First-tier Tribunal Grants Fire Safety Works Dispensation with Conditions

OUTCOME: Allowed in Part

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference :  LON/OOBE/LDC/2021/0257

Property :  [NAME_1], St. Pauls Steps, Rotherhithe Applicant :

[redacted]

Respondent :  [redacted] :  Dispensation pursuant to s 20 ZA Landlord and Tenant Act 1985 Tribunal Members :

Judge Shepherd Evelyn Flint FRICS

Date of Determination :  13th August 2022

Determination

1. In this case the Applicants, [NAME_2] (“The Applicants”) are seeking dispensation from the consultation requirements under Section 20 of the Landlord and Tenant Act 1985 (“The Act”). The application relates to premises at [NAME_1], St. Pauls Steps, Rotherhithe (“The premises”). The Respondents to the application are the [NAME_3] (“The Respondents”). The premises consist of a riverside gated estate comprising 5

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developments [ADDRESS], [ADDRESS], [ADDRESS], [ADDRESS], and [ADDRESS]. The buildings consist of a combination of private houses and residential flats integrated together. There are 174 residential units within the premises.

2. Following investigations, the Applicants discovered that there were compartmentation issues in the buildings posing a fire safety risk. Accordingly interim fire safety measures were required and a “[NAME_4]” was introduced. In order to urgently remove the [NAME_4] the Applicants had instructed [COMPANY_5] to install a fire alarm system in accordance with the NFCC guidance. The Applicants’ agent began the section 20 consultation process but due to the urgency of the works this was not completed. The Applicants therefore seek retrospective dispensation in respect of the consultation for the works.

3. In a statement of case the Applicants provided more detail. There was a concern about compartmentation within the ceiling specifically where the communal services connect to each flat where there was no suitable fire stopping in place. As a result of this issue it was recommended that there be an evacuation strategy as opposed to the previous “stay put” strategy. The Applicants instructed [COMPANY_6] to produce a fire risk assessment in July 2021. In fact a previous assessment had been carried out a year before – see below.

4. The July 2021 fire risk assessment noted that there was damage to the fire resisting construction on the ground floor of the staircase to 18 to [ADDRESS]. It was also noted that the fire doors in the common area were generally in poor condition. Many of the riser cupboard doors were either not locked or could not be locked. Improvements were recommended to ensure that the service rises were fire stopped.

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5. The July 2021 fire risk assessment recommended that either an immediate [NAME_4] should be instigated or as a very short-term measure simple battery operated linked smoke detectors should be installed to the internal hallway of each flat. It was recommended that a permanent fire alarm should be installed as soon as practicable this should comprise a fire alarm system covering the communal areas and heat detectors in each hallway leading onto the escape route. The system should be installed and designed in accordance with BS 5839 and that smoke and heat alarms should be fitted within the flat to warn the occupants of a fire within their flat.

6. In response to the 2021 fire risk assessment the Applicants implemented a four man [NAME_4]. The cost of the [NAME_4] was £10,000 per week. Also works were to be carried out to install an alarm and heat detection system within all apartments which would be linked to the main fire alarm system and sprinkler system.

7. The Applicants obtained 3 tenders:

a) Turnkey fire services: £188,282.67

b) [COMPANY_5]: £168,588.

c) [NAME_7]: £178,210.40

8. The Applicants instructed [COMPANY_5] to carry out the works on the 20th of August 2021 as they were able to carry out the works at cheapest cost and in the fastest time frame

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9. Agents on behalf of the Applicants began the consultation process by sending a stage one notice of intention to all Respondents in respect of the work dated the 2nd of August 2021. That is where the consultation ended and the works continued.

10. In response to the application various leaseholders submitted reply forms to the Tribunal objecting to dispensation being given. These replies dealt with a number of issues including the following sample:

a. the implementation of a [NAME_4] scheme was unnecessary and expensive.

b. The Applicants had dismissed the battery operated system without any cost benefit analysis.

c. The Applicants should have completed the consultation process it started.

d. The Applicants were relying on the removal of [NAME_4] to justify the lack of consultation.

e. [NAME_4] was not universally regarded as the safest option.

