Service Charge Consultation: JB Leitch represents landlord in successful application for dispensation from consultation

JB Leitch acted for the applicant landlord in its successful application to the First-tier Tribunal for dispensation from the service charge consultation requirements under section 20 of the Landlord and Tenant Act 1985.

The background

In this case, JB Leitch’s client was the landlord of a block comprising 71 apartments let on long residential leases across 10 storeys with a basement below ground level.

The external walls of the building were found to contain combustible materials, with the recommendation of the replacement of non-compliant wall materials. Further, it was recommended that a common automatic fire alarm and detection system was installed throughout the building from level 5 upwards, and until such a system was installed a waking watch was implemented.

The landlord registered the property with the Building Safety Fund and pursued tenders from contractors for the installation of the alarm system and to complete the major works to the exterior of the building. Referencing Daejan Investments Ltd v Benson and others, the applicant sought dispensation under s.20ZA from the statutory consultation requirements in respect of both the alarm system and external major works.

The landlord had issued notices of intention in respect of the works to the external façade but was unable to complete consultation owing to the urgency of the works, the Design and Build procurement route adopted and the requirements of the Building Safety Fund application. The landlord continued with the fire alarm installation without consulting on the basis that works were urgent and necessary to avoid further costs of the waking watch.

A number of represented leaseholders sought to consent to the application but requested that a number of conditions be imposed upon any grant of dispensation.

The decision

The First-tier Tribunal granted dispensation of consultation requirements in respect of the installation of the fire alarm system and the major external works to replace the building’s cladding. Dispensation was granted on a conditionally on terms as agreed between the parties prior to the final hearing.

Considering Daejan, the FTT had sufficient jurisdiction to order dispensation if satisfied that it is reasonable to do so, in such terms as it thinks fit provided that terms are appropriate in their nature and effect. Further, the FTT considered the comments of Lord Neuberger in the Daejan decision in respect of ‘relevant prejudice’ suffered by leaseholders as a result of the lack of consultation. The concerns raised by the leaseholders in this case, relating to the communication of information and costs, were addressed by the conditions attached to the dispensation order. Ultimately, the respondent leaseholders were keen not to jeopardise the Building Safety Fund application by requiring any delay or interrupting the award of the contract for works. For this reason, the leaseholders agreed that the application should be successful.

Advice and action for landlords

JB Leitch is pleased to have secured this decision on our landlord client’s behalf. The decision supports others in this area, referencing Daejan to conclude that, financial prejudice suffered by the leaseholders as a result of the lack of consultation is a key consideration in determining whether dispensation ought to be granted. Conditions may only be imposed where it is appropriate to do so and where it would be reasonable to grant dispensation only if the landlord accepts certain conditions.

JB Leitch’s building safety expertise progressed this application smoothly to a satisfactory conclusion, supported by significant and highly relevant experience in a number of similar applications for client landlords and management companies across the UK.