First-tier Tribunal Grants Unconditional Dispensation for Boiler Replacement Costs

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : HAV/00HQ/LDC/2025/0607 Landlord /Applicant : [redacted] : [NAME_2], [ADDRESS], [POSTCODE]

Representative : Mr [NAME_3] [NAME_4], Counsel Tenants/ Respondents :

[redacted] the attached schedule

Representatives : [NAME_6] for himself and [NAME_17] shown on the attached schedule; the other respondents were not represented

Type of Application : Dispensation from consultation requirements under section 20ZA of the Landlord and Tenant Act 1985 Tribunal :

[NAME_11] Mr A [NAME_15]

Date of Hearing : 1 September 2025 Date of Decision : 10 December 2025

DECISION

2 Decision 1. Dispensation from the consultation requirements in respect of costs incurred with boiler replacement at [NAME_2] is GRANTED UNCONDITIONALLY. The relevant invoices are from [COMPANY_232] dated 8 December 2024 and 23 February 2025 in the respective sums of £100,850.40 and £89,280.00.

2. As announced at the hearing, the two commercial tenants are removed as respondents as they do not have the benefit of section 20 of the Landlord and Tenant Act 1985 (“the Act”) which confers rights solely on residential occupiers. They are shown by strike-through on the attached schedules of respondents and (in one case) [NAME_10]. Reasons Background 1. [NAME_2] is an eight storey block of flats in central Bournemouth constructed in the 1930s. It comprises 97 flats and two office suites. There is surface and underground car parking. The flats and office suites are provided with heating and hot water from communal gas boilers in the basement.

2. The application was for dispensation from full compliance with consultation requirements under section 20 of the Landlord and Tenant Act 1985. Stage 1 notices had been served. The relevant works were replacement of the communal gas boilers. The hearing 3. Mr [NAME_3] [NAME_4], Counsel, represented the applicant. [NAME_16] represented those [NAME_10] shown on the attached schedule of [NAME_10], where notices of representation have been provided (see below). The Tribunal received a hearing bundle of 224 pages together with an applicants’ authorities bundle of 123 pages. Directions 4. Directions were issued on 1 April 2025. The matter was set down for determination on the papers initially, but a hearing was subsequently directed. Further directions were issued on 27 June 2025. These required a single representative to act for [NAME_17], provided signed authorities had been given authorising the representative. The further directions included a schedule of [NAME_10].

3 Procedural matters 5. The following matters arose. The Tribunal pointed out that the protection conferred by section 20 of the Act applied only to residential tenants and not commercial occupiers in mixed use buildings. It therefore directed that the two commercial occupiers should be removed as parties. 6. [NAME_6], a commercial occupier, also acted as spokesperson for [NAME_17]’ group, this did not affect his ability to continue acting. However, the further directions and Tribunal rules require a party wishing to be represented to provide a signed notice of representation, or verbal authority at a hearing. At the hearing, such authorities were identified only in relation to [NAME_18] and [NAME_233]. However, the Tribunal has subsequently seen signed authorities from several other leaseholders as listed on the attached schedule. It therefore treats [NAME_16] as having represented all those individuals. Further, it has fully considered the “group statement” on behalf of all [NAME_10] (see below). 7. [NAME_16] sought to call a witness from the managing agent, [NAME_23] to give evidence at the hearing. No witness from [NAME_23] had served a witness statement. In these circumstances, as [NAME_23] represent the applicant, [NAME_16] should have served a witness summons on the relevant witness in accordance with rule 20 of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (see Appendix below), and met the other conditions of rule 20. As this had not been followed the Tribunal refused to allow [NAME_16] to call any such witness. The Landlords/Applicants’ Case 8. The applicant’s case was that section 20 notice was served in September 2023 as the boilers required replacement. This followed a failure of one of the four boilers. In September 2024 two further boilers failed. As the lease required the applicant to provide heating and hot water from 1 October 2024, temporary plant was installed. At the time of the application, the applicant was working towards a like for like boiler replacement. The scope of the application was for replacement of the boilers at the site. The replacement boilers had an approximate cost of £200,000. A more expensive option which was to cost £650,000 was considered but rejected as service charge funds were insufficient. The statutory consultation procedure could not be carried out because of the time of year [at which the boilers failed]. 9. [NAME_24]’s legal submissions may be summarised as follows. He referred to Daejan Investments Ltd v Benson [2013] UKSC 14. The Tribunal has to consider relevant prejudice. There is a factual burden on the tenant to identify some relevant prejudice. The Tribunal must reconstruct what would have happened.

