First-tier Tribunal Grants Dispensation from Statutory Consultation

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AL/LDC/2024/0149 Property : Various residential leasehold properties owned by [COMPANY] Applicant : [redacted] : None Respondent : [redacted] subject to building insurance Representative : None Type of application : To dispense with the statutory consultation requirements under section 20ZA Landlord and Tenant Act 1985 Tribunal members :

Judge Sarah McKeown

Date of decision : 4 November 2024

DECISION

This has been a remote hearing on the papers. A face-to-face hearing was not held because no-one requested a hearing and all issues could be determined on paper. The documents to which the Tribunal was referred are in an electronic bundle of 224 pages, the contents of which the Tribunal has noted. The decision made is as set out below.

DECISION The Tribunal grants the application for retrospective dispensation from statutory consultation in respect of the long-term qualifying agreement entered into by the Applicant for the provision of [NAME]. This decision does not affect the Tribunal’s jurisdiction upon any future application to make a determination under section 27A of the Act in respect of the reasonableness and/or cost of the qualifying long-term agreement. The Application References are to page numbers in the bundle provided for the hearing.

1. The Applicant seeks (p.1) a determination pursuant to section 20ZA of the Landlord and tenant Act 1985 (“the Act”) for retrospective dispensation from consultation in respect of a qualifying long-term agreement for [NAME]. The Service Charges (Consultation Requirements) Regulations 2003 provide that consultation requirements are triggered if the landlord plans to carry out qualifying works or enter into a qualifying long-term agreement which would result in the contribution of any tenant being more than £250. The cost which is the subject of the application exceeds this threshold.

2. By directions (p.13) dated 19 July 2024 (‘the directions”) the Tribunal directed that the applicant had to write to each of the leaseholders (and any residential sublessees and any [NAME]), by 23 August 2024, by email, hand delivery or first-class post:

(a) Informing them of the application; (b) Advising them that a copy of the application would be available on the Applicant’s website. 3. The Applicant confirms in its Statement of Case that this had been done.

4. The directions provided that leaseholders who oppose the application had to, by 4 October 2024, complete the reply form and sent to the Applicant and the Tribunal and sent to the Applicant a statement in response

with copies of any documents they wished to rely upon. There was also provision for a response from the Applicant.

5. The Tribunal has received no completed form from any [NAME] or sublessee.

6. The directions provided that the Tribunal would decide the matter on the basis of written submissions unless any party requested a hearing. No such request has been made.

The Applicant’s case

7. The applicant is the freeholder of the properties listed in the application. It is a non-for-profit [NAME].

8. By clause 4.2 of the sample lease (p.168), the Applicant covenanted to keep the Premises insured.

9. In its application, which is dated 5 June 2024, the Applicant explained that the contract for [NAME] had been entered into following successful procurement and compliance with the s.20 consultation process, but the listed properties were not included in the consultation in error. It is said that it is important that the Applicant receive dispensation to recover the premiums paid for [NAME]. The agreement start date was 1 April 2024, all properties were covered under previous agreements and this was a new contract as the previous one had ended. The first stage Notice of Intention began on 4 September 2023 and ran for 30 days. The second stage began following the completion of the tender process on 20 February 2024 and again the consultation period ran for 30 days. Observations received during these periods were responded to in full and on time and residents’ feedback was taken into account. It is said that dispensation was required as 1311 shared ownership houses were missed from the consultation process due to an administration error. All houses are required to receive [NAME] cover from the Applicant’s provider under the terms of the leases, whilst they remain shared ownership properties and the Applicant has an obligation to be able to recover the costs of this. Consultation requirements were followed for other properties the Applicant contacted. It is said that it is believed that the leaseholders who were omitted from the consultation process would not have been prejudiced by the failure to follow the consultation process.

10. The Applicant’s Statement of Case (p.19) it is said that on 24 April 2024, an invoice for the contract was provided to the Applicant for £7,223,730.80.

