First-tier Tribunal Grants Freeholder Dispensation with Conditions

OUTCOME: Allowed

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER

(RESIDENTIAL PROPERTY)

Case Reference : CAM/00KA/LDC/2020/0029

Property : 146 [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondents : [redacted]

on the application

Type of Application : for dispensation of all or any of the consultation

requirements provided for by section 20 of the

Landlord and Tenant Act 1985 [LTA 1985, s.20ZA]

Tribunal : Tribunal Judge [NAME] of determination : 15th January 2021

DECISION

following a determination on the papers

1. On 9th October 2020 Luton Borough Council, the relevant local housing

authority, served on the freeholder an improvement notice under section 11 of the

Housing Act 2004 identifying certain Category 1 hazards and requiring inter alia

the removal of polystyrene covered render insulation and category 3 aluminium

composite material (ACM) cladding panels from the external walls of the building

and their replacement in accordance with current Building Regulations with

materials complying with Euro Class A1 or A2-s1.

2. On 12th October 2020 [NAME] served upon the

freeholder two enforcement notices under Article 30(1) of the Regulatory Reform

(Fire Safety) Order 2005. The first required the imposition of a 24 hour “waking

watch” at the premises in order to ensure the safety of residential occupants and

the second required installation of a fire detection and alarm system.

3. This application, dated 12th November 2020, seeks dispensation of some or all of

the statutory consultation requirements imposed by section 20 of the Landlord

and Tenant Act 1985 and subsidiary legislation concerning some or all of the

above. There is no linked application under section 27A for determination of the

reasonableness of the cost of any urgent major works carried out or to be carried

out at the property. As made clear by introductory paragraph (3) of the tribunal’s

directions issued by Deputy Regional Judge Wyatt dated 25th November 2020 the

only issue requiring determination is whether it is reasonable to dispense with

the statutory consultation requirements. It does not concern whether any service

charge costs will be reasonable or payable.

4. On the above basis, but with a degree of hesitation given the background, this

tribunal is prepared to grant dispensation from the need to consult lessees under

section 20 but on the following condition, namely that if an application is later

brought under section 27A seeking determination of the reasonableness of the

cost of works required then :

a. If the lessees collectively, or a majority of them, seek to challenge the

proposed costs

b. The freeholder shall reimburse the fees properly incurred by them for a

suitably qualified chartered surveyor or fire safety expert selected by such

majority in connection with the physical inspection of the property and

preparation of a detailed expert report, answering relevant questions upon

it and attendance (if required) at any substantive tribunal hearing.

Background

5. In its detailed statement of case produced in compliance with paragraph 3(a)(ii)

of the tribunal’s directions order the applicant freeholder explains the

background to the development of this part-commercial but now mainly

residential block in central Luton, but the history is incomplete.

6. Originally constructed in the 1930s as a three-storey commercial building, in

2005 planning consent was obtained to convert the top two storeys for residential

use and add another four storeys on top, creating 39 one-bedroom flats in total.

Who precisely was responsible for the development is unclear, but the tribunal

notes that the work was completed by 2008 and each of the flats was soon let on

a 125-year lease by [APPELLANT[COMPANY], which suggests that it may be

an associated company of the current applicant and freeholder and thus that the

2018 transfer was not conducted as a normal arm’s length transaction with due

diligence undertaken prior to assumption of legal responsibility for the condition

of the building.

7. Paragraph 6 of its statement of case merely states that the applicant acquired the

freehold in 2018.

8. Following an inspection by [NAME] a section 11 improvement

notice was served on the applicant on 9th October 2020. No attempt seems to

have been made to appeal the notice, on the grounds of inadequacy of timings or

otherwise, bearing in mind the need for statutory consultation about the very

major works involved in recladding the exterior of the building. The applicant

has instead chosen to rely upon this section 20ZA application alone.

9. Following its separate inspection [NAME] served

two enforcement notices on the applicant. Each provided that the recipient may

request an extension of time for completion of the required works. In each case

this was sought. That for installation of a “waking watch” was refused, while that

for commencement of the work for installation of an effective fire detection

system etc was granted. No attempt was made to appeal either notice.

