[2024] UKUT 193 (LC)

The Barleymow Estate in East London used to be an industrial area belonging to the Barley Mow Brewing Company; in the early 1960s it was acquired by the London County Council and redeveloped as social housing. Three blocks were built, of which one has since been demolished; the respondents hold long leases in the two remaining buildings, Malting House and Brewster House. Their leases were granted under the right to buy scheme at various dates from 1989 to 2005.

The blocks were built using the Large Panel System (“LPS”), a construction technique widely used in the 1960s whereby mass produced concrete slabs were bolted together to form the walls and floors of the building. The peril of that system was that the walls bore the weight of the building; when a piped gas explosion destroyed external walls in the Ronan Point building in 1968 the floors collapsed too, and four people were killed and 17 injured.

The Ronan Point Inquiry recommended work to safeguard buildings constructed with the LPS from the risk of collapse in case of abnormal loading (such as a gas explosion); Government circulars 62/68 and 71/68 set standards for such work, and the requisite work was carried out on the Barleymow Estate in the late 1960s.

The Estate was transferred to the appellant in 1986.

Additional work was carried out to strengthen the building, between 1990 and 1994, following concerns raised in a report by the London Dockland Development Corporation prior to the construction of the new Limehouse Link tunnel. Again the work was done in order to make the building safe in case of abnormal loading; it was still considered that LPS was safe under normal loading (that is, the weight of its occupants and contents).

In 2017 after a fire in Shepherds Bush the Department for Communities and Local Government wrote to local authorities to explain further safety concerns, and in January 2018 a report commissioned by the appellant from Wilde Carter Clack concluded that the work done in the 1960s was satisfactory and that there was no problem with normal loading but recommended further review; and that further review, in 2018, concluded for the first time that the reinforcement of the building was insufficient to cope with normal loading.

More investigation was carried out and in March 2020 the appellant decided to carry out:

The total cost for the two blocks was estimated at £8,066,944.38 (half to each block). The appellant wishes to recover part of the cost through the service charge – only part, because some of the flats in the buildings are let to periodic tenants and the appellant has apportioned the cost accordingly. It estimated initially that for the long-leaseholders the cost would be £60,971 for a one-bedroom apartment, for a two-bedroomed flat £73,066, and for a three-bedroomed flat £82,136, and we are told that higher sums are now anticipated. The appellant carried out extensive consultation with the leaseholders, beyond the statutory requirements. Contractual arrangements were put in place to carry out the work and, if I have understood correctly, they have been commenced.

The respondents made an application to the FTT for it to determine pursuant to section 27A of the Landlord and Tenant Act 1985 whether those service charges were payable under the terms of the lease, and whether the costs were or were going to be reasonably incurred under section 19 of the 1985 Act. As to whether the costs were reasonably incurred the respondents said not only that the cost was excessive but also that the work proposed will not adequately address the inherent structural defects in the buildings.

By way of postscript to what I have said about the factual background, I should acknowledge that what I have said here does not reflect the detail of the account given by Mr Bates KC, nor the diligence of the archival research carried out by the appellant in order to establish what has happened to these two blocks over the last 60 years. I have kept my summary brief because the point sought to be made by Mr Bates KC in giving such a detailed account is not in dispute: all the work required to be done in the aftermath of the Ronan Point disaster was done, and until 2018 no-one had the faintest idea that these buildings might be unsafe under normal loads.

In the FTT the focus was on the terms of the leases and whether they permitted the appellant to charge the respondents for the work to be done as a result of the July 2018 investigation. The focus of the appeal is the same; the FTT decided the charges were not payable, and did not make any decision about the challenge under section 19 of the 1985 Act on the usual “in case we are wrong” basis, because it regarded that challenge as premature. If the appeal were to succeed the respondents would still be entitled to challenge the service charge on the basis that the costs were not reasonably incurred.