First-tier Tribunal Rejects Request to Bypass Consultation for Combined Service Agreement

OUTCOME: Dismissed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BJ/LDC/2019/0103 Property : [ADDRESS] [POSTCODE] Applicants : [redacted] Hawksworth ) Managing agents Representative : [COUNSEL] Respondents : [redacted] : To dispense with the requirement to consult in respect of a qualifying long term agreement Tribunal : Judge Daley Mr Taylor FRICS Date of decision : 02 October 2019

DECISION

The Tribunal has determined not to grant the Application to dispensation with the statutory consultation requirements in relation to a long term agreement for a combined service provision for concierge, security and incident emergency response for [ADDRESS].

Reasons

1. The Applicant made an application, which was received on 25 June 2019 for dispensation in respect of concierge services. Directions were given on 27 June 2019, Direction 5 required the landlord to send copies of the application and directions to [NAME] on or before 5 July 2019. The application at direction 6 required those [NAME] who oppose the application to send details of their opposition to the landlord and the Tribunal in a pro forma to the Tribunal on 12 July 2019. There were 5 objections received. One of the [NAME] indicated that they wished for

2 this matter to be dealt with at an oral hearing. The matter was set down for hearing on 2 October 2019. Mr [APPELLANT] attended on behalf of the applicant. There was no attendance on behalf of the [NAME] who had objected, however the Tribunal was able to consider the objections as all 5 of the [NAME] had made detailed written objections.

2. At the hearing Mr [NAME] explained that [ADDRESS] was on [ADDRESS], and that it shared the site with a hotel the Hotel Rafayel and that entrance to [ADDRESS] was via the hotel, there were 144 units, which were subject to the terms of the original lease, and 15 units which had subsequently been built by the freeholder, so the terms of the lease were likely to change to reflect this.

3. The concierge service was provided by an employee of the Applicant during the hours of 7am to 3pm (Monday to Friday) and that coverage outside of those hours was provided by staff employed by the freeholder provided via the hotel. Coverage was provided 24 hours a day for 365 days of the year. Mr [NAME] informed the Tribunal that the requirements to provide the concierge service was set out in the lease (the Tribunal did not examine the lease, as there did not appear to be any dispute concerning the terms of the lease or the necessity for the service.

4. Mr [NAME] submissions concerning consultation are set out in the application. He stated-: “… If we were to seek comparable prices from other companies apart from … having to go to numerous separate companies for the combination of services… such responses would be financially prohibitive… We therefore request to forego consultation to save [NAME] from the unnecessary costs of the consultation process” 5. The Tribunal was informed that the costs of consultation was likely to be an initial charge of £350.00 plus £30.00 per unit ( approximately (£4770.00) It was accepted by Mr [NAME] that the current costs for the service was in the range of £160,000, given this the service charges payable by the [NAME] was approximately £1000.00 per unit.

6. The Tribunal considered the objections from the leaseholder of flat Ms [NAME], [NAME], and [NAME] and Ms [NAME] (via email), all of the objections centred on the lack of transparency; concerning arrangements between the freeholder who owns the hotel and also some of the units and also provided the concierge service, the fact that it was difficult to quantify the service, and the fact that the out of hours response to emergencies in the building was not effective. The [NAME] also noted the high cost of the service.

7. The Tribunal asked about the difficulties of consultation, and whilst it accepted that there may be difficulties in obtaining tenders from like for like contractors for the service, it considered that this difficulty and the cost did not outweigh the rights of the [NAME] to participate in consultation, which would provide transparency, and which could potentially result in a saving to the [NAME].

8. The Tribunal was mindful that it might prove difficult to find a like for like service, however this would not been known until the Applicant had undertaken a consultation exercise.

3 9. In accordance with the Supreme Court’s decision in [COMPANY] v Benson [2013] 1 WLR 854, the primary issue when considering dispensation is whether any lessee would suffer any financial prejudice as a result of the lack of compliance with the full consultation process, the Tribunal could not be satisfied that there would be no financial prejudice to the [NAME].

10. The Tribunal is also not satisfied that the problems identified are such as to justify not going through the full consultation process. Given the objections, (albeit from a small number of [NAME]), and the potential prejudice to the [NAME] in terms of cost and service provided, the Tribunal is not satisfied that it is reasonable to dispense with the statutory consultation requirements.

Name: Judge Daley Date: 02 October 2019