First-tier Tribunal Grants Emergency Call System Upgrade Dispensation

OUTCOME: Allowed

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Case Reference

: CAM/33UC/LDC/2024/0048

Property

: [ADDRESS] [POSTCODE]

Applicant

: [redacted] : [COUNSEL], Head of [NAME] [NAME] [NAME] & [COUNSEL]

Respondent : [redacted] Annex 3

Type of [NAME] : To dispense with the consultation

requirements referred to in Section 20 of the

Landlord and Tenant Act 1985 pursuant to

Section 20ZA

Tribunal

: Judge JR Morris

Date of [NAME] : 19 July 2024 Date of Directions : 6 September 2024 Date of Decision : 14 October 2024

_______________________________________________

DECISION ____________________________________

© CROWN COPYRIGHT 2024

Decision

1. The Tribunal is satisfied that it is reasonable to dispense with compliance with the consultation requirements of Schedule 4 Part 2 to the Service Charges (Consultation etc) (England) Regulations 2003 (SI 2003/1987).

2. The Applicant shall serve a copy of the Tribunal’s decision on dispensation, together with the relevant appeal rights attached, to the [NAME] and his Representative.

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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Reasons

The [NAME]

3. On 19 July 2024 the Applicant applied for dispensation from the statutory consultation requirements in respect of qualifying works which are to replace an emergency call system. The [NAME] is one of two applications received from the Applicant regarding the replacement of an emergency call system installed in sheltered housing. The second property is [ADDRESS] [POSTCODE]. For the reasons given in the Submissions and Evidence Section the Applicant considers the need to replace the present call system in the two properties is now a matter of urgency.

4. The Property is an [NAME] [NAME] scheme which consists of 30 one- and two-bedroom flats, 7 are shared ownership and 23 rented. The shared ownership flats are held on long leases, a copy of which was provided. The 7 [NAME] are the Respondents in this [NAME]. The total cost of the qualifying work was not provided but the [NAME] indicates that the Applicant considers it to be likely to exceed the threshold of £250.00 per unit which requires the Applicant to consult the [NAME] in accordance with the procedure required under section 20 of the Landlord and Tenant Act 1985.

5. Directions were issued on 6 September 2024 which stated that the [NAME] would be determined on or after 14 August 2024 based on written representations and without an inspection, unless either party made a request for an oral hearing by 27 September. No request was received.

6. The Directions required the Applicant to send to each of the Respondents, by hand delivery or by first class post and by email, if practicable copies of: i. The [NAME] form without the list of [NAME]’ names and addresses; ii. The Directions; iii. A clear concise description of the relevant works for which dispensation is sought; iv. The estimate of the cost of the relevant works, including any professional fees and VAT; v. Any other evidence relied upon; and To file with the tribunal confirming that this had been done and stating the date on which this was done.

7. On 19 September 2024 the Applicant confirmed that this Direction had been complied with. No representations were received.

The Law

8. Section 20 of the Landlord and Tenant Act 1985 limits the relevant service charge contribution of tenants unless the prescribed consultation requirements have

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been complied with or dispensed with under section 20ZA. The requirements are set out in The Service Charges (Consultation Requirements) (England) Regulations 2003. Section 20 applies to qualifying works if the relevant costs incurred in carrying out the works exceed an amount which results in the relevant contribution of any tenant being more than £250.

9. The consultation provisions appropriate to the present case are set out in Schedule 4 Part 2 to the Service Charges (Consultation etc) (England) Regulations 2003 (SI 2003/1987) (the 2003 Regulations). The Procedure of the Regulations are summarised in Annex 2 of this Decision and Reasons.

10. Section 20ZA allows a Landlord to seek dispensation from these requirements, as set out in Annex 2 of this Decision and Reasons and this is an [NAME] for such dispensation.

Submissions & Evidence

11. The Applicant provided a bundle to the Tribunal which included:  A copy of a Lease,  The [NAME] containing a Description of the Works, and  The Directions.

