The case was Various Occupational Leaseholders of Foundling Court and O’Donnell Court, Brunswick Centre, London v (1) London Borough of Camden (2) Allied London (Brunswick) Limited [2016] UKUT 366 (LC) and others.
Summary
If you are an intermediate leaseholder, the responsibility for consulting your own leaseholders lies with the freeholder. In cases where there is an intermediate lease between the freeholder and the occupational leaseholder, the Upper Tribunal (Lands Chamber) has held that the consultation requirements in section 20 of the Landlord and Tenant Act 1985 (the “Act”) requires the freeholder to consult the intermediate leaseholder and the occupational leaseholder before carrying out “qualifying works” or entering into a “qualifying long-term agreement”.
Consultation requirements
Section 20 of the Act limits the service charges payable by a leaseholder in respect of “qualifying works” to £250 and for entering into a “qualifying long-term agreement”, to £100, unless the landlord has consulted the leaseholder in the prescribed manner or obtained dispensation from some or all of the consultation requirements from the First-tier Tribunal (Property Chamber) (the “FTT”).
The facts
Allied London (Brunswick) Ltd (the “Freeholder”) sought to carry out “qualifying works” which required consultation under section 20 of the Act. Consequently, the Freeholder consulted London Borough of Camden (the “Intermediate Leaseholder”) in accordance with the consultation requirements of section 20 of the Act. The Freeholder did not directly consult the occupational leaseholders, instead, the intermediate leaseholder sought to consult with the occupational leaseholders but not in the prescribed manner required by Act.
The Intermediate Leaseholder paid the service charges demanded by the Freeholder and in turn sought to recover the sums from the occupational leaseholders. Consequently, the occupational leaseholders issued proceedings in the FTT under section 27A of the Act, on the basis that they had not been consulted by the Freeholder or intermediate leaseholder in the prescribed manner required by section 20 of the Act and therefore their liability should be capped to £250.
In response, the Freeholder argued that it was only required to consult the Intermediate Leaseholder under section 20 of the Act. The Intermediate Leaseholder argued that there was no requirement for either the Freeholder or itself to consult the occupational leaseholders or in the alternative it was the Freeholder’s responsibility to consult the leaseholders.
The case was dealt with by the Upper Tribunal, having being transferred by the FTT because the issue was one of general public importance.
Held
The Upper Tribunal held that the Freeholder, as the party carrying out the works, had the responsibility to consult the intermediate leaseholder and the occupational leaseholders (as those who would be ultimately responsible for paying the service charge costs). The intermediate leaseholder was held not to be under an obligation to consult the occupational leaseholders as they would not be responsible for carrying out /placing a contract for the works.
The Upper Tribunal recognised that there may be circumstances where it is impracticable for the Freeholder to be able to consult all of the intermediate leaseholders and the occupational leaseholders, particularly if the freeholder doesn’t know the details of each and every occupational leaseholder. In such a case, the freeholder should seek dispensation from the FTT before proceeding with any “qualifying works” or entering into any “qualifying long-term agreements."
Comment
This is an important decision as it places a greater burden on freeholders in such circumstances than previously. Unless dispensation from consultation is sought from the FTT, the freeholder is now required to consult with occupational leaseholders where there is an intermediate leaseholder even though there is no direct contractual relationship between the parties or risk the service charges being capped. Expect the routine use of dispensation in such matters!
For advice on Section 20 and other housing management matters please contact Penny Bournes.
In 2020 the court rules were changed to require that all residential tenants must be given 14 days’ notice of an eviction. What happens though if the eviction is cancelled on the day?
We are delighted to announce that our private wealth law department has continued to maintain its Band 2 position in the latest edition of Chambers and Partners High Net Worth.
The new CHF is set to launch and open for applications with £4 million set to be allocated to community-led housing groups to support an increase the supply of affordable housing in England.
Charities, like other organisations, may be subject to or choose to voluntarily comply with the reporting requirements under the Modern Slavery Act 2015.
The draft regulations making it mandatory for anyone entering a registered care home in England to have been double vaccinated unless they are clinically exempt were made on 22 July 2021.
In the Transforming Public Procurement Green Paper, the Government signalled its desire to increase its control over procurements by all contracting authorities.
The monthly round-up from the Anthony Collins Solicitors charities team.
Legal updates as the UK enters into stage 4 of the roadmap and legal restrictions on face coverings and social distancing are lifted.
The first disability we are going to discuss is diabetes. We begin by discussing the different types of diabetes; their similarities and differences and how we live with the disability within our day.
Tim Coolican and Freya Cassia explore the legal and practical options available to providers if a disappointing result is received following an inspection.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.