In Reedbase Limited and another v Fattal and others [2018] EWCA Civ 840 the Court of Appeal was asked to decide if a statutory consultation should have been repeated when a landlord changed a specification of works to residential leasehold property.
The Court also considered whether the landlord had failed to make good damage caused by repairs to a roof terrace.
Statutory background
The Landlord and Tenant Act 1985 imposes restrictions on landlords of residential property who intend to carry out "qualifying works". At the first stage, the landlord must consult the tenants on the intention to carry out the works. A second consultation is required on the estimates obtained by the landlord.
Failure to consult may result in the landlord being able to recover only £250 for the works from each tenant.
Facts
The case involved an apartment block near Regent's Park, London.
Repairs were required to an asphalt roof under a terrace adjoining two penthouse flats. During the course of the works, the landlord decided to make some changes so that the new (and more expensive) tiles were fixed by a pedestal system, instead of being bonded on to the asphalt. This was necessary in order to avoid invalidating the guarantee relating to the roof sealant.
The additional cost of the new tiles and fixing system was approximately £31,000, representing 6% of the full costs of the works.
The tenants of the two penthouse flats (but no other tenants) complained that the estimates originally obtained by the landlord did not refer to the pedestal system and that the statutory consultation was therefore defective.
The two tenants also complained that the landlord had failed to satisfy its obligation to make good following the repairs to the roof.
The Court of Appeal's decision
The consultation issue
Giving judgment, Lady Justice Arden noted that there was no statutory judgment as to when the second stage consultation should be repeated. She held that the test was whether, in all the circumstances, the two complainant tenants had been given sufficient information by the first set of estimates. It was also necessary to consider the protection to be given to the tenants by the consultation procedure. Would it be materially assisted by obtaining fresh estimates?
In the circumstances of the case, fresh estimates would not assist because:
- The tenants knew about the change in the works and approved it. This was not a case of the landlord trying to ambush the tenants
- The change in cost was relatively small compared with the full cost of the works
- It was unrealistic to assume that contractors who had estimated for the full works but not obtained the contract would be likely to tender or hasten to tender for a small part of it. There was no evidence that a fresh tender would have led to a cost saving
- The possible delay caused by a retendering process might have prejudiced other tenants
- Regardless of the consultation procedure, the tenants could rely on other statutory provisions relating to unreasonable and unreasonably incurred service charge costs
An estoppel argument advanced by the landlord — based on the tenant's prior approval of the additional works — was not considered by the court.
The landlord's obligation to make good
The landlord was required to make good any damage caused to the demised premises when carrying out repairs.
The tenants' argument that the landlord should have replaced like with like was rejected by the Court. The landlord's obligation was, so far as possible, to restore the property to its pre-existing condition.
In this case the landlord could not reasonably have been expected to lay the same type of tiles on the sealed roof surface, or to replace the tiles in their pre-existing damaged condition.
The landlord had in fact improved the tenant's property by installing new and apparently superior tiles. Its actions did not amount to breach of covenant.
Comment
This is a helpful decision in that it offers guidance to landlords on when the statutory consultation procedure for "qualifying works" should be repeated.
It is also a useful reminder of the purpose of the consultation procedure, as observed by Lord Neuberger in Daejan Investments Limited v Benson and others [2013] UKSC 14. In short, the consultation requirements are a means to an end, not an end in themselves. The objective is the protection of tenants in relation to service charges, so that they are not required to pay for unnecessary services, or services provided to a defective standard, or to pay more than they should for services which are necessary and are provided to an acceptable standard.
The article first appeared in our Real Estate Bulletin - September 2018.
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