Case Success for JB Leitch in the matter of an application under the Landlord and Tenant Act 1985 Section 27A

Trainee Solicitor Katie Orr summarises a recent case success for JB Leitch at the Leasehold Valuation Tribunal (Wales) in regard to application under Section 27A Landlord and Tenant Act 1985 relating to the reasonableness of service charges.

The leaseholder sought a determination as to liability to make payment of service charges relating to building safety measures carried out to a 15-storey block of residential apartments in Wales. Specifically, the leaseholder challenged the reasonableness of the charges and asserted that consultation as per Section 20 LTA had not been carried out prior to the fire alarm works being undertaken. The specific items in dispute included:

1. cost of fire risk assessment/survey;
2. cost of fire door replacement;
3. cost of Waking Watch;
4. cost of insurance premium increase;
5. cost of fire alarm upgrade;

Below, we consider the Tribunal’s evaluation and decisions on each point in turn.

Surveys:

Following the Grenfell Tower tragedy, our client reviewed its entire portfolio and evaluated each building on a risk basis with the view that fire risk assessments and surveys would be undertaken when appropriate.

A Fire Inspection Officer had confirmed verbally that that there was an external façade issue at the block and that an intrusive assessment would need to be undertaken. Our client obtained three quotes for the combined report, which included an external wall review, and instructed the second lowest on the basis that it had positive experience with that fire engineer previously. The Applicant challenged that there was no need for the external façade to be examined, that there was an overlap between the reports and a single report would have been sufficient.  It was further argued that there was no requirement in writing for the external façade to be examined. Our response highlighted that it was more cost effective to do the internal and external review at the same time and that the fire officer’s verbal comments in regards to the external wall review being required were sufficient. It was further argued that there was no requirement on the client to choose the cheapest tender.

Taking these points into account, the Tribunal considered that the decision to obtain the reports was reasonable in the circumstances, as were the costs on the basis that three comparative quotes had been obtained. In the client’s view, and as accepted by the Tribunal, the reports would have had to have been undertaken at some stage and that being the case, found that once alerted to the issue our client became immediately proactive.

Fire Compartmentation and Doors

The Applicant stated that there was historic neglect and disregard to the proper safety standards, criticising the client’s “broad” approach that allegedly failed to do what ought to be done in relation to building safety issues including the repair and replacement of fire doors. Given that three quotations were obtained by our client, we argued that the sums were reasonable in all the circumstances as the works were necessary. Furthermore, our client was the named management company as opposed to the landlord or developer.

Having heard all the evidence, the Tribunal found that in relation to the work to the fire doors and the other compartmentation works, our client had acted reasonably. Our client was not responsible for the installation of the doors and had obtained competitive quotations.

Waking Watch

The Applicant did not take issue with the appointment of the Waking Watch in principle but considered that it was in place for too long, increasing costs unnecessarily.

We countered that the Waking Watch was implemented as an interim measure upon receipt of expert advice and that it was in place for as long as it was required i.e., until the fire alarm system was upgraded. Our client took an evidence-based approach and corresponded with leaseholders regarding the service charge estimate and provided detailed information as regards reasons and costs.

The Tribunal determined that our client had found itself in an invidious position and that given all the circumstances, it had undertaken its management role in a reasonable manner. The costs of the waking watch were considered to be fully reasonable.

Insurance Premiums

With regard to the matter of renewed insurance, the Applicant raised two issues being that firstly, only three companies had been approached and secondly, the information supplied was insufficient to enable them to adequately quote.

In essence, despite having appointed a wholesale insurance broker, our client was unable to obtain any comparative quotes. This was due to the EWS1 B2 rating attributed to the property.

Evidence provided by our client’s Head of Insurance confirmed that three insurance companies were asked to quote. Two of these simply responded to the enquiry with a “no” and the third confirmed that they would only consider quoting once the combustible material had been removed. We concluded by stating that this was an entirely reasonable approach when there was no alternative and no other options available.

Having considered the evidence carefully, the Tribunal accepted our client’s evidence; the reports had identified defects in the external façade which would have in any event resulted in an increased premium. The Tribunal found that renewing the insurance policy was reasonable in all the circumstances and as such, should be paid as part of the service charge.

Fire Alarm Upgrade

Our client obtained retrospective dispensation under Section 20ZA Landlord and Tenant Act 1985 in relation to the consultation requirements regarding the works to the fire alarm system.

Three quotes were received and our client forward funded the costs of the alarm in order that it could be installed at the earliest opportunity thus ending the costs of the waking watch. On this basis, the Tribunal considered the costs to be reasonable in the circumstances.

Section 20C Application

The Applicant made numerous criticisms of our client in terms of misconduct and management in general however, the Tribunal declined to grant a Section 20c Order. The Judge concluded that they do not consider this to be a case which warrants interfering with the provisions of the lease to deprive our client from recovering its costs in the usual manner.

If you would like to discuss this case further, or have any questions on matters relating to Section 27A of the Landlord and Tenant Act 1985 (which allows leaseholders to apply to the Tribunal for a determination whether a service charge is payable and / or reasonable and, if it is, as to the amount which is payable and / or reasonable), please contact us.