Council wins appeal over dispensation of consultation requirements

The London Borough of Lambeth has won an appeal concerning leaseholders and the dispensation of consultation requirements, despite being severely criticised by an Upper Tribunal (Lands Chamber) judge for “a wholesale failure to comply with the section 20 process”, and having a “careless attitude” towards informing residents of repair costs.

Judge Siobhan McGrath decided though that the main applicant Dorette Danvers-Russell was unable to demonstrate that she had suffered loss.

In Mayor and Burgesses of the London Borough of Lambeth v Kelly & Ors (LANDLORD AND TENANT - SERVICE CHARGES - section 20ZA - timing for application - exercise of discretion - importance of finding relevant prejudice) [2022] UKUT 290 (LC) the judge said: “This had not been an easy decision as the council’s failures to communicate with the leaseholders and its rather careless attitude to leasehold management have distracted from the main issue.

“On balance however, I have decided that the appeal must be allowed and unconditional dispensation from the requirements of section 20 of the 1985 Act is granted.”

The case arose from the First-Tier Tribunal (FTT), where it was taken by Ms Danvers-Russell and her neighbours Michaela Kelly and Christopher Woodman.

They are leaseholders in three of five flats in a house owned by Lambeth, with the others being let by the council on secure tenancies.

In July 2016 a possible roof leak was reported to the council and after works were carried out the lessees were invoiced in 2018 for costs divided between them as part of their annual service charge.

Section 20 of the 1985 Act was triggered given the cost involved but Ms Danvers-Russell said she did not receive the requisite consultation notice because Lambeth sent it to the house rather than to her correspondence address in Birmingham, of which the council was aware.

In 2021 she applied to the FTT for a determination that her contribution should be limited to the statutory cap of £250. The FTT agreed given Lambeth’s failure to comply with section 20.

Lambeth then applied to the FTT under section 20ZA of the Act, for dispensation from the consultation requirements, which the FTT refused.

The council argued it had served the section 20 notice at the property - and that was sufficient service even though it was aware Ms Danvers-Russell did not live there - because it was implementing new automated processes which were unable to use any address for correspondence other than the property itself.

The FTT had decided that Lambeth “thereby admitted that they knowingly and deliberately implemented a system whereby correspondence would be sent to the applicant at an address where she would not receive it. By no possible definition may this be regarded as ‘giving notice’.”

Judge McGrath said: “I would observe that I consider the council has adopted a disproportionately heavy-handed approach to this case. The dispute relates to works that cost a total of £7,175.91 and the proportion payable by the only active respondent to the dispensation application is £1,545.46. But notwithstanding this, there have been two FTT determinations and a full day’s hearing in the Upper Tribunal.”

She noted: “In this case the council had clearly failed in its statutory duty to consult the leaseholders not only because it failed to serve the notice at the correct address but also because on the council’s own case the notice was served after the works had been completed and an invoice issued.”

The FTT said prejudice was caused to Mrs Danvers-Russell by her inability to budget for the costs since she had not been told what these were.

Ms Danvers-Russell though stated: “Although  the [FTT] decision referred to me being unable to budget for the cost … I did not put great importance on this so I do not agree with this point in the decision.”

She was not given a copy of the notice until January 2019, nearly two years after the works had been carried out and after repeated requests and it was ”indisputable that there was a failure to provide the leaseholders with adequate information in advance of the costs being incurred as the section 20 notice was not served on them before the works were begun”, the judge said.

Judge McGrath added: “There was a wholesale failure to comply with the section 20 process. The requisite notices were either not served at all or not served until after the works had been completed. The lessees were not informed that the costs had been incurred until about 18 months after they had been demanded by the contractor.”

She said though that while Ms Danvers-Russell was understandably aggrieved, “there is no evidence of actual prejudice.

“The prejudice identified as a consequence of being unable to budget is disregarded and what is left is in my view insufficient,” she concluded.

Mark Smulian