Dispensation from consultation and major works

In the recently decided case of Aster Communities v Chapman & Others [2021] EWCA Civ 660, the Court of Appeal upheld the decision of the First-Tier Tribunal (Property Chamber) (“FTT”) and confirmed that the FTT has considerable scope to impose conditions when granting dispensation from the consultation requirements of Section 20 of the Landlord and Tenant Act 1985 (“1985 Act”).  Landlords must follow the consultation procedure when carrying out major works, otherwise they can only recover a maximum of £250 from each tenant unless an order is obtained dispensing with them.

This is an important decision and one of relevance to both landlords and tenants dealing with the consultation requirements and applications for dispensation.  In this case, the landlord of a block of flats let on long leases consulted with leaseholders under Section 20 in relation to various major works.  The Notice of Intention to carry out works, however, did not refer to proposed balcony asphalt repair works.  Therefore, the FTT found that the landlord had not consulted with the tenants in relation to those works.  However, dispensation was granted on the following conditions by the FTT:

(1) The landlord was to pay the reasonable costs of an expert nominated by the lessees to consider and advise them on the necessity of replacing all the balcony asphalt;

(2) The landlord was to pay the lessees’ reasonable costs of the application; and

(3) The costs of the application were not recoverable by the landlord from the lessees through the service charge.

The landlord objected to the first and second conditions but the Court of Appeal upheld all of the conditions attached to the grant of dispensation.  Accordingly, the Court of Appeal has confirmed that the FTT has a wide discretion to grant dispensation to the consultation requirements on terms which they consider fit and appropriate.

The Court viewed the grant of dispensation as effectively an “indulgence” to the landlord as a result of a defect in compliance with the consultation requirements.  Whether a tenant has suffered prejudice from a defect in the consultation procedure, will be dependent on whether they would have acted differently (and can show this) if the consultation requirements imposed by the 1985 Act had been fully complied with. In Aster, because one of the lessees had shown she would have commissioned an expert report on the necessity the replacement of the balcony asphalt had the consultation been carried out, that prejudice had been proved on behalf of all the tenants.

The decision follows, the Supreme Court’s landmark decision in Daejan Investments Ltd v. Benson [2013] UKSC 14 and confirms that the FTT has a wide discretion to impose whatever conditions  it deems appropriate to an order granting dispensation, and shows the wide range of conditions which may be imposed.

It remains important for landlords to ensure that the consultation procedure is carefully followed to avoid any need for an application for dispensation.  However, applications for dispensation can also be made where works are required in an emergency and there isn’t sufficient time for a landlord to complete the consultation procedure.  If dispensation is granted, the FTT will have a wide discretion to impose appropriate conditions, such as for the landlord to pay the tenants’ costs of obtaining expert evidence.

This article was written by Oliver Park and Laura Bushaway, please contact Oliver, Laura or your usual Charles Russell Speechlys contact for more information.