[2023] UKUT 231 (LC)

The FTT having found against the appellant in respect of charges made before 2016 nevertheless made findings about those charges in case it was found to have been wrong about the first issue.

The first is a sum stated by the FTT to be £15,236.50 and described as having been demanded in 2014 or 2015.

What can be seen from the appellant’s service charge account is that he was charged £15,440.32 on 12 May 2014. It was not in dispute in the appeal that this was the sum in issue on this second point decided by the FTT, and that it was a charge made in respect of the work on the driveway and the retaining wall. The charge, if demanded on the date it was debited to the service charge account, falls outside the period said by the FTT to have been in issue in the present proceedings (see paragraph 8 above), but the FTT does not seem to have been aware of that, perhaps because of its uncertainty as to when the charge was demanded, and regarded this sum as being within the scope of the present proceedings because it was based on a point that had not been raised in the 2016 proceedings.

The appellant’s challenge to this sum was two-fold. The first point he made was that it was a charge for the work on the drive and the retaining wall that was the subject of the 2013 proceedings, and that it had been charged without the consultation process having been followed as required by the statute and by the FTT’s 2013 decision.

In order to set out that point properly we have to look in a little more detail at the requirements of the Service Charges (Consultation Requirements) (England) Regulations 1987. The procedure relevant to the works in question is prescribed by Part 2 of Schedule 4; paragraph 1 requires the landlord to give the leaseholders a “notice of intention” explaining what is to be done, with 30 days to respond, and paragraph 4 requires the landlord to give them a notice setting out the estimates obtained for the work, or some of them, and again for the leaseholders to have 30 days to respond. In each case the landlord is to have regard to any observations made by the leaseholders. Finally paragraph 6 requires the landlord when it enters into a contract for the works to give the leaseholders a notice as follows:

““(1)  Subject to sub-paragraph (2), where the landlord enters into a contract for the carrying out of qualifying works, he shall, within 21 days of entering into the contract, by notice in writing to each tenant and the recognised tenants' association (if any)–

(a)

state his reasons for awarding the contract or specify the place and hours at which a statement of those reasons may be inspected; and

(b)

there he received observations to which (in accordance with paragraph 5) he was required to have regard, summarise the observations and set out his response to them.

(2)

The requirements of sub-paragraph (1) do not apply where the person with whom the contract is made is a nominated person or submitted the lowest estimate.

It will be recalled that the FTT in 2013 did not give an unqualified dispensation. It truncated the time periods for the leaseholders’ responses to the landlord’s notices, allowing a 14 day period instead of 30 days. It said nothing about the final notice required by paragraph 6 of the regulations and there is no suggestion that that notice was not required.

The reason why Mr Lacy now says that the consultation process was not complied with is that he found out in September 2016 that the quotation that the respondent had accepted for the work was not one of the ones disclosed to the leaseholders. It was for a higher price than the estimates the leaseholders had seen. No notice was given in accordance with paragraph 6 above and so the leaseholders have had no explanation of the landlord’s choice. Accordingly the consultation requirements were not met and his liability is limited to £250.

The FTT does not appear to have Mr Lacys’s argument, and decided instead that the notice of intention given by the respondent was sufficient to cover the work done.

Mr Lacy’s second point was about section 21B of the 1985 Act; he argued that the demand had not been made within 18 months of the respondent having incurred the costs of the work. Instead the demand had been made before the costs were incurred. Therefore nothing was payable.

Mr Lacy has permission to appeal the FTT’s decision about the charge of £15,440.32 (as the amount now appears to be).

I begin by dismissing the appeal insofar as it relates to section 20B of the 1985 Act. The section does not prevent a charge being made before the cost is incurred.

As to the argument about consultation, which the FTT does not appear to have taken on board, there was no argument made about it in the respondent’s statement of case in the FTT. Mr McHugh was without instructions on this point, despite its having been very clearly argued in Mr Lacy’s grounds of appeal and skeleton argument, and was unable to assist the Tribunal. He could not point to anything in the bundle that might assist or that might indicate that the FTT was correct to dismiss this point.

Accordingly the appeal succeeds, and instead of the sum of £15,440.32 the appellant is liable to pay only £250 in accordance with section 20 of the 1985 Act and the regulations made thereunder.