10. With reference to [NAME_25] v [NAME_26] and others [2021] 4 WLR 74, counsel submitted that the issue was whether the tenant would

4 have acted differently had the consultation requirements been fully met. In Aster the FTT had found that the tenant would have commissioned an expert surveyor’s report. Consequently, the FTT decided that the respondents had made out a credible case of relevant prejudice namely that the lessees will be asked to pay for inappropriate works. As a condition of granting dispensation the landlord was required to pay the lessee’s costs of the investigation.

11. In Marshall v Northumberland & Durham Property Trust Ltd, [2022] UKUT 92(LC) it was held that the question of prejudice was central. The FTT needed to assess prejudice caused by the steps which the respondent had failed to take.

12. In London Borough of [NAME_27] v [NAME_28] and others [2022] UKUT 00290(LC), there was a total failure to comply with the section 20 process. Nevertheless, the Upper Tribunal held that there was no evidence of actual prejudice. It was still incumbent upon the respondent to show some type of loss. Unconditional dispensation was granted. 13. [COMPANY_29] v Leaseholders of [ADDRESS] [2023] UKUT 174 (LC) concerned the imposition of a waking watch condition following failure to consult for fire alarm works. It was held that conditions must be relevant and appropriate to the relevant prejudice to the leaseholders. There was no legal obligation to consult in relation to the waking watch and that condition was set aside. The Upper Tribunal also set aside a condition requiring the landlord not to seek to recover its legal costs through the service charge. The Upper Tribunal held that it would not be appropriate in circumstances where it was clearly sensible and in everyone’s interest to get the fire alarm system installed. Therefore, the application was not a petition for an indulgence but a matter of practical importance for all concerned.

14. In RM Residential Ltd v Westacre Estates Ltd [2024] UKUT 56 (LC) which concerned structural disrepair, it was held that urgency was unnecessary in order for the Tribunal to grant dispensation. 15. [NAME_24] submitted that The Tribunal should focus on evidence as to what the lessees would have done had the consultation been fully carried out. This was referenced in the directions of 27 June 2025. There was no evidence of prejudice.

16. With reference to the [NAME_2] Group Statement, the absence of the stage 2 notice, or any other notice, or any breach of duty is not evidence of prejudice. The conduct of the managing agents is not evidence of prejudice and due to the timescales involved there was no relevant prejudice. 17. [NAME_24] also referred to the applicant’s response to the respondent’s group statement. On 5 September 2023 a stage 1 notice was served as confirmed to have been received in meeting minutes dated 15 September 2023 from a leaseholder meeting. On 1 October 2024 [NAME_30] sent a letter to the lessees. This stated that the landlord continued to have issues

5 with the current boilers and had instructed their replacement on a like for like basis. This would include a manufacturer guarantee of 5 years, and the anticipated lifespan was 15 to 20 years. There would be a need for temporary plant. On 16 October 2024 a further letter was sent updating the lessees. This was followed by further letters on 15 November and 9 December 2024. In August 2024 an estimate of £335,000 was given by [NAME_31]. Azure completed such works for £190,130 including VAT. These Invoices were included in the bundle. The project had been completed at substantially less cost than initially estimated. Further, 13 lessees had sent statements in support of the works. [NAME_24] confirmed that temporary works were not included in the scope of this application. 18. [NAME_24] called [NAME_32] of [COMPANY_246]. He had provided a witness statement verified by statement of truth. His evidence may be summarised as follows. The original boilers were installed in 2001 with an estimated life of 15 to 20 years. The system comprises four very large combination boilers. Six years ago, a boiler failed. There were initial discussions with the landlord’s heating design consultants, [[NAME_31]] contemplating complete redesign of the boiler system. However, three working boilers were sufficient in the absence of extreme demand. In late 2022 a second boiler failed. Additional hot water cylinders were installed to mitigate the effect of this.

19. In early summer 2024 the landlord’s heating design consultant prepared a system estimated at £650,000. This was considered non-feasible and a redesigned version was considered at a cost £450,000. These alternative systems would require a full re-design of the flue and necessitate working in areas containing asbestos. In August 2020 the third boiler failed. [NAME_36]’s company then established that [NAME_35] could provide replacement boiler parts comprising chassis casing and housings to refurbish the existing plant. These parts would carry a guarantee. A decision was therefore made to immediately order the necessary parts to avoid the risk of a complete breakdown in the heating and hot water system during winter.

20. In cross examination by [NAME_16], [NAME_36] said that the temporary hot water cylinders were no longer in use because the boilers were combi boilers. The original specification [£650,000] was not feasible based on information from [NAME_30]. The replacement boiler parts were in kit form. This was the approach adopted by [COMPANY_37] when its boilers required replacement. In re-examination [NAME_36] said that the lifespan was 15 to 20 years, but every boiler is different, and these are commercial boilers operating 365 days a year, 24 hours a day.

21. In conclusion [NAME_24] submitted that there was no evidence from leaseholders, no witness statements, no oral witnesses and a serious gap in evidence. Prejudice could not be inferred. This was not a case in which conditional dispensation should be granted.

