Service charge – Major works – Consultation requirements – Sections 20 and 20ZA of Landlord and Tenant Act 1985 – Service Charges (Consultation Requirements) (England) Regulations 2003 – Appellant landlord failing to comply with statutory consultation requirements – LVT refusing to dispense with requirements – Whether necessary to consider whether prejudice caused to respondent leaseholders – Whether prejudice assumed where non-compliance substantial – Appeal dismissed
The appellant was the landlord of a block of 18 flats in Bromley, Kent, comprising a three-storey, post-war building with a flat roof. The respondents were the long leaseholders of the flats in the block. They applied to the leasehold valuation tribunal (LVT), under section 27A of the Landlord and Tenant Act 1985, for a determination as to their liability to pay service charges demanded by the appellant. These included sums for major works to which the statutory consultation requirements of section 20 of the Act, and the Service Charges (Consultation Requirements) (England) Regulations 2003, applied; the respondents contended that, by reason of the appellant’s admitted failure to carry out the statutory consultation, its recovery in respect of those works was capped at £250 per flat pursuant to para 6 of the regulations., unless it succeeded in an application for dispensation from those requirements under section 20ZA.
The appellant made an application to the LVT, under section 20ZA, for dispensation form the consultation requirements. Dismissing the application, the LVT held that the appellant, although aware of the consultation requirements, had made no real attempt to comply with them and had put forward no good reason to explain the failure to consult.
The appellant appealed. It contended that dispensation should not be refused unless the failure to consult had caused some significant prejudice to the leaseholders. It submitted that the LVT had failed to consider whether any prejudice had in fact been caused and that prejudice could not be presumed.
Decision: The appeal was dismissed.
Although the LVT had not set out explicitly what prejudice had been caused to the respondents, it had none the less considered the issue of prejudice. It could be inferred that it had considered the breach to be so substantial that prejudice must be taken to have flowed from it, even though there was no evidence of any work that would have been done differently if the consultation had been carried out properly. Such a decision was open to it on the facts.
A loss of opportunity to make further representations, and to have them considered, could itself amount to significant prejudice, at least where the non-compliance with the consultation regulations had been substantial. A conclusion that the curtailment of the consultation itself amounted to significant prejudice was not inconsistent with the view that it was important to find prejudice to the tenants. Where there had been a minor breach of procedure, it would be important for a tribunal to find evidence that the tenants were prejudiced or disadvantaged. However, where the breach had been substantial, it might be reasonable to assume prejudice. Even if it were possible to prove that further consultation would have made no difference to the end result, that did not mean that there has been no prejudice, if the breach were substantial. A properly conducted consultation process should give confidence to the tenants in the decisions that were reached and leave them feeling as comfortable as they could be with the service charges that were likely to flow from those decisions. The opportunity to participate in a meaningful way in the decision-making process was of real value. Even if the end result would probably have been the same without their participation, it was very arguable that tenants who were substantially deprived of their right to be included in the decision-making process were genuinely prejudiced: Daejan Investments Ltd v Benson [2011] EWCA Civ 38; [2011] 2 EGLR 113 applied; Eltham Properties Ltd v Kenny LRX/161/2006 and Re 30-40 Grafton Way LRX/185/2006; [2008] PLSCS 198 considered.
Adrian Carr (instructed by Peter Dulley & Associates (chartered surveyors), of Bromley) appeared for the applicant; the second respondent, Klaus Reckling, appeared for the respondents with the permission of the tribunal.
Sally Dobson, barrister