10. A “waking watch” was duly implemented, currently at the applicant’ expense, and

many of the more minor or simpler tasks required by the various notices (such

as the installation of a gas supply isolator valve) have already been undertaken.

Installation of a fire detection and alarm system may be well underway, but the

current position is unclear. Subject to correction, the tribunal’s understanding

is that the “waking watch” is intended only as a temporary measure pending the

installation of a proper fire detection and alarm system; not the replacement of

the exterior cladding. Whether its continued provision requires consultation in

respect of “long term agreements” is therefore a moot point.

11. Also worth recording is the fact that the applicant has applied for government

grant assistance for the cladding works. Whether this includes any financial help

with the cost of the “waking watch” is unclear, but the department has accepted

the application. The extent and timing of any available assistance (the overall

fund having been capped) will no doubt emerge in due course..

Evidence

12. In compliance with the tribunal’s directions the applicant has filed and served on

the lessees a more detailed statement of case to which are exhibited copies of the

various notices and, at Annex E, a detailed schedule setting out what works are

required. The applicant later filed and served an updated schedule, which set out

what had now been completed, timetables, and likely costs.

13. Although only to confirm the respective parties’ liabilities, a sample lease for flat

603 was included in the application bundle. The [NAME]’s maintenance obligations

concerning the main structure, etc appear in clause 7 and Schedule 4; the [NAME]’s

service charge covenants in clause 3.

14. The applicant also includes a selection of correspondence with various lessees

following service of the information available to it. The tribunal notes from this

that a limited amount of work concerning exterior lightning protection will be (or

has been) undertaken entirely at the freeholder’s expense and not as a service

charge item.

15. The lessees filed their own small bundle of documents. This largely raises the

questions of cost, lack of time for consultation, and whether the grant of a

“waking watch” contract to a connected company may give rise for concern. The

bundle also includes a copy of a London tribunal decision which also goes into

some detail on the reasonableness of costs in that specific case. These are really

issues for another day, requiring evidence that such work could have been done

by others at more favourable overall cost if proper consultation and tendering

had been undertaken.

Discussion

16. Apart from the applicant’s lack of understanding of its appeal rights under Part

1 of the Housing Act 2004 and (initially) its right to apply under section 20ZA the

tribunal cannot really fault the applicant’s managing agents’s actions in trying to

respond constructively in particular to the two enforcement notices served by

[NAME]. Implementation of an immediate “waking

watch” was insisted upon and alternative quotes were obtained. There was no

time for consultation under the 1985 Act. The applicant went with the cheaper

one. Steps have been taken to speed the installation of a working fire detection

and alarm system, and this should – on the tribunal’s current understanding –

curtail the need to provide that temporary service once it is operational.

17. Where the tribunal expresses concern is about the period between the Grenfell

fire in June 2017 and the pre-enforcement inspections undertaken by the various

authorities in late 2020. The fire was a wake-up call to every property owner

about the potential dangers inherent in certain types of insulating cladding. Not

once in the applicant’s statement of case is there any mention of investigations

or reports undertaken either by the then freeholder or by the applicant, prior to

taking on responsibility for the building in 2018. That, surely, was the time at

which due diligence should have been exercised and the incoming freeholder

learn what liabilities it might be taking on. A surveyor’s report at that stage could

have started a chain of enquiry and sharing of information with lessees of the

flats who, under their service charge provisions, might suddenly find themselves

liable for a substantial financial commitment. Buildings insurers and lenders

may also have wished to comment and/or impose binding commitments.

18. All this time was wasted, and yet not by other responsible building owners. The

applicant could at this early stage have commenced statutory consultation, long

before strict deadlines were imposed by regulators. It is for this reason that the

tribunal is prepared to dispense with the section 20 consultation requirements

only on condition that, in any subsequent application concerning reasonableness

and payability of service charges, the applicant be responsible for meeting the

costs incurred by a majority of the leaseholders in obtaining professional advice

and assistance from a suitably qualified chartered building surveyor or fire safety

expert – such to include the cost of inspection, report, answering questions and

attendance at any tribunal hearing.

Dated 15th January 2021

[NAME], First-tier Tribunal Judge