12. These together set out the Applicant’s case as follows:

13. The relevant provisions of the Lease are:

a) Under Clause 5.3 the Landlord covenants to “maintain, repair, renew and improve the Service Media (including television and radio wiring and aerials intruder alarm systems fire detection and firefighting equipment) and all other installations in under or upon the Building and the Estate”

b) Under Clause 3.3 the [NAME] covenant to pay the Service Charge.

c) Schedule 5 Part 1 states that the Service Charge shall include “All costs associated with the provision of the Landlord’s Services which shall include a warden call system”

14. The Applicant said that the chosen [COMPANY] system is currently the only fully digital emergency cell system available that uses secure encryption to authenticate and encrypt both data and speech. There is a limited number of other digital systems that offer general functionality comparable to the old analogue systems but have limited health and safety features in comparison to the [NAME] system.

15. Many telecare and fire alarm calls are still delivered using devices that transmit across the analogue UK telecommunications infrastructure. However, as with television services, the infrastructure is changing from analogue to digital. As a

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result, Internet Protocol will become the default communications method, meaning analogue telecare systems will soon no longer work. BT have already announced they will not be offering analogue services after 2020, with the total switch off concluding in 2025.

16. In addition to analogue systems becoming obsolete, they are becoming increasingly unreliable creating safety and reliability issues for [NAME]. As a result, the Applicant has explored the market to ascertain what systems were digital ready, overcame existing health and safety issues and provided a good investment. Although there are a few systems that provide a digital service onsite, only the [COMPANY] supports a fully encrypted digital onsite and offsite pathway. All aspects of the [NAME] connectivity are digital using Voice Over IP (VOIP) and the British Standard 388521-2 which is the BS for signalling alarm calls to the monitoring centre over digital networks. Other systems use elements of analogue to digital conversion technology to get alarm calls successfully delivered to monitoring centres but do not provide the safety enhancements seen in the [NAME] system.

17. A crucial requirement is ensuring the system is capable of handling simultaneous calls. Traditional analogue systems will only allow 1 call to be made at any one time with any subsequent calls forming a queue. In addition, if a fire alarm is activated traditional equipment may delay the fire call being received by the monitoring centre. Hybrid digital systems will allow 2 simultaneous calls, whereas the [NAME] system will allow unlimited calls raised and handled concurrently from any site. This is of particular importance on our [NAME] where up to 10,000 calls per month can be made from any one site. Having this capability is a significant enhancement in supporting the safety of [NAME].

18. Other relevant advancements provided by the [NAME] include:  3 second connection speed to the monitoring centre  [NAME] for functionality on personal devices  Flat to flat video calling  Wi-Fi provision enabling customers to access the internet in their home.  Bluetooth provision enabling accessories to be added to help with simple tasks like answering the door from their chair.  An [NAME] to allow [NAME] to use the system on a tablet from the comfort of their chair, whilst the main system is still mounted on the wall and permanently powered as the British Standards mandate.

19. To interconnect all the properties into a central system and achieve the same functionality, service, and assurance to all our [NAME], would not be possible with a hybrid of two separate systems onsite.

20. At this stage of delivering the digital upgrade with [NAME], we are unable to tender a directly comparable system as [NAME] are the only supplier a digital solution with the desired functionality.

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Findings

21. The Tribunal was aware of the move from analogue to digital communications and the benefits that the latter can provide. Although this transition has been heralded for several years it is only relatively recently that analogue systems are becoming obsolete to the point that organisations are rapidly having to digitalise before the analogue is ‘switched off.’ The Tribunal therefore appreciates the urgency felt by the Applicant.

22. The Tribunal also appreciates the very significant benefits described in replacing the current call system by the one described. The Tribunal notes that the Applicant has identified a particular product that meets its requirements from what is in the knowledge and experience of the Tribunal a limited number of call systems.

23. Therefore, considering the pressing need to install a digital call system that meets the Applicant’s requirements and is, so far as possible, future proof, from a limited product market the Tribunal finds that the [NAME] have not been prejudiced by the failure to carry out the consultation procedure.

Determination

24. In [NAME] its decision the Tribunal had regard to the decision of the Supreme Court in [COMPANY] v [NAME] and others [2013] UKSC 14. In summary, the Supreme Court noted the following:

1) The main question for the Tribunal whether the landlord’s breach of the section 20 consultation requirements resulted in the [NAME] suffering real prejudice.

2) The financial consequence to the landlord of not granting a dispensation is not a relevant factor.

