Application by a landlord for dispensation from service charge consultation (Aster Communities v Chapman & others – 2020)

Where a landlord fails to consult with tenants regarding certain works, can the landlord succeed in an application for dispensation from statutory consultation requirements in relation to those works?

The background

In Aster Communities v Chapman & others [2020], the landlord carried out certain works at a development of flats comprising 5 blocks, 114 apartments at which were let on long leases. The landlord looked to recover the costs of the works through the service charge, and made an application to the First-tier Tribunal for determination as to the sum payable by the long lessees.

The landlord had replaced asphalt on the flats’ balconies as part of its works. Two flats had suffered ingress of water due to the condition of asphalt on their balconies which had prompted this replacement work, but the FTT found that wholesale replacement across all properties could not be justified on this basis. As the works were unnecessary, the landlord could not recover costs for this element of work through the service charge.

The landlord had not included the asphalt replacement works in its consultation with lessees pursuant to s.20 of the Landlord and Tenant Act 1985. The landlord applied to the FTT seeking dispensation from this statutory consultation requirement in order that it could then look to include the cost of the asphalt works in the service charge. Objecting to the application, the lessees argued that the lack of consultation had resulted in them being unable to obtain expert advice. The lessees also argued that, as they were unable to object to the scope of the works, they had been prejudiced.

The FTT referred to earlier case law Daejan Investments Ltd v Benson [2013], which applied a test of whether the lessees would suffer any relevant prejudice as a result of the landlord’s failure to comply with the statutory consultation requirements. The FTT concluded that the asphalt works had already been found to be unnecessary and therefore there was a relevant prejudice. It granted dispensation, but this was conditional on the landlord paying the costs of the lessees in obtaining a report. The landlord appealed against the conditional dispensation decision.

The decision

The Upper Tribunal dismissed the appeal by the landlord.

The court agreed with the FTT that were the lessees to now seek expert opinion on the asphalt replacement, that would put them in the position they would have been in had consultation procedure been carried out. The landlord had not provided any evidence to counter this, and the FTT had applied conditions to the dispensation in line with the Daejan judgment, which was broad and did not qualify such conditions that a court may choose to impose.

The UT concluded that it was not at liberty to interfere with the FTT’s exercise of its discretion where it had heard evidence, formed its own view and exercised discretion properly, and in line with Daejan.

Advice and action for landlords

This decision serves as a warning to landlords to follow correct statutory procedure in all respects, particularly where works of a significant cost are to be undertaken.

We recommend that landlords take appropriate legal advice prior to commencing any programme of works in order to fully ascertain and meet the consultation requirements of the Landlord and Tenant Act 1985, thereby reducing risk of subsequent claims or reduction in recovered expenditure.