6 [NAME_17]’ case 22. [NAME_17]’ case was set out in a “group statement” dated 27 May 2025, which may be summarised as follows. They opposed the grant of dispensation. They acknowledged that in early September 2023 they received by post the stage 1 notice dated 5 September 2023. This stated that the works to be carried out were “replacement of boilers and installation of water heaters”. No further notices were sent under section 20 and therefore [NAME_30] are in breach of their duty as managing agent. The respondents submitted that the managing agent had been disingenuous by disregarding the legal obligations to serve stage 2 notices. They referred to the email of 1 October 2024 sent by [NAME_236] at [NAME_23] (see above). 23. [NAME_17] had not been aware that there was an issue with the boilers. The email did not make reference to the likely cost of replacement. There was no further information about the lifespan of the replacement boilers. [NAME_17] complained that there had been a gap in information for some 13 months since the managing agent’s previous communication. The email implied a degree of panic and that when fired up for the 1st time on 1 October 2024 3 boilers failed, which cannot be correct.

24. The reason given for the application of dispensation being the time of year was not credible. The Group Statement also referred to an email of [NAME_235] dated 10 April 2025. That referred to the third boiler failing in August 2024 and that the agents therefore had no alternative but to press on straightaway with new replacement boilers, otherwise the building would have been without hot water and central heating during the winter of 2024/2025;

accordingly, the second part of the section 20 consultation could not be complied with.

25. Also, the reference to replacement of boilers and installation of water heaters implied that the existing boilers and water heaters would be removed and new equipment the same or similar specification installed. However, the applicant stated that it was working on a new design for more efficient heating and hot water systems and if so, [NAME_17] complained that they had not been informed. The lessees had never been given an opportunity to assess and consider the scheme which involved the higher expenditure of £650,000 to install a more efficient heating and hot water system. The applicant’s submission implies that there might have been several designs or different proposals. The leaseholders had not been kept informed and this caused confusion and distrust. Over a period of 13 months prior to the email of 1 October 2024 the managing agents had not mentioned that the approximate cost would be £200,000. There had been poor communication from the managing agents to the lessees. The managing agent had been negligent in their duty towards leaseholders. The applicant by seeking dispensation had attempted to circumvent an Act of Parliament.

26. The replacement cost should be limited to £250 for each contributing leaseholder. Costs in excess of that should be borne by the landlord and managing agent.

7 The Law 27. Section 20ZA is set out in the appendix to this decision. The Tribunal has discretion to grant dispensation when it considers it reasonable to do so. As referred to above, the Supreme Court Judgment in Daejan Investments Limited v Benson and Others [2013] UKSC 14 empowers the Tribunal to grant dispensation on terms or subject to conditions. Discussion 28. The Tribunal found [NAME_36] to be a credible witness and accepts his evidence. The Tribunal in general accepts counsel’s legal submissions. However, it does not consider that the circumstances set out in [COMPANY_234] which concerned dispensation for a fire alarm system to be directly comparable to boiler replacement. It finds that the applicant here is seeking an indulgence from the Tribunal.

29. It agrees that identifying prejudice suffered from [NAME_17] is crucial. It finds that had the stage 2 notices and other notices been served, the outcome would have been the same. None of [NAME_17] instructed their own heating engineers to examine and investigate the system or provide evidence of alternative solutions to that proposed by the applicant. The only other specifications considered by any party were for works costing £650,000 and £450,000. These were both considered by the landlord. They were for much larger projects for which funds were not available, certainly for the higher amount1. Furthermore, in [NAME_43] v [NAME_245] stated “the [consultation] requirements leave untouched the fact that it is the landlord who decides what works need to be done, when they are to be done, who they are to be done by, and what amount is to be paid for them.” (para 46)

30. The scale of the work is therefore a matter for the landlord not the tenants. The absence of a larger project does not therefore demonstrate prejudice to [NAME_17]. 31. [NAME_17] did not call any witness evidence. Therefore, there was no evidence of [NAME_17] suffering prejudice as a result of the breaches of the consultation requirements.

32. The Tribunal also finds, for the same reasons, that the grant of dispensation should be unconditional. Conclusion 33. The Tribunal grants dispensation unconditionally.

34. However, this decision has no bearing on the question of the reasonableness of costs incurred or their payability. The

1 The Tribunal did not hear evidence on whether funds for the £450,000 specification were available.

8 Tribunal makes no findings in this decision in relation to those matters.

10 December 2025

9 ANNEX - RIGHTS OF APPEAL

• The Tribunal is required to set out rights of appeal against its decisions by virtue of the rule 36 (2)(c) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013 and these are set out below.

• If a party wishes to appeal against 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.

