First-tier Tribunal Grants Dispensation from Consultation Requirements for Major Works

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case Reference

:

CHI/18UB/LDC/2021/0058

Property

:

Various blocks at [ADDRESS], Exmouth, Devon

Applicant: [redacted]

[COMPANY]

[RESPONDENT]

:

[NAME]

Respondent: [redacted]

:

Type of Application

:

To dispense with the requirement to consult [NAME] about major works section 20ZA of the [NAME]

Tribunal Member(s)

:

[NAME] of Decision

:

15 September 2021

DECISION

The Tribunal therefore grants dispensation from the consultation requirements of S.20 [NAME] in respect of entering into a Qualifying Long Term Agreement for the provision of internal and external redecorations of the various blocks which make up the estate over the next 5 years with work commencing in April 2022.

In granting dispensation, the Tribunal makes no determination as to whether any service charge costs are reasonable or payable.

The Applicant is to send a copy of this determination to the freeholder and all of the [NAME] liable to contribute to service charges.

2 Background

1. The Applicant seeks dispensation under Section 20ZA of the [NAME] from the consultation requirements imposed on the landlord by Section 20 of the 1985 Act.

2. The Applicant explains that they wish to enter into a Qualifying Long Term Agreement for the provision of internal and external redecorations of the various blocks which make up the estate over the next 5 years with work commencing in April 2022. The application refers to various informal consultations which have taken place and the likely savings to be achieved. It is understood that the majority of leaseholders are supportive of the approach proposed.

3. The application refers to their being some urgency as to ensure the works can be scheduled the contractor requires the contract to be entered into shortly.

4. The Tribunal made Directions on 29 July 2021 indicating that it considered that the application was suitable to be determined on the papers without a hearing in accordance with Rule 31 of the Tribunal Procedure Rules 2013 unless a party objected.

5. The Directions required the Applicant to send them together with a copy of the application to each Respondent and included with the Directions was a form for the Leaseholders to indicate to the Tribunal whether they agreed with or opposed the application and whether they requested an oral hearing. Those Leaseholders who agreed with the application or failed to return the form would be removed as Respondents.

6. On the Applicant’s request the Tribunal confirmed that the directions could be served on [NAME] as Chairman of the [NAME] rather than individually.

7. Replies were received from [COMPANY] and Mr [NAME] on behalf of the [NAME] both of whom agreed to the application and neither of whom called for an oral hearing.

8. In accordance with paragraph 5 above the [NAME] were removed as Respondents.

9. Before making this determination, the papers received were examined to determine whether the issues remained capable of determination without an oral hearing and it was decided that they were, given that the application remained unchallenged.

10. The only issue for the Tribunal is whether it is reasonable to dispense with any statutory consultation requirements. This decision does not concern the issue of whether any service charge costs will be reasonable or payable.

3 The Law

11. The relevant section of the Act reads as follows:

S.20 ZA Consultation requirements: Where an application is made to a Leasehold Valuation Tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long- term agreement, the Tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.

12. The matter was examined in some detail by the Supreme Court in the case of [COMPANY] v [NAME]. In summary the Supreme Court noted the following i. The main question for the Tribunal when considering how to exercise its jurisdiction in accordance with section 20ZA is the real prejudice to the tenants flowing from the landlord’s breach of the consultation requirements.

ii. The financial consequence to the landlord of not granting a dispensation is not a relevant factor. The nature of the landlord is not a relevant factor.

iii. Dispensation should not be refused solely because the landlord seriously breached, or departed from, the consultation requirements.

iv. The Tribunal has power to grant a dispensation as it thinks fit, provided that any terms are appropriate.

v. The Tribunal has power to impose a condition that the landlord pays the tenants’ reasonable costs (including [NAME] and/or legal fees) incurred in connection with the landlord’s application under section 20ZA (1).

vi. The legal burden of proof in relation to dispensation applications is on the landlord. The factual burden of identifying some “relevant” prejudice that they would or might have suffered is on the tenants.

vii. The court considered that “relevant” prejudice should be given a narrow definition; it means whether non- compliance with the consultation requirements has led the landlord to incur costs in an unreasonable amount or to incur them in the provision of services, or in the carrying out of works, which fell below a reasonable standard, in other words whether the non-compliance has in that sense caused prejudice to the tenant.

4 viii. The more serious and/or deliberate the landlord's failure, the more readily a Tribunal would be likely to accept that the tenants had suffered prejudice.

ix. Once the tenants had shown a credible case for prejudice, the Tribunal should look to the landlord to rebut it.

Evidence

13. The circumstances of the application are contained in the application and recited in paragraphs 2 and 3 above.

Determination

14. Dispensation from the consultation requirements of S.20 of the Act may be given where the Tribunal is satisfied that it is reasonable to dispense with those requirements. Guidance on how such power may be exercised is provided by the leading case of [NAME] v [NAME] referred to above.

15. There have been no objections to the application and no evidence of the type of prejudice to the [NAME] as referred to in the [NAME] case referred to above has been identified.

16. The Tribunal therefore grants dispensation from the consultation requirements of S.20 [NAME] in respect of entering into a Qualifying Long Term Agreement for the provision of internal and external redecorations of the various blocks which make up the estate over the next 5 years with work commencing in April 2022.

17. In granting dispensation, the Tribunal makes no determination as to whether any service charge costs are reasonable or payable.

18. The Applicant is to send a copy of this determination to all of the [NAME] liable to contribute to service charges.

D [NAME] [NAME] 15 September 2021

5

RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application by email to [EMAIL] to the First-tier Tribunal at the [NAME] office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.