[2024] UKUT 253 (LC)

Phoenix Place comprises 348 units of purpose-built accommodation in two blocks, completed in 2018. There are two types of unit: 74 self-contained studios with a bedroom, bathroom and kitchenette, and 274 ensuite bedrooms grouped into clusters with shared kitchen and common room facilities. All the units (studios and cluster units) are held on long leases as income-producing investments, and let out to students by agents; many of the long-leaseholders live abroad. The leases contain unsurprising covenants to keep the demised premises in good repair and condition, and to pay a service charge. The issues in this appeal are such that I need not go into any detail about what exactly the leaseholders were required to do or to pay.

The first respondent, Better Intelligent Management Limited, acquired the freehold of Phoenix Place in April 2020; the second respondent, Phoenix Place (Liverpool) Management Limited, has been responsible for day-to-day management of the property since March 2019.

In January 2022 the respondents issued interim service charge invoices to all the leaseholders to cover the cost of replacing the windows in Phoenix House, which they claimed was needed as a matter of urgency. The sums demanded ranged from £7,459 to £21,717 depending on the number of windows in the relevant unit. The appellants did not pay those invoices. On 1 June 2022 the respondents served notices on the leaseholders asserting that they were in breach of the covenants in their leases and requiring them to replace the windows in their units within 56 days. On 16 June the respondents wrote to the leaseholders offering to replace their windows as part of a large-scale project, with associated costs savings; they said that the offer could be accepted only if the leaseholder admitted to being in breach of covenant as stated in the letter of 1 June 2022. On 20 June 2022 the respondents served consultation notices under section 20 of the Landlord and Tenant Act 1985 in relation to the replacement of the windows.

In mid-July the first appellant, Zaid Alothman Holdings Limited (leaseholder of 30 units in Phoenix Place) instructed Mishcon de Reya, and in the weeks that followed the rest of the appellants joined in that instruction and entered into a retainer agreement with the firm. On 22 July Mishcon de Reya wrote to the respondents explaining that they were instructed, acknowledging the communications sent by the respondents and asserting that they were acting in breach of the leases, unreasonably and in bad faith. No response was received.

On 28 July 2022 the respondents’ solicitors wrote to the leaseholders asserting that as they had not carried out the work as required within 56 days of 1 June, the respondents were entitled to enter the unit, execute the works and recover the cost as a debt; and furthermore that for the leaseholder to attempt repairs would now be a trespass that could be restrained by injunction.

Mishcon de Reya wrote to the respondents’ solicitors on 29 July seeking confirmation that no injunction would be sought, and “that no attempt will be made to forfeit any lease on the basis of non-payment of service charge or breach of repair obligations without (a) service a s.146 notice (having first sought a determination from the FTT (where appropriate)); and (b) other than by proceedings”. On 3 August 2022 the respondents’ solicitors replied, refusing to give the confirmations requested. Mishcon de Reya wrote to the respondents’ solicitors providing a list of those whom they represented and suggesting a meeting between the respondents’ surveyors and the appellants’ surveying team to try to agree what work was needed. No response was received.

On 3 November 2022 Mishcon de Reya wrote to the respondents’ solicitors again, chasing for a response, and repeating the requests for confirmation contained in the letter of 29 July 2022. No response was received.

Meanwhile on 16 August 2022 the respondents had made two joint applications to the First-tier Tribunal, each against all 348 leaseholders. One was for a determination under section 168 of the Commonhold and Leasehold Reform Act 2002 that the leaseholders were in breach of covenant, because they had failed to repair their windows. The second was for a dispensation from consultation requirements, under section 20ZA of the 1985 Act in respect of the replacement of all the windows, on the basis that it was urgently required to be done during the summer vacation while the students were away. The appellants knew nothing about those two applications until they were served on all the leaseholders on 4 November 2022.