11. A joint statement from leaseholders was coordinated by [NAME_8] of [ADDRESS]. In summary this statement made the following points:

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a. The Applicants were slow in assessing fire safety following the fire in [ADDRESS] on the 6th of October 2016.

b. The need for [NAME_4] was questioned particularly as it was financially burdensome and there was a cheaper alternative namely fire alarms which are battery operated.

c. A permanent fire alarm system if kept would require maintenance at least twice a year.

d. Following the change from “stay put” to evacuation due to the discovered fire stopping issues a cost benefit analysis should have been carried out.

e. The Applicants had not properly explained why they were not going ahead with installing heat sensors in the bin areas and car parks as recommended.

f. A right to manage block at [NAME_10] was not taking similar action to that carried out by the Applicants and it was not clear why this was the case. The Applicants were said to be hiding behind confidentiality.

g. The Respondents had suffered financial prejudice due to the imposition of the [NAME_4] and the decision to proceed with the works rather than take other available courses of action.

12. The Applicants provided a statement in response to the Respondents’ objections. Amongst other things they said that the decision to implement a [NAME_4] patrol was in the interests of residents’ safety and the factory operated linked smoke detection system could only be instigated as a very short term measure. Further the [NAME_4] was agreed by the fire risk assessor as

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being the safest option. They also said that the battery - operated fire alarm system was not deemed to be a viable option but failed to give any reasons for this. In relation to [NAME_10] they said that the [COMPANY_11] was now responsible for management issues relating to that property and therefore it was irrelevant to their decision.

The Law

Landlord and Tenant Act 1985,s.20ZA

13. 20ZA Consultation requirements: supplementary (1)   Where an application is made to [the appropriate 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. (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— (a)  if it is an agreement of a description prescribed by the regulations, or (b)  in any circumstances so prescribed. (4)  In section 20 and this section “the consultation requirements”  means requirements prescribed by regulations made by the Secretary of State. (5)  Regulations under subsection (4) may in particular include provision requiring the landlord— (a)  to provide details of proposed works or agreements to tenants or the recognised tenants' association representing them,

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(b)  to obtain estimates for proposed works or agreements, (c)  to invite tenants or the recognised tenants' association to propose the names of persons from whom the landlord should try to obtain other estimates, (d)  to have regard to observations made by tenants or the recognised tenants' association in relation to proposed works or agreements and estimates, and (e)  to give reasons in prescribed circumstances for carrying out works or entering into agreements. (6)  Regulations under section 20 or this section— (a)  may make provision generally or only in relation to specific cases, and (b)  may make different provision for different purposes. (7)  Regulations under section 20 or this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Daejan

14.In Daejan Investments v Benson [2013] UKSC 14, the landlord was the freehold owner of a building comprised of shops and seven flats, five of which were held by the tenants under long leases which provided for the payment of service charges. The landlord gave the tenants notice of its intention to carry out major works to the building. It obtained four priced tenders for the work, each in excess of £400,000, but then proceeded to award the work to one of the tenderers without having given tenants a summary of the observations it had received in relation to the proposed works or having made the estimates available for inspection. The tenants applied to a leasehold valuation tribunal under section 27A of the Landlord and Tenant Act 1985 , as inserted, for a determination as to the amount of service charge which was payable, contending inter alia that the failure of the landlord to provide a summary of the observations or to make the estimates available for inspection was in breach of the statutory consultation requirements in paragraph 4(5) of Schedule 4 to the Service Charges (Consultation Requirements) (England) Regulations

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2003 so as to limit recovery from the tenants to £250 per tenant, as specified in section 20 of the 1985 Act and regulation 6 of the 2003 Regulations in cases where a landlord had neither met, nor been exempted from, the statutory consultation requirements. The landlord applied to the tribunal under section 20(1) of the Act for an order that the paragraph 4(5) consultation requirements be dispensed with, and proposed a deduction of £50,000 from the cost of the works as compensation for any prejudice suffered by the tenants, which offer they refused. The tribunal held that the breach of the consultation requirements had caused significant prejudice to the tenants, that the proposed deduction did not alter the existence of that prejudice, and that it was not reasonable within section 20ZA(1) of the Act, as inserted, to dispense with the consultation requirements. The Upper Tribunal (Lands Chamber) dismissed the landlord's appeal and the Court of Appeal upheld the Upper Tribunal's decision.

