Major works: A case of delayed dispensation but relevant prejudice still required
In The Mayor & Burgesses of the London Borough of Lambeth v. Kelly & Others  UKUT 00290 the landlord failed to comply with the consultation requirements under section 20 of the Landlord and Tenant Act 1985 (“the Act”) but was granted dispensation notwithstanding an earlier determination that the maximum sum recoverable from one of the leaseholders was the £250 statutory cap.
The Council was the owner of a Victorian property in Stockwell which had been converted into 5 flats. In 2016, a leak in the roof of the property led to works being carried out. However, the tenants were not invoiced for that work until 2018. In addition, the cost of the work meant that the consultation requirements under section 20 of the Act and associated Regulations were triggered.
One tenant, Ms Danvers-Russell, alleged that she had not received the consultation notice. (It is worth noting that as the Council was a local authority and the works were carried out under a qualifying long term agreement under a framework with a specified contractor only one consultation notice was required.) In 2021 she applied to the First-Tier Tribunal (“FTT”) for a determination that the costs of her contribution should be limited to the statutory cap of £250 due to the failure to consult. Despite the fact that Ms Danvers-Russell did not live at the flat and this was known to the Council, they maintained that service of the notice at the flat only was valid by reference to a number of legal principles. When the FTT gave directions for the case to be managed it indicated that if the Council wanted to make an application for dispensation from the consultation requirements it would need to make a separate application and pay a fee. The Council decided not to apply for dispensation at that stage but to wait and see. The FTT found that the Council had admitted (due to employing new working processes) to knowingly implementing a system by which correspondence was sent to Ms Danvers-Russell at an address where she would not receive it. Therefore, notice had not been given in accordance with the Regulations and her contribution to the cost of the works should be limited to £250.
Following that decision, the Council applied for dispensation in August 2021. The FTT refused the application on the basis that it had already determined the service charges payable by one tenant in the previous proceedings brought by Ms Danvers-Russell. The Council appealed to the Upper Tribunal.
The Upper Tribunal found that there was nothing to suggest that a dispensation application could not be made after an application to determine the reasonableness and amount of service charges payable had been made. It was noted that it was in fact common practice given it would not be known whether a dispensation application would be required until the determination of the first set of proceedings.
Nonetheless, the Tribunal criticised the Council for its heavy-handed approach to the matter (in which the total costs were just over £7,000). It transpired, after the first proceedings, that the consultation notices could not have been valid even if service had been effective because the notices were served after the works had been carried out and a demand for payment had been made by the contractor.
Notwithstanding the fact that there had been a “wholesale failure” to comply with the consultation process, and the tenants were not informed of the costs until 18 months after they had been demanded by the contractor, dispensation was granted. There was no evidence of actual prejudice to the tenants. Even though it was accepted that the tenants were hampered in showing prejudice by the Council’s delay, it was still incumbent on the tenants to show some type of loss (which they had failed to do in this case).
This decision is notable as a case where there was no compliance with the consultation procedure and dispensation was still granted without conditions. It also provides some further guidance in terms of service of notices, in circumstances where a landlord is aware that the tenant is not resident. As ever, landlords would be well advised to ensure that they take all necessary steps to comply with the consultation requirements. If there is any doubt as to compliance, a dispensation application ought to be made promptly. The decision is a helpful reminder that it is necessary for tenants to show relevant prejudice in order to successfully oppose an application for dispensation (applying the Supreme Court’s decision in Daejan Investments v. Benson  UKSC 14).