Automated Summary
Key Facts
Aster Communities (landlord) appealed a First-tier Tribunal (FTT) decision to dispense with consultation requirements for balcony asphalt replacement works in four main blocks at Kingsway Gardens, Andover. The FTT ruled that the works were unnecessary in its prior section 27A determination and imposed three conditions: (1) paying lessees' expert surveyor costs to assess work necessity, (2) covering lessees' legal costs for the dispensation application, and (3) non-recovery of application costs via service charge. The appeal was dismissed by the Upper Tribunal, which upheld the FTT's conditions as reasonable, noting the landlord's failure to provide timely evidence and the lessees' credible case of prejudice.
Issues
- A key issue was the application of the Daejan v Benson [2013] UKSC 14 principles, particularly the focus on tenant prejudice rather than landlord culpability when determining dispensation under section 20ZA. The FTT had found a credible case of prejudice, but the landlord argued this was not established due to lack of expert evidence from the lessees.
- The appeal questioned whether the FTT's conditions (i) and (ii) were 'appropriate in their nature and effect' as required by section 20ZA. The Upper Tribunal considered whether the FTT's discretion in imposing these conditions was justified given the prior section 27A determination and the lack of independent evidence from the landlord.
- The primary issue was whether the First-tier Tribunal (FTT) correctly imposed conditions (i) and (ii) requiring the landlord to pay the lessees' expert and legal costs in the dispensation application under section 20ZA of the Landlord and Tenant Act 1985. The FTT had granted dispensation with three conditions, but the landlord argued that only condition (iii) (non-recovery of application costs via service charge) was appropriate.
Holdings
The appeal was dismissed as the Upper Tribunal found the First-tier Tribunal (FTT) correctly applied the Daejan principles, imposing three conditions for dispensation: (1) the landlord must pay the lessees' reasonable costs of an expert surveyor to assess the necessity of balcony asphalt replacement, (2) the landlord must cover the lessees' legal costs of the application (to be assessed if not agreed), and (3) the landlord cannot recover its application costs via the service charge. The Tribunal emphasized that the FTT's discretion should not be interfered with unless there was a misdirection in law or an unreasonable conclusion.
Remedies
- The landlord is prohibited from passing on the costs of the dispensation application to lessees via the service charge. This prevents financial burden transfer for the legal proceedings initiated by the landlord.
- Aster is required to reimburse lessees for the costs of an expert surveyor to evaluate whether the proposed balcony asphalt replacement was necessary. This condition ensures lessees can investigate potential prejudice from the unconsulted works.
- The landlord must pay the legal costs (for instructing counsel) incurred by lessees during the dispensation application and appeal processes. These costs are to be summarily assessed if not agreed between the parties.
Legal Principles
- Under the Daejan framework, the factual burden of establishing prejudice lies with tenants, while the legal burden of justifying dispensation remains on the landlord. The FTT found tenants had discharged their factual burden by presenting a credible case of potential prejudice, and the landlord failed to rebut this through evidence like Mr. Greenhalgh's non-independent opinion.
- The Supreme Court in Daejan Investments Ltd v Benson emphasized a purposive approach to interpreting the consultation requirements under the Landlord and Tenant Act 1985. The consultation process was intended to ensure tenants are not charged for unnecessary or defective services and to allow them to challenge proposed works. The FTT applied this approach when determining conditions for dispensation, focusing on remedying prejudice to tenants rather than punishing landlords.
Precedent Name
- OM Property Management Ltd
- Paddington Basin Developments Ltd v West End Quay Estate Management Ltd
- Daejan Investments Ltd v Benson
- Stuart v Goldberg Linde (a firm)
- Jastrzembski v Westminster City Council
- Piglowska v Piglowski
- Camden LBC v Leaseholders of 37 flats at 30-40 Grafton Way
- Aldi Stores Ltd v WSP Group plc
Cited Statute
- Landlord and Tenant Act 1985
- Tribunals, Courts and Enforcement Act 2007
- Statutory Instrument 2003/1987 (Landlord and Tenant Act 1985)
- Commonhold and Leasehold Reform Act 2002
Judge Name
Stuart Bridge
Passage Text
- The FTT found that the lessees had made out a 'credible case of relevant prejudice, namely that the lessees will be asked to pay for inappropriate works.' It concluded that 'had the landlord indicated from the outset (at Stage 1) that replacement of the asphalt was intended, the lessees may have sought the evidence of an expert surveyor at that stage.'
- The FTT imposed three conditions: (i) payment of lessees' expert surveyor costs to assess necessity of works; (ii) payment of lessees' legal costs in the dispensation application; and (iii) non-recoverability of the landlord's application costs through service charges.
- The Upper Tribunal concluded at [80]: 'For the reasons given, I do not consider that it is the duty of the Tribunal to interfere with the FTT's exercise of discretion in granting dispensation on the three stated conditions, and this appeal must therefore be dismissed.'