Service charges: reconsultation not required for same set of works

If, following a valid consultation exercise, a contractor engaged to carry out a set of works is unable to complete the same, there is no requirement for the landlord to carry out a fresh consultation exercise before a new contractor is engaged to carry out the same works. In Wynne v Yates and another [2021] UKUT 278 (LC); [2021] PLSCS 194, the appellant landlord was the freeholder of a converted Victorian terraced house in Hove, East Sussex. The respondents were long leaseholders of the upper maisonette. Under the service charge provisions of the respondents’ lease the landlord was required to maintain the exterior of the building. The respondents covenanted to pay 50% of the costs incurred by the landlord in fulfilling his obligations. Further, the respondents covenanted to make interim payments in June and December each year, on account of the landlord’s expenditure in the next six months. In 2019, works began to the exterior of the building. The qualifying set of works encompassed external redecoration, repairs to roof and associated works. The proposed costs of the works exceeded £250 and a valid consultation exercise was conducted. The original contractor failed to complete the works. The landlord engaged new contractors, without a fresh consultation. The new contractors were more expensive than the original contractor, but less than the other contractors who quoted during the initial consultation. A dispute arose between the parties as to the reasonableness and payability of interim service charges for the periods December 2018, June 2019 and December 2019. The respondents claimed not to have received demands for the payment of interim service charges in December 2018 and June 2019. They alleged they had received an interim service charge in January 2020 for the sum of £1,215.54. The respondents queried the sum demanded with the landlord and were told it was to cover additional external works done to the building by the new contractors. Before the First-tier Tribunal, the respondents argued the interim service charges were unreasonable in amount as they had already made a payment of £1,591 towards the external works. Further, their landlord was not entitled to charge for the additional works because he had failed to consult. The FTT agreed; adding the landlord should be limited to recovering the fixed price that the initial contractor had quoted for the works. The landlord appealed the reasonableness and payability of the service charges and the FTT’s refusal to grant him dispensation from consultation. Relying on Daejan Investments Ltd v Benson [2013] UKSC 14; [2013] 2 EGLR 45; [2013] EGILR 4, the Upper Tribunal (Lands Chamber) reiterated that a landlord’s application for dispensation would ordinarily be granted unless the tenant could demonstrate some prejudice, beyond the simple fact of not having been consulted or being required to contribute to the cost of the works. The respondents had not. Additionally, relying on Phillips v Francis [2014] EWCA Civ; 1395 [2015] EGLR 8, the UT observed that the consultation requirements applied to a “set of works”. A landlord was not obligated to carry out a fresh consultation exercise in relation to the same set of works if his original contractor was unable to complete the works. This would fact that costs increased and a tenant’s contribution was to be more than £250 did not alter matters. In the present case, the new contractors had carried out the same set of works envisaged. In allowing the appeal the UT also found that the interim service charges were reasonable in amount and payable, as they were in respect of the works carried out. There was no reason for the FTT to restrict the landlord to only recovering the fixed estimate of the original contractor. Elizabeth Dwomoh is a barrister at Lamb Chambers