15. The Supreme Court , allowing the appeal (Lord Hope of Craighead DPSC and Lord Wilson JSC dissenting), held that the purpose of a landlord's obligation to consult tenants in advance of qualifying works, set out in the Landlord and Tenant Act 1985 (as amended) and the Service Charges (Consultation Requirements) (England) Regulations 2003 , was to ensure that tenants were protected from paying for inappropriate works or from paying more than would be appropriate; that adherence to those requirements was not an end in itself, nor was the dispensing jurisdiction under section 20ZA(1) of the 1985 Act a punitive or exemplary exercise; that, therefore, on a landlord's application for dispensation under section 20ZA(1) the question for the leasehold valuation tribunal was the extent, if any, to which the tenants had been prejudiced in either of those respects by the landlord's failure to comply; that neither the gravity of the landlord's failure to comply nor the degree of its culpability nor its nature nor the financial consequences for the landlord of failure to obtain dispensation was a relevant consideration for the tribunal; that the tribunal could grant a dispensation on such terms as it thought fit, provided that they were appropriate in their nature and effect, including terms as to costs; that the factual burden lay on the tenants to identify any prejudice which they claimed they would not have suffered had the consultation requirements been fully complied with but would suffer if an unconditional dispensation were granted; that once a credible case for prejudice had been shown the tribunal would look to the landlord to rebut it, failing

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which it should, in the absence of good reason to the contrary, require the landlord to reduce the amount claimed as service charges to compensate the tenants fully for that prejudice; and that, accordingly, since the landlord's offer had exceeded any possible prejudice which, on such evidence as had been before the tribunal, the tenants would have suffered were an unqualified dispensation to have been granted, the tribunal should have granted a dispensation on terms that the cost of the works be reduced by the amount of the offer and that the landlord pay the tenants' reasonable costs, and dispensation would now be granted on such terms. Per Lord Neuberger of Abbotsbury PSC, Lord Clarke of Stone-cum-[NAME_12]. (i) Where the extent, quality and cost of the works were unaffected by the landlord's failure to comply with the consultation requirements an unconditional dispensation should normally be granted (post, para 45). (ii) Any concern that a landlord could buy its way out of having failed to comply with the consultation requirements is answered by the significant disadvantages which it would face if it fails to comply with the requirements. The landlord would have to pay its own costs of an application to the leasehold valuation tribunal for a dispensation, to pay the tenants' reasonable costs in connection of investigating and challenging that application, and to accord the tenants a reduction to compensate fully for any relevant prejudice, knowing that the tribunal would adopt a sympathetic (albeit not unrealistically sympathetic) attitude to the tenants on that issue (post, para 73).

16. Lord Neuberger giving the leading judgment stated inter alia the following:

56. More detailed consideration of the circumstances in which the jurisdiction can be invoked confirms this conclusion. It is clear that a landlord may ask for a dispensation in advance. The most obvious cases would be where it was necessary to carry out some works very urgently, or where it only became apparent that it was necessary to carry out some works while contractors were already on site carrying out other work. In such cases, it would be odd if, for instance, the LVT could not dispense with the requirements on terms which required the landlord, for instance, (i) to convene a meeting of the tenants at short notice to explain and discuss the necessary works, or (ii) to

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comply with stage 1 and/or stage 3, but with (for example) five days instead of 30 days for the tenants to reply.

The hearing

17. [NAME_13] of Counsel appeared on behalf of the Applicants and the Respondents were represented by the lead leaseholder [NAME_8].

18. The works had finished at the date of the hearing and the [NAME_4] scheme had ceased. [NAME_13] took the tribunal through the chronology of events. A letter was sent to leaseholders outlining the planned scheme on the 16th of July 2021. There was a zoom meeting. Works had commenced and had been completed such that the [NAME_4] scheme could cease on the 25th of October 2021. The period of the [NAME_4] cover was the 13th of July 2021 until the 25th of October 2021. [NAME_13] took the tribunal through the relevant reports including the [NAME_6] report dated the 13th of July 2021. She said that the report had concluded that there was a substantial risk and that considerable resources might have to be allocated to reduce the risk. In terms of an action plan the report stated that either [NAME_4] should be instigated or as a very short term temporary measure simple battery operated linked smoke detectors should be installed to the internal hallway of each flat. It was recommended that smoke and heat alarms were fitted within flats to warn the occupants of a fire in their flat.

19. [NAME_15] gave evidence for the Applicants explaining how the fire risk had been discovered. He went through the reports carried out by [NAME_6] in 2020 and 2021.In the report dated 25th June 2020 the risk of fire spreading where services pass through compartment walls was identified as substantial and it was said that works to reduce the risk should be carried out within 3 months. In the event this investigation work was not carried out until July 2021 when the need for works was confirmed. The delay was not properly explained by [NAME_15].

