Critical Communication: Service Charge: Dispensation from statutory consultation procedure to undertake fire safety works

A management company proposed to carry out urgent fire safety works to three properties forming part of a development and made an application to the First-tier Tribunal for dispensation from the consultation requirements under Section 20 Landlord and Tenant Act 1985. JB Leitch successfully represented the management company in this application.

The background

In Barking Central Management Company (No.2) Limited v Leaseholders of Lemonade Building, Bath House & 87 Axe Street [2021], the management company wished to undertake urgent fire safety works to a development in London comprising three mixed-use or residential blocks. The required works included works to replace the façade of each building, works to address deficiencies in the internal compartmentation of each building and the installation of an ‘L5’ automatic fire alarm system. The cost of the qualifying works exceeded the threshold for consultation with leaseholders, set out in the Service Charges (Consultation Requirements) Regulations 2003.

Each of the buildings achieved a B2 rating under the EWS1 process meaning that they had not achieved an adequate standard of safety and remediation measures were required. The management company was also advised that each of the buildings required the implementation of a ‘waking watch’ as a mitigating measure pending the completion of the fire safety works. The management company submitted that the works were urgent, given their fire safety nature and considering the constraints associated with their applications for Government funding. Furthermore, the installation of the fire alarm system could reduce or eliminate the need for the ‘waking watch,’ which was an ongoing and high cost to the leaseholders. As a result, the management company sought dispensation from further compliance with the statutory consultation requirements, agreeing instead to:

• If reasonably practicable, provide all leaseholders with a copy of the final specification for each part of the works.
• Provide all leaseholders with details of the tenders for each part of the works and allow a short period for comments.
• Have regard to any leaseholder comments made at any time prior to entering into binding contracts; and
• Keep leaseholders updated on a monthly basis as to the broad progress of the works and the applications for funding until the completion of the works.

Outcomes & Advice

The First-tier Tribunal granted the management company dispensation from the consultation requirements that had not already been complied with in respect of the urgent fire safety works proposed. The grant of dispensation was, however, made conditional upon the managing agent complying with the conditions that it had put forward, noting that those Respondents who had not objected to the application may have only been satisfied with the application on this basis.

The FTT commented that, as the management company had already sent out notices of intention, this was not a case where no attempt to consult had been made. In making its decision, the FTT considered Daejan, and whether the leaseholders had suffered any real prejudice as a result of the lack of consultation. The FTT considered that the management company had provided persuasive evidence that the works were urgent as it might not be safe to wait until full consultation had been carried out. The FTT also accepted that the Government funding applications and associated timescales were another good reason for not delaying the process. The FTT found no compelling evidence that the leaseholders would suffer prejudice due to the shortening of the consultation process.

JB Leitch is pleased to have delivered a successful outcome for our client in this application for dispensation from the statutory consultation requirements.

The management company in this case had already demonstrated that it had kept leaseholders informed and further committed to provide leaseholders with relevant information as the works and funding applications progressed. Landlords and management companies are advised that, where an application for dispensation is made, demonstrating efforts to communicate with leaseholders throughout may benefit the application considerably.