Appendix

Section 20ZA Landlord and Tenant Act 1985 (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 [NAME_44] 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 [NAME_44] 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 [NAME_44] term agreement— (a)if it is an agreement of a description prescribed by the regulations, or

10 (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, (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.

The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 Summoning of witnesses and orders to answer questions or produce documents

20.—(1) On the application of a party or on its own initiative, the Tribunal may—

(a)by summons require any person to attend as a witness at a hearing at the time and place specified in the summons; or

(b)order any person to answer any questions or produce any documents in that person's possession or control which relate to any issue in the proceedings.

11

(2) A summons under paragraph (1)(a) must—

(a)give the person required to attend not less than 14 days' notice of the hearing or such shorter period as the Tribunal may direct; and

(b)where the person is not a party, make provision for the person's necessary expenses of attendance to be paid, and state who is to pay them.

(3) No person may be compelled to give any evidence or produce any document that the person could not be compelled to give or produce on a trial of an action in a court of law.

(4) A summons or order under this rule must—

(a)state that the person on whom the requirement is imposed may apply to the Tribunal to vary or set aside the summons or order, if they have not had an opportunity to object to it; and

(b)state the consequences of failure to comply with the summons or order.

12 SCHEDULE OF RESPONDENTS Case Reference: HAV/00HQ/LDC/2025/0607/LC

[NAME_237] [NAME_45] A1 [NAME_47] & [NAME_239] A2-A5 [NAME_51] A6 (Executors of) [NAME_53] A7 [NAME_55] A8 [NAME_57] A9 [NAME_59] A9 [NAME_61] & [NAME_238] A10 [COMPANY_64] A11 [NAME_65] A12 [NAME_66] A14 [NAME_68] & [NAME_70] A15 [NAME_72] B1 [NAME_74] B2 [NAME_76] B3 Mr S A & Mrs [COMPANY_241] B5 [NAME_79] B6 [NAME_81] & [NAME_82] B7 [NAME_84] B8 [NAME_86] B9 [NAME_88] B10 [NAME_90] B11 [NAME_92] B12 [NAME_94] B14 [NAME_97] B15 [NAME_99] C1 [NAME_65] C2 [COMPANY_101] C3 [NAME_102] C4 [NAME_104] for [NAME_240] C5 [NAME_106] (Executors of) C6 [NAME_107] & [NAME_109] C7 [NAME_110] C8 [NAME_112]. J, M & P Daly C9 Miss L V Llewellyn C10 [NAME_113] C11 [NAME_114] C12 [NAME_115] C14 [NAME_117] C15 [NAME_119] D1

13 [NAME_120] D2 [NAME_122] D3 [NAME_125] & [NAME_126] D4 [NAME_126] & [NAME_128] D5 [NAME_129] D6 [NAME_131] D7 [NAME_133] D8 [NAME_134] D9, [COMPANY_242] D10 [NAME_137] D11 [NAME_139] D12 [NAME_141] D14 Mr T Sangiveeraj D15 Mrs R V Jackson E1 [NAME_143] E2 [NAME_145] E4 [NAME_147] E5 [NAME_149] [COMPANY_243] E7 [NAME_152] E8 [NAME_154] E9 [NAME_156] E10 [NAME_158] E11 [NAME_160] E12 [NAME_162] E14 Mr A J Boyd E15 Mrs R V Jackson F1 Mr McRuvie & Ms Thomas F2 Mr Bozhkov F3, G3, G4 [NAME_125] & [NAME_164] F4 [NAME_166] F5 [COMPANY_168] F6 [NAME_169] F7 [NAME_171] & [NAME_173] F8 [NAME_175] F9 [NAME_177] F10 [NAME_90] F11 [COMPANY_179] F12 [NAME_180] & [NAME_182] F14 [NAME_184] F15 [NAME_186] G1 [NAME_90] G2 [NAME_248] G3 [NAME_191] G5 [NAME_192] G6 [NAME_193] G7 [NAME_195] G8 [NAME_147] G9 [NAME_197] G10

14 [NAME_199] G11 [NAME_200] G12 [NAME_202] G14 [NAME_203] G15 [NAME_205] [NAME_206] [COMPANY_244] c/o [COMPANY_209]

[NAME_10] to the Application as of 1st September 2025 represented by [NAME_16](s) of Lessee(s) No

B3 [NAME_210] B10 [NAME_213] C10 [NAME_215] C14 [NAME_218] D3 [NAME_123] D11 [NAME_220] E7 [NAME_222] E14 Thomas Boyce

F3 Bozhidar Todorov Bozhkov G3 Svetla Ivanova Stoyanova-Bozhkova G4 Bozhidar Todorov Bozhkov G5 Ian Francis G8 [NAME_225] G10 [NAME_228] G11 [NAME_20] [NAME_7]

C4 [NAME_230]