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20. [NAME_8] said that the compartmentation issue had been flagged in 2016 and investigations should have been carried out then. In fact, nothing had happened. The fire risk assessment in 2020 did not prompt works until a year later. She highlighted the fact that it was not clear why [NAME_10] were not carrying out the same action. There was a lack of transparency. She said that there were other options like the battery - operated system. She said that the [NAME_4] had been paid by the reserve fund. She had not had a clear answer on the positioning of heat detectors.

21. The other leaseholders present at the hearing also made representations. [NAME_18] said that the application was misconceived as the works were not urgent at all. He questioned the need for the [NAME_4] and why there had been a delay between 2020 and the work carrying being carried out.

22. [NAME_19] said that a fire alarm rental system would have been much cheaper than [NAME_4] and they should have looked at alternative options.

Determination

23. Since the Grenfell Tower fire the focus of dispensation applications has been on cases in which landlords are seeking to carry out urgent fire safety works. It is obviously the correct thing to do for a landlord to seek to upgrade the fire safety of buildings. In many cases works have to be carried out urgently because there is a considerable risk to the health and safety of occupants. Cases in which urgent works are carried out and dispensation is sought retrospectively were recognised as potentially valid in Daejan. Obviously if works are urgent it is not feasible to go through the consultation process in full. In the present case the consultation was started but not completed. The Applicants decided unilaterally to appoint a [NAME_4] at considerable expense to the leaseholders. The tribunal is concerned that this decision was made unilaterally and without considering potential alternative options.

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The [NAME_4] was in place for a period of three months at a cost of 10,000 pounds a week. The alternative measure of battery operated alarms would patently have been a lot cheaper.

24. [NAME_4] has been the “go to” solution for many landlords concerned about the immediate risk of fire. Usually this is in buildings similar to Grenfell Tower where the risk of fire is caused by inappropriate and dangerous cladding. This was not the case here. The blocks in the scheme are of varying sizes. None of them were the height of Grenfell Tower or other larger social housing blocks. The issue was compartmentation rather than cladding. This should have been evident as an issue much earlier. The Respondents were advised to investigate it within 3 months and did not do so. Indeed, the identification of service access as a means of spread of fire is not a new concept and arguably the Respondents should have investigated the issue much earlier. If the investigation works had been carried out within the three months as advised the remainder of the year could have been used to carry out a proper consultation exercise. If the resultant report had recommended a [NAME_4] then a short consultation on this issue would have been appropriate. In fact the investigation was delayed for a period when no fire protection either [NAME_4] or other wise was provided. The 2021 Fire Risk Assessment advised that urgent works should be carried out and a [NAME_4] was then introduced. Plainly the compartmentation issue had to be dealt with but the leaseholders are right to question why these works were delayed when the issue was known about. It seems to the Tribunal that the introduction of [NAME_4] was a knee jerk reaction and a cheaper alternative was available particularly when the works were carried out relatively quickly. 25. [NAME_13] was anxious to distinguish the [NAME_4] from the rest of the works but they were part and parcel of the works to deal with the potential fire risk. The cost of [NAME_4] does constitute a significant financial prejudice to the leaseholders. If matters had been properly dealt with by the Applicants they would have carried out some consultation in relation to the use of [NAME_4]. This is not a case in which the leaseholders could be criticised for failing to put up cheaper suppliers of [NAME_4] because in this case it was questionable whether a [NAME_4] was required at all when there were much cheaper alternatives.

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26. Accordingly whilst recognising that the fire safety works had to be carried out notwithstanding the failure to properly consult the Tribunal considers that the dispensation must be made conditional on the [NAME_4] scheme being funded by the Applicants and not through the service charge and on the costs of the current proceedings not being recovered from the service charges.

27. In summary dispensation is given for the failure to consult on condition that the Applicants bear the cost of the [NAME_4] and do not seek to recover their costs of the present proceedings from the Respondents or any of the leaseholders at [NAME_1].

Judge Shepherd

13th August 2022

ANNEX - RIGHTS OF APPEAL Appealing against the tribunal’s decisions

1. A written application for permission must be made to the First-tier Tribunal at the Regional tribunal office which has been dealing with the case.

2. The application for permission to appeal must arrive at the Regional tribunal office within 28 days after the date this decision is sent to the parties.

3. 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.

4. The application for permission to appeal must state the grounds of appeal, and state the result the party making the application is seeking. All applications for permission to appeal will be considered on the papers 5. Any application to stay the effect of the decision must be made at the same time as the application for permission to appeal.