Elizabeth Dwomoh discovers whether urgent works give a landlord the right to only partially comply with rules.
Key points
- The urgency of work does not negate the need to comply with the statutory consultation requirements
- It is important that each leaseholder is given the chance to have their views taken into account as part of the statutory consultation process
Sections 20 and 20ZA of the Landlord and Tenant Act 1985 are intended to provide residential long lessees with a degree of protection from their landlords, and others, levying either excessive, unexpected or unreasonable service charges. These statutory provisions impose an obligation for tenants to be consulted before costs are incurred for certain qualifying works or certain long-term agreements that are entered into for the provisions of services that can be recovered through the service charge provisions of the lease.
The parties and the lease
In Marshall v Northumberland & Durham Property Trust Ltd [2022] UKUT 92 (LC); [2022] PLSCS 56, the Upper Tribunal (Lands Chamber) was asked to consider issues concerning the exercise of the statutory discretion to order dispensation from the consultation requirements when works were rendered urgent.
Kelvin Court, 40/42 Kensington Park Road, London W11, is a residential block containing 16 flats. The respondent, Northumberland and Durham Property Trust Ltd (NDPT), was the landlord of the block. The appellant, Cameron Marshall, was a long leaseholder of one of the flats. He acquired his interest in the flat on 20 December 2019.
The leases of the flats in the block were all in standard form. Under the terms of the leases, the landlord was obliged to provide heating and hot water to the flats, for which it could recover a fixed percentage, through the service provision, of the cost of certain items, which included the costs of replacing the whole of the boilers and other plant and machinery for the supply of hot water within the block.
The dispute
In January 2019, NDPT was advised by engineering consultants that the boilers servicing the flats within the block needed to be replaced as soon as possible. It advised that the works could be carried out in two phases. Proper statutory consultation in respect of those works was not undertaken by NDPT until July and September 2019.
On 14 October 2019, Marshall received answers to pre-contract enquiries from NDPT’s managing agents. The pre-contract enquiries disclosed that remedial boiler works were due to take place within the next two years and copies of the section 20 consultation notices, which had previously been served, were enclosed with the response.
Following Marshall’s completion of the purchase of his flat in December 2019, notice of his acquisition was given to NDPT’s managing agents on 7 January 2020. On receipt of the notice, the managing agents failed to add Marshall to future communications intended for the leaseholders until 6 April 2020. This meant that Marshall did not receive any further communication provided to the leaseholders in respect of the works. In particular, Marshall was not provided with notification sent to leaseholders on 3 April 2020 that the ongoing section 20 consultation exercise was to be halted as the works had become urgent. Legionella had been discovered in February 2020 and accordingly NDPT intended to apply for dispensation.
NDPT was granted unconditional dispensation by the First-tier Tribunal due to the urgency of the works. Further, the FTT rejected Marshall’s arguments that he had been prejudiced by the failure to consult.
The FTT observed that this type of argument “…[failed] to engage with the urgency of the situation faced by [NDPT]…” Further the FTT placed weight on the fact that NDPT had carried out some consultation before the need for urgency was appreciated. Marshall appealed.
The appeal
Having regard to the decisions of the Supreme Court in Daejan Investments Ltd v Benson [2013] UKSC 14; [2013] 2 EGLR 45 and Court of Appeal in Aster Communities v Chapman [2021] EWCA Civ 660; [2021] EGLR 33, the UT underscored that the FTT’s exercise of its jurisdiction to dispense with the statutory consultation requirements stood and fell on the issue of prejudice.
The UT found that the FTT should have, first, systematically identified which steps the landlord had undertaken and which steps it had failed to undertake under the statutory consultation requirements and for which dispensation was now required. Second, it should have determined the consequences of those omissions. Third, the FTT should have identified if any of the leaseholders were prejudiced by the failure to consult.
As a note of caution, the UT observed that the absence of prejudice could not be assumed simply because there was a need to undertake consultation work urgently.
Additionally, the UT found that the FTT had placed too much weight on the fact that some consultation had taken place. Marshall had not been included in that consultation process. The fact that he had received some information via the pre-contract enquiries was not a substitute for statutory consultation and did not mitigate any prejudice suffered by the absence of the same.
The lesson
A key takeaway from this decision is the importance of every leaseholder being given the chance to have their views taken into account as part of the statutory consultation process.
Elizabeth Dwomoh is a barrister at Lamb Chambers
Photo by Siegfried Grassegger/imageBROKER/Shutterstock
