anomaly than the anomalous and capricious effect of capping a head tenant’s contribution to service charge to £100 in the absence of consultations, regardless of the number of dwellings comprised in his lease. However, it seems to me in any event that one could reasonably then look at the matter on the basis of a simple averaging, because if a simple averaging produced the result that the increase was higher than the appropriate amount it would necessarily be the case that at least one unit would incur a higher increase than the appropriate amount.
[83] To this, Mr Bhose suggested that there might be cases in which simple averaging could not apply, such as where there were other premises comprised in the property that were not residential premises but (say) commercial premises. In that context, it might be impossible (he suggested) to ascertain whether relevant service charge contributions in respect of an individual dwelling were actually going to be raised by an amount that was above the appropriate amount.
[84] In my judgment, this is a situation that is so unlikely to apply in practice that, applying the approach laid down in Oakfern Properties, the possibility that it has not been catered for satisfactorily by the Act would be such a minor anomaly as to carry no weight against what I regard as the provisionally correct interpretation of the Act, namely the one that is actually correct on its words and that is also the obviously sensible one. In any event, Ms Holland said that such a very unlikely combination of circumstances could always be dealt with by the court taking a view on an appropriate apportionment of charges, if necessary, in order to see whether the Act was engaged. I accept this argument, and, indeed, it might well be the strictly appropriate approach. It would in any event be the way in which this potential problem could ultimately be dealt with if necessary.
[85] I return to commenting, in respectful agreement with Jonathan Parker LJ, that in the case of elaborately drafted legislation such as this it is easily possible that anomalous results can occur in rare or exceptional circumstances. One must balance this against the results of any other possible construction. I therefore weigh the possible difficulties suggested by Mr Bhose against what I regard as being the potentially absurd consequence of consultation having to take place in a case of this kind in respect of expenditure of only £101 spread among 79 units. The balance, in my judgment, falls unquestionably in favour of accepting any disadvantage of the former possibility rather than the latter, in particular when, as I have found, the latter is the construction to which the careful application of the relevant sections leads.
[86] I also bear in mind that the purpose of the protection conferred by the Act is to protect the individual paying tenant, who cannot pass on the payment, from unreasonable charges by providing a sanction of irrecoverability as an incentive to landlords to consult so as to ensure that charges are not unreasonable. I think that it would be extraordinary if the fact that an expenditure of £101 pa on some service to a block of flats could produce the result that consultation was required where there was a head tenant interposed above subtenants, but not in the case of precisely similar expenditure on the same service to the same block if it were held on separate residential leases directly from the freeholder. Ms Holland’s construction brings these two situations coherently into line.
[87] I hold, therefore, that the effect of the failure to consult was in this case to impose a cap equal to what must be the total of the £100 test applied in respect of each individual unit and aggregated. This total may not be exactly £7,900, as the calculation may have to be done in respect of individual units according to their actual percentage contributions to see what figure is produced in practice. However, that figure is no doubt a good working guide. Even though it may not be perfectly accurate, I imagine that the result is very close to it.
(5) Is window cleaning “qualifying works”?
[88] The only matter remaining is the final issue, namely whether window-cleaning works referred to in the invoice of 13 December 2005 for £19,493.25 were “qualifying works” for the purpose of section 20 and section 20ZA of the Act.
[89] This is a different situation from that of a “qualifying long-term agreement” because, being a one-off contract, it falls under the consultation provisions only if it is a contract for “qualifying works” as defined by section 20ZA(2).
[90] “Qualifying works” means “works on a building or any other premises”. That is not a very illuminating definition. Ms Holland reminded me of the history, where, of course, the Act originally provided protection in respect of works on a building. She said that window cleaning is not “works on a building” or “building works” because it falls more naturally in the category of “services”. By definition, it is “cleaning”, which itself is part of “services” and not “works”.
[91] Mr Bhose said that it is “works” and it is works being done “on a building”. Window cleaning is not that different from stone cleaning, which itself is not that different from maintenance work on stone surfaces. There is really no ground for distinguishing any form of such works that are being done, and window cleaning works therefore fall within the definition.
[92] It is again a short point and a matter of impression. I prefer Ms Holland’s argument. Window cleaning may be “work” and even “work on a building” but it is not, in my judgment, “works on a building”. Works on a building comprise matters that one would naturally regard as being “building works” and it does not seem to me that window cleaning naturally falls within that concept.
[93] I therefore find that, on that issue, Ms Holland is correct and consequently this was not a contract for “qualifying works”. It follows that the question of the imposition of the cap on any expenditure does not arise.
Conclusion
[94] I will therefore make such order as counsel are agreed flows from my above findings. As requested, I will also make an order under section 20C of the Act, in respect of one-third of the claimant’s costs.
Preliminary issued determined.
