Service Charge & Building Safety: Success for JB Leitch at the First-tier Tribunal

JB Leitch have this week been successful in another building safety case, relating to an application under Section 27A Landlord and Tenant Act 1985 to determine estimated service charges in relation to the costs of major works.

Background

The case focused on an Application to the First-tier Tribunal (FTT) for proposed major works, specifically the replacement of the floors and supporting structures to balconies which were said to pose a fire risk to the health and safety of the occupiers within a development comprising 43 blocks of flats in 103 acres of ground.

In September 2020 the Applicant, represented by JB Leitch, had commissioned an external façade review and the production of an EWS1 form for each block of flats on the estate, which identified six blocks that required fire safety remedial action. The Applicant applied to the Tribunal to seek a determination of estimated service charges in respect of the proposed balcony works and the Tribunal directed the leaseholders to complete a proforma indicating whether they agreed or disagreed with the application; 86 leaseholders responded with 60 supporting the Application and 26 opposing it.

Key to the successful application was the affirmative consideration by the Tribunal of 2 questions:

• Would a service charge be payable under the terms of the respective lease for those works if they were carried out?
• Would it be reasonable for the Applicant to incur costs in carrying out the works as specified having regard to the EWSI and the Fire Safety Report?

On the first point, several Respondents contended that the proposed works were the responsibility of individual lessees because floor surfaces of the balcony are within the definition of Property (the Demise). We argued that that the proposed works fell within the Applicant’s obligations as named management company within the leases and furthermore, were necessary in order to comply with the Applicant’s obligations under the Regulatory Reform (Fire Safety) Order 1985. For the purposes of that Order, we argued that the Applicant is the responsible person for each block and accordingly, it has a duty under the leases to take such general fire precautions as may reasonably be required to ensure that each block is safe. Under the Order it was also noted that general fire precautions included taking measures to reduce the risk of fire and the risk of the spread of fire, which would cover the proposed works by removing the fire risk posed by the wooden structure of the balconies. Additionally, the Applicant had a duty under the Order to eliminate or reduce so far as reasonably practicable a dangerous substance and a “dangerous substance” includes a substance that, owing to its properties and the way it is present at the premises, creates a risk. We argued that the combustible wood in the balconies constituted a “dangerous substance” within the meaning of the Order. This was accepted by the Tribunal.

The Applicant further argued, and the Tribunal agreed, that the presence of combustible material on the balconies does not constitute keeping the property in good and substantial condition as required by the terms of the leases.

On the second point, regarding incurring costs to carry out the works, our argument was that the presence of a combustible material (timber) in balconies which were horizontally stacked on the building exterior posed an unacceptable fire risk and that the proposed works to the balconies were essential to protect the health and safety of the leaseholders. In this regard we maintained that the Applicant was acting reasonably and in accordance with the terms of the lease; this superseded challenges including the argument that the works were not necessary because the lessees would receive no benefit from the works in terms of an improved EWS1 rating at relevant blocks.

The Decision

The Tribunal determined (in accordance with section 27A(3) of the 1985 Act) that if costs were incurred for in carrying out the works on the balcony floors and supporting structures, a service charge would be payable by the lessees to the Applicant. In the determination, the Tribunal specifically noted that the proposed works to the balconies are necessary to ensure “that the fire risks to the properties are reduced to acceptable levels and (2) the proposed works are necessary to ensure that the Manager discharges its legal responsibilities under Regulatory Reform (Fire Safety) Order 2005 and its obligations under the lease”.

Trainee Solicitor Katie Orr comments further: “This case serves to illustrate the ongoing prioritisation of resident safety in building safety matters and touches upon many important elements – from the responsibilities and duties of responsible persons through to the value of EWS1 assessment and the extent of service charge obligations.”