11. It is said that any argument about likely savings by the individual leaseholders to be made by having them secure their insurance on a property-by-property basis would be outstripped by the administrative burden of ensuring that such cover was in place from year to year and then securing insurance for the

remaining properties. Such comparison is not like-for-like and is not a realistic or cheaper way of administering insurance across a [NAME]’s portfolio of stock.

12. The Statement of Case states that on 1 August 2024, the Tribunal heard the same application for the same dispensation in respect of the Applicant’s various leasehold properties across Surrey, Kent, Hampshire and West Sussex (CHI/00MS/LDC/2024/0097). In its decision dated 2 August 2024, the Tribunal granted the Applicant unconditional retrospective dispensation from the consultation requirements of s.20. In that case, some of the leaseholders did object. The Tribunal found that the Applicant had undertaken statutory consultation across its portfolio in relation to the placing of insurance but omitted, by admission, to consult lessees of some 1,311 houses. It found that the Applicant had responded to a number of observations and questions raised by those lessees who were consulted, that the Applicant undertook a procurement process having offered the contract through a government portal and that the Respondent’s objections were not of direct relevance to the dispensation application.

13. The witness statement of Mr. [NAME] (p.56) confirms that the Notice of Intention (p.65) was issued on 4 September 2023. He states that several questions were received (p.70). Once the consultation period closed, a meeting was held with the procurement team and the insurance manager to discuss the outcome of stage 1 in light of the residents’ feedback. Once the Applicant had drawn up the tender documents, it advertised them through the “Find a Tender” government portal. The bids were reviewed. The notice of proposal (p.93) was sent on 20 February 2024. Some observations were received (p.107). [COMPANY] were selected to provide [NAME] cover and the contract began on 1 April 2024 following completion of the procurement and consultation process (p.156). It was then discovered that 1,311 properties had not received s.20 notices.

14. The Applicant also included in the bundle the Tribunal’s decision dated 10 September 2024 in respect of a similar application for various shared ownership properties in Cambridgeshire, Northamptonshire and Buckinghamshire (p.218).

The Respondent’s case

15. No respondent objected to the application.

The Law 16. Section 20ZA of the Act, subsection (1) provides: “Where an application is made to a 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”.

17. The Supreme Court in the case of [COMPANY] v [NAME] [2013] UKSC 14 set out certain principles relevant to section 20ZA. Lord [NAME], having clarified that the purpose of section 19 to 20ZA of the Act was to ensure that tenants are protected from paying for inappropriate works and paying more than would be appropriate, went on to state “it seems to me that the issue on which the [tribunal] should focus when entertaining an application by a landlord under section 20ZA(1) must be the extent, if any, to which the tenants were prejudiced in either respect by the failure of the landlord to comply with the requirements”.

Determination and Reasons

18. The whole purpose of section 20ZA is to permit a landlord to dispense with the consultation requirements of section 20 of the Act if the tribunal is satisfied that it is reasonable for them to be dispensed with. Such an application may be made retrospectively, as it has been made here.

19. The Tribunal has taken account of the decision in [COMPANY] v [NAME] in reaching its decision.

20. It was the intention of the Applicant to consult all the leaseholders and the omission of the Respondents was due to an error which it sought to remedy once it was discovered. There is no evidence before the Tribunal that the Respondents were prejudiced by the failure of the Applicant to comply with the consultation requirements.

21. The Tribunal is therefore satisfied that it is reasonable to grant unconditional retrospective dispensation from the consultation requirements of s.20 Landlord and Tenant Act 1985 in regard to the Applicant entering into a long- term qualifying agreement for the provision of [NAME].

22. The Tribunal make no determination as to whether the cost of the qualifying long-term agreement are reasonable or payable. If any [NAME] wishes to challenge the reasonableness of the costs, then a separate application under s.27A Landlord and Tenant Act 1985 should be made.

Judge Sarah McKeown 4 November 2024

Rights of appeal

If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).