Major works – Consultation requirements – Landlord and Tenant Act 1985 – Schedule 2 to Service Charges (Consultation Requirements)(England) Regulations 2003 – Appellant landlords carrying out major works to property – Whether consultation with respondent tenants complying with requirements of 2003 Regulations – Whether appropriate to grant retrospective dispensation from requirements – Appeal dismissed
The appellant council held a headlease of a property that comprised the residential parts of a mixed-use building containing 135 flats. The respondents held underleases of a number of the flats on terms that entitled the appellants to recover from them a share of the costs of undertaking major works to the property. The appellants proposed extensive repair and renewal works, in respect of which they were obliged to consult with the respondents in accordance with the Service Charges (Consultation Requirements)(England) Regulations 2003, made under section 20ZA of the Landlord and Tenant Act 1985. The appellants sent various communications to tenants regarding the proposed works, but these contained a number of errors. A letter informing the tenants of the intention to carry out works, and inviting them to a meeting on the subject, gave the incorrect date and time for the meeting. Following the tendering process for the works, the tenants were informed only of the successful tender. A further letter of October 2004 specified the incorrect works and omitted any statement of the amount of other estimates or notice of where and when those estimates could be inspected.
The leaseholders subsequently maintained that any service charges recoverable in respect of the works were to be limited to £250, pursuant to section 20 of the 1985 Act, since the statutory consultation requirements had not been met or dispensed with. The appellants applied to the leasehold valuation tribunal (LVT) for a retrospective dispensation of certain requirements. They argued that it was reasonable, within the meaning of section 20ZA(1), to dispense with the requirements in question since the respondents had been given sufficient information and opportunity to consult. Rejecting that application, the LVT found that the errors in the October 2004 letter, together with the errors regarding the date of the previous consultation meeting, would have made meaningful consultation difficult, and that, since the failure to serve the required notice arose as a result of avoidable errors, it was not reasonable to dispense with the requirement to consult. The appellants appealed.
Decision: The appeal was dismissed.
The consultation scheme of the 2003 Regulations required information to be given to the tenants at three stages, namely when: (i) there was an intention to carry out works; (ii) estimates had been obtained; and (iii) a contract had been entered into. It required observations from tenants to be invited at the first two stages. That scheme was designed to protect the tenants’ interests. Having regard to that purpose, the principal consideration when deciding whether to grant retrospective dispensation was whether a tenant had suffered any significant prejudice as a result of the landlord’s failure to comply with the requirements in question. That fell to be considered in all the circumstances. If an omission was small, or was rendered insignificant through the provision of an opportunity to comment on the matter in another context, it might not prejudice a tenant. The general nature of the provisions in question, including the £250 limit on service charge recovery, formed part of the background to the consideration of reasonableness. However, the particular effects of those provisions on the landlord or the tenants in the particular case could not properly be taken into account, since it was in the very nature of the provisions that the landlord would suffer financially and the tenants gain financially if dispensation were not given.
The appellants had failed to comply with the requirements in para 4(5)(b) and (9) of the 2003 Regulations regarding service of a statement of the amount of at least two estimates and, in para 4(10), regarding service of a notice specifying where and when the estimates could be inspected and inviting observations on them. The requirements as to estimates were fundamental to the scheme; the purpose was to provide the tenants with the opportunity to see the estimates and make observations on them, which the landlord was then required to take into account. The leaseholders had not been provided with the basic information on the tenders or the opportunity to inspect and make observation on them. The appellants had entirely omitted the second stage of consultation. That constituted a gross error that manifestly fundamentally prejudiced the leaseholders. Accordingly, dispensation should not be granted.
Katharine Holland (instructed by the legal department of Camden London Borough Council) appeared for the appellants; Daniel Gatty (instructed by Hogan Lisle) appeared for the respondents.
Sally Dobson, barrister