3) The nature of the landlord is not a relevant factor.

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

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

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

7) 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.

8) The Supreme 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

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words whether the non—compliance has in that sense caused prejudice to the tenant. 9) 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. 10) Once the tenants had shown a credible case for prejudice, the Tribunal should look to the landlord to rebut it.

25. The Tribunal is satisfied that it is reasonable to dispense with compliance with the consultation requirements of Schedule 4 Part 2 to the Service Charges (Consultation etc) (England) Regulations 2003 (SI 2003/1987).

26. The [NAME] should note that this is not an [NAME] to determine the reasonableness of the works or their cost. If, when the service charge demands in respect of these works are sent out, any [NAME] objects to the cost or the reasonableness of the work or the way it was undertaken, an [NAME] can be made to this Tribunal under section 27A of the Act. A landlord can also seek a determination as to the reasonableness of the cost of the work.

27. The Applicant shall serve a copy of the Tribunal’s decision on dispensation, together with the relevant appeal rights attached, to all [NAME].

Judge JR Morris

Annex 1 – Right of Appeal

1. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) then a written [NAME] for permission must be made to the First-tier Tribunal at the Regional office which has been dealing with the case.

2. The [NAME] for permission to appeal must arrive at the Regional office within 28 days after the Tribunal sends written reasons for the decision to the [NAME].

3. If the [NAME] is not made within the 28 day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed despite not being within the time limit.

4. The [NAME] 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 [NAME] the [NAME] is seeking.

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Annex 2 – The Law

1. Section 20 of the Landlord and Tenant Act 1985 limits the relevant service charge contribution of tenants unless the prescribed consultation requirements have been complied with or dispensed with under section 20ZA. The requirements are set out in The Service Charges (Consultation Requirements) (England) Regulations 2003. Section 20 applies to qualifying works if the relevant costs incurred in carrying out the works exceed an amount which results in the relevant contribution of any tenant being more than £250.

2. The consultation provisions appropriate to the present case are set out in Schedule 4 Part 2 to the Service Charges (Consultation etc) (England) Regulations 2003 (SI 2003/1987) (the 2003 Regulations). The Procedure of the Regulations and are summarised as being in 4 stages as follows:

A Notice of Intention to carry out qualifying works must be served on all the tenants. The Notice must describe the works and give an opportunity for tenants to view the schedule of works to be carried out and invite observations to be made and the nomination of contractors with a time limit for responding of no less than 30 days. (Referred to in the 2003 Regulations as the “relevant period” and defined in Regulation 2.)

Estimates must be obtained from contractors identified by the landlord (if these have not already been obtained) and any contractors nominated by the Tenants.

A Notice of the Landlord’s Proposals must be served on all tenants to whom an opportunity is given to view the estimates for the works to be carried out. At least two estimates must be set out in the Proposal and an invitation must be made to the tenants to make observations with a time limit of no less than 30 days. (Also referred to as the “relevant period” and defined in Regulation 2.) This is for tenants to check that the works to be carried out are permitted under the Lease, conform to the schedule of works, are appropriately guaranteed, are likely to be best value (not necessarily the cheapest) and so on.

A Notice of Works must be given if the contractor to be employed is not a nominated contractor or is not the lowest estimate submitted. The Landlord must within 21 days of entering into the contract give notice in writing to each tenant giving the reasons for awarding the contract and, where the tenants made observations, to summarise those observations and set out the Landlord’s response to them.

3. Section 20ZA allows a Landlord to seek dispensation from these requirements, as follows –

(1) Where an [NAME] 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

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tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements.

(2) In section 20 and this section— "qualifying works" means works on a building or any other premises, and "qualifying long term agreement" means (subject to subsection (3)) an agreement entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months.

(3) The Secretary of State may by regulations provide that an agreement is not a qualifying long term agreement— if it is an agreement of a description prescribed by the regulations, or in any circumstances so prescribed.

(4) to (7)… not relevant to this [NAME].

Annex 3 – [NAME] 1 [NAME] 3 [NAME] [NAME] 9 [NAME] [NAME] (estate of) Flat 10 [NAME] 19 [NAME] 20 [NAME] 25 [NAME]