Cases - Re Om Property Management Ltd

Record details

Name

Re Om Property Management Ltd

Date

[2014]

Citation

UKUT 0009 (LC)

Legislation

• Landlord and Tenant Act 1985
• Service Charges (Consultation Requirements (England) Regulations 2003

Keywords

Landlord and tenant - service charges - dispensation

Summary

The appellant management company failed to comply with the statutory consultation requirements. Due to the appellant’s failure to consult, each leaseholder contribution to the cost of the major works was limited to £250 by the LVT pursuant to Landlord and Tenant Act 1985, section 20(1) ('the 1985 Act'). Consequently, the Appellant recovered only £42,500 of its total expenditure instead of the £347,106 claimed.

The appellant subsequently applied for dispensation with the consultation requirements pursuant to section 20ZA of the 1985 Act. The LVT refused to grant dispensation on the grounds that the failure to consult was in itself sufficiently prejudicial to the leaseholders. Om appealed.

The Tribunal held that the approach to dispensation following the case of Daejan Investments Ltd v Benson [2013] UKSC 14, was as follows:

• The purpose of the consultation requirements was to ensure that tenants were protected from (i) paying for inappropriate works or (ii) paying more than would be appropriate. The issue that one had to focus on when an application for dispensation was received must be the extent, if any, to which the tenants were prejudiced in either respect by the failure of the landlord to comply with the requirements.
• Any distinction in cases involving substantial or serious breach of the consultation requirements and to those where only technical or minor breaches had been committed often left to uncertainty and sometimes to inappropriate outcomes.  In considering whether to grant dispensation the focus should be on the existence of real prejudice to the tenants flowing from the landlord’s breach of the consultation requirements.
• The previous practice of inferring the existence of prejudice in cases involving a serious failure to consult should not be followed.  In all cases the burden of identifying some relevant prejudice falls on the tenants seeking to resist the application for dispensation.
• The jurisdiction under the section 20ZA(1) included a power to grant dispensation on such terms as the LVT thinks fit provided that any such terms are appropriate in their nature and effect.

The Service Charges (Consultation Requirements (England) Regulations 2003 only required 2 estimates to be obtained. The leaseholders were not provided access to details of the 2 highest tenders out of the 4 tenders obtained. There was, however, no evidence that the failure to provide access to these tenders contributed to the leaseholders paying for inappropriate works or paying more than would be appropriate for the works carried out.

The failure to provide notice to all leaseholders of the responses to the initial consultation notice did not give rise to the leaseholders having suffered a real prejudice. Further it cannot be said that prejudice was suffered because the tenants lost confidence in the process itself and the management of the block. That was not a statutory objective nor did it provide leaseholders with grounds for avoiding payment of service charges.