[2024] UKUT 0135 (LC)

The FTT was required to determine applications by Mr Lehner and by the leaseholders of another flat in the development, Mr Pechev and Mrs Pecheva. It determined that the Pechevs were liable to pay £1,562.85 and that Mr Lehner was liable to pay £1,244.85 towards the cost of the work recommended by LSMC’s building safety consultant, Efectis. Mr Lehner was partially successful in his application, in that he was found not to be liable to contribute an additional sum as an administration charge and obtained an order under section 20C, Landlord and Tenant Act 1985 providing protection against any service charge liability relating to the costs of the proceedings. Both Mr Lehner and the Pechevs applied for permission to appeal, but only Mr Lehner complied with conditions set by the Tribunal and only he became entitled to pursue this appeal against the FTT’s decision.

The FTT recorded in its decision that both when giving procedural directions and at the hearing it had suggested to Mr Lehner and the Pechevs that, because of the complexity of the 2022 Act, it may be preferable for them not to rely on its provisions but effectively to reserve their position until another occasion. It was said that adopting that approach would not prejudice their right to rely on the leaseholder protections at a later stage. We do not consider that to have been correct advice, and we do not see how it would have been open to Mr Lehner to rely on those protections at a later date to defeat a claim for service charges which the FTT had already decided he was liable to pay (we express no view on the effect of a determination of liability under section 27A, Landlord and Tenant Act 1987 on a subsequent claim for a remediation contribution order under section 124, 2022 Act).

The FTT was quite right to warn of the complexity of the 2022 Act and prudent to suggest that the leaseholders seek legal advice, but such advice is not always available at proportionate expense. It is for the FTT to determine in every case whether the leaseholder protections apply, and the burden on it is particularly heavy where one or both of the parties is unrepresented.

The FTT identified seven issues, only the last of which concerned the impact of the 2022 Act. In addressing one of the earlier issues it quoted what it referred to as “the best description of the works”, taken from an email from the managing agents of 14 February 2020. According to that description the works involved:

“(i)

The removal of the cladding and insulation, replacing the insulation with material that meets current standards. It seems that there was no need to replace the cladding which was reinstated after the insulation had been upgraded.

(ii)

The inspection of the current cavity barrier to establish if any are in place and install a safety barrier (if required) between each dwelling. It seems that it was necessary to install these safety barriers.”

Although the FTT did not explain what it meant by a “cavity barrier” or a “safety barrier”, we understand those terms to refer to the same building component, namely an intumescent strip installed in the gap between the cladding system and the concrete face of the building which is either a ‘closed state’ cavity barrier, which forms a tight seal between cavities within the cladding system, or an ‘open state’ barrier which allows ventilation and drainage but is designed to expand on exposure to heat and thereby to seal that gap and prevent the passage of fire between floors and apartments.

Having decided that the leaseholders were liable under the terms of their leases to contribute towards the cost of the work, and that LSMC had complied with its obligation to consult on the works, the FTT arrived finally at the issue with which this appeal is concerned. It recorded the first submission of counsel for LSMC as being that the protections in paragraphs 3, 4 and 8 of Schedule 8 apply only to "qualifying leases". The leaseholders were said to have adduced no evidence that their leases were qualifying leases.It was also asserted that neither LSMC nor Damgate was a developer, nor were they associated with the developer (Wimpey) on the relevant date of 14 February 2022. It is not clear to us whether there was any evidence about these matters, or whether they simply asserted by counsel (but in at least one respect they are inconsistent with the landlord’s certificate served by LSMC just before the hearing of the appeal).

At paragraph 94 of its decision the FTT addressed the contribution condition in paragraph 3 of Schedule 8, as to which it said this:

“A landlord meets a “contribution condition” when the landlord’s net worth exceeds £2 million in respect of each of the buildings of which it is landlord. The ground rents of Sanctuary Street are £150 per annum. The Tribunal therefore accepts that it is highly unlikely that the Respondent [LSMC] meets the criteria of £2 million per year.”

The FTT did not refer to paragraph 14(2) of Schedule 8 or to the potential significance of the fact that no landlord’s certificate complying with regulation 6 of the Leaseholders Protections Regulations had been served.

The FTT next quoted paragraph 8 of Schedule 8 and noted that cladding remediation involved the removal or replacement of part of cladding system which forms the outer wall of an external wall system, and which is unsafe. At paragraph [97] it recorded and agreed with LSMC’s submission that neither of these requirements was satisfied, as follows:

“(i)

The fire remedial works did not involve the “removal or replacement” of any part of a cladding system. The works rather involved the replacement of the insulation and the addition of a cavity barrier. The cladding system itself was neither removed nor replaced. We accept this argument.

(ii)

The cladding system was not itself unsafe. The Efectis Report rather identified the lack of cavity barriers behind the aluminium cladding system as unsafe. This did not require any removal or replacement of part of the cladding system and was therefore not “cladding remediation” for the purposes of this paragraph. Again, we accept this argument.”

Finally, in paragraph [98] the FTT said that it agreed with LSMC that none of the Schedule 8 protections applied and added, for good measure:

“Neither have the Applicants established that their leases are "qualifying leases" for the purposes of paragraphs 3, 4 and 8.”

In making that observation, the FTT did not refer to paragraph 13 of Schedule 8 or to the potential significance of the fact that no landlord’s certificate had been served.