On appeal from: [2011] EWCA Civ 38

Provisions in the Landlord and Tenant Act 1985 and the Service Charges (Consultation Requirements) (England) Regulations 2003 (SI 2003/1987) impose requirements on landlords that must be complied with or the landlord cannot recover more than £250 from each tenant in respect of works for which the service charge would otherwise be greater. The Leasehold Valuation Tribunal has the authority to dispense with those requirements.

The appellant landlord sent the respondent members of a residents’ association a notice of intention to carry out work and provided estimates, thereby complying with the first two stages of the requirements. The appellant failed to comply with the third stage by not supplying the respondents with a summary of observations on the estimates, its responses to them and notice of where they would be available for inspection. The Tribunal (and subsequently the Upper Tribunal and Court of Appeal) regarded this failure as a serious breach of the requirements and refused to grant the appellant dispensation.

The Supreme Court, by a majority of three to two, allowed the appeal, granting the appellant dispensation from the requirements on terms that the respondents’ liability to pay for the work is reduced by £50,000, and that the appellant paid the reasonable costs of the respondents in relation to the Tribunal proceedings.

The correct question in this case was whether the respondents would suffer any relevant prejudice if dispensation was granted, and it was held to be highly questionable that any prejudice would have been suffered. The only specific prejudice was a matter of speculation, and that could not be higher than the £50,000 reduction effectively offered by the appellant.

The minority considered that the gravity of the non-compliance should be weighed in determining whether to grant dispensation without having first considering the amount of prejudice they may cause or have caused. The Tribunal’s decision to reject the £50,000 proposal was not based on an error of law that would entitle the Supreme Court to interfere with it.

For judgment, please download: [2013] UKSC 14
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