Nicholas Kissen, Senior Legal Advisor at LEASE: Warning To Freeholders: Consult Carefully Over s20
Nicholas Kissen was in private practice as a solicitor for nearly twenty years and was a partner in a long-established firm in Ealing before joining the Leasehold Advisory Service in April 2002. He is a Senior Legal Adviser with joint responsibility for professional training and development. As such he has considerable experience of public presentations on all aspects of residential leasehold law.
Leasehold Life is pleased to welcome Nicholas as a new guest contributor commenting on the judgement by the Court of Appeal in Daejan v Benson.
On 28th January 2011 the Court of Appeal handed down the judgment in “Daejan Investments Limited v.Benson and Others”. This provides a powerful warning to landlords and managing agents to follow Section 20 consultation to the letter and not to expect the LVT to grant dispensation where significant prejudice to the leaseholders has been caused through non-compliance.
By Section 20ZA(1) of the Landlord and Tenant Act 1985 the landlord may apply to the Leasehold Valuation Tribunal (“LVT”) for an order to waive compliance with all or part of the consultation requirements. The landlord has to show that it is reasonable in the circumstances to grant dispensation.
Of particular importance is the guidance provided by the Court on the handling of dispensation applications-
- The financial consequences of the grant or refusal of dispensation are irrelevant;
- Significant prejudice to the leaseholders is a consideration of primary importance;
- Compliance with the requirements is vital and curtailing the consultation amounts to significant prejudice except where the non-compliance is minor or technical;
- It is not for the LVT to speculate as to what might have been the result had consultation been followed properly;
- The landlord’s offer to apply a discount to the costs claimed is not a ground for granting dispensation.
Those involved with leaseholder-owned companies embarking on major works should note the court’s view that a more flexible approach to sticking to the consultation requirements may be justified. This is because of the greater chance of informal consultation between members. The court made no mention of the situation where not all leaseholders are members of the freehold-owning company.
The court also indicated situations that are the likeliest candidates
- emergency works
- where there is only one possible contractor
- A minor breach causing no prejudice.
Despite Daejan having to pick up the tab for £270,000 worth of service charge works as they were barred from recovering any more than £250 from each of the leaseholders in the building, they have now been given leave to appeal to the Supreme Court.