[2024] UKUT 56 (LC)

The property known as 2, The Waterloo, Cirencester GL7 2PZ (“the property”) is a mixed-use block comprising four self-contained commercial units on the ground floor and six residential units on the first and second floors. The appellant purchased the freehold of the property from a Mr Simche Teitelbaum on 22 December 2020 (that was the date of the transfer, in which payment of the purchase price is acknowledged). The appellant became registered proprietor of the property, which is registered under two title numbers GR272258 and GR187110, on 7 January 2022.

The respondents hold three long leases of the residential parts of the property; the first respondent holds a 125-year lease of two flats, granted in 2005, and the second respondent holds two 125-year leases granted in 2006, each of two flats. The leases contain standard provisions for the payment of a service charge calculated by reference to the landlord’s expenditure on the property; one lease requires the lessee to pay 50% of the service charge while the other two leases each require the lessee to pay 12.5%. So the respondents together pay 75% of the landlord’s costs in maintaining and repairing (etc) the property, leaving 25% of the expenditure to be met by the landlord itself or, if it lets the commercial units, by its commercial tenants. When the appellant bought the property the commercial units were not let and it was given vacant possession of those units.

Shortly after its purchase the appellant instructed David Partridge Limited, chartered consulting engineers, to inspect it and report on its condition. Mr Partridge later made a witness statement in the FTT proceedings and explained what he had found when he inspected in April 2021: an outward bulge on the north elevation, a number of cracks through mortar joints and stones, and clear indications that the movement in the property was likely to be ongoing so that it was in need of “urgent restraint”. He took the view that movement had commenced many years previously, probably initiated by the removal of some internal walls. He advised the appellant to install structural steelwork frames.

The appellant also took advice from RPA Consultancy Ltd, whose director Mr Payne (who is also a director of the appellant) inspected the property and produced a report in April 2021 which advised that the property was in extremely poor condition; that asbestos was present and needed removal; and that “after decades of neglect the building was in a dangerously poor state of repair and there are several issues that must be rectified immediately”.

Unsurprisingly the appellant set to work to stabilise the structure of the property and to carry out a range of works identified as necessary in the reports of Mr Partridge and Mr Payne; in the course of that work (as so often happens) further problems were discovered and remedied. Work was substantially completed in September 2021 although some asbestos removal remained to be done; it was finished in 2023 before the FTT hearing in May.

The appellant did not comply with the consultation requirements but it did not entirely neglect them. On 7 May 2021, after work had started, the appellant’s agents sent out a notice of intention to do the works. It received observations from the respondents to the effect that the work was not necessary. Relying on the reports from Mr Partridge and Mr Payne it decided to go ahead. It gave the respondents notice about estimates in September 2021 (by which time the works were finished, or nearly so). They did not comment.