Natasha Dzameh, a real estate barrister, was instructed by Lucy Mills at Gregg Latchams Limited. She was recently successful in a rolled up hearing of her client’s application for permission to appeal and the appeal before His Honour Judge Denyer QC.
Natasha was instructed to represent a non-resident tenant (“the Non-Resident Tenant”) of the landlord management company (“the Management Company”) who was also a director of said company with several other individuals. The Management Company was the freehold owner of a property which was comprised of several flats (“the Property”). The Non-Resident Tenant had a long lease in respect of one of the flats as did each of the other directors. He had his own sub-tenants but the headlease required him to pay 17% of the Main Building Expenditure and 19% of the Internal Building Expenditure. A directors’ meeting occurred (“the Meeting”) at which the prospect of works to the Property was discussed. Following the Meeting the Non-Resident Tenant received an invoice for his share of works to the front and rear of the Property. He contended that not all of these works had been discussed and agreed upon at the Meeting. In any event as he had not received written notice of the works he argued his liability was limited to £250 in accordance with section 20(3) of the Landlord and Tenant Act 1985 and the Service Charges (Consultation Requirements) (England) Regulations 2003 (“the 2003 Regulations”).
The Management Company instructed debt collectors and sought to pursue the Non-Resident Tenant for the full amount invoiced. Instead of applying to the First-tier Tribunal (Property Chamber) for a determination as to whether the service charge was payable, the Management Company issued proceedings in the County Court at Bristol to recover the remaining amount of the invoiced sum as a debt.
The principal concerns at first instance were whether the relevant works had been discussed at the Meeting and whether the Management Company had complied with the consultation process detailed in Part 2 of Schedule 4 of the 2003 Regulations. The judge at first instance determined that the works had been discussed at the Meeting and that the Management Company had probably sent minutes of the Meeting to the Non-Resident Tenant. The judge also considered that there was no requirement for the written notice to be in any particular form and so held the Non-Resident Tenant liable for the full sum invoiced along with the Management Company’s costs.
Gregg Latchams Limited applied for permission to appeal on paper but this was refused. Natasha was instructed to represent the Non-Resident tenant at the oral hearing on permission to appeal with the appeal to follow. The application for permission to appeal and the appeal centered on the following points:
- The learned judge committed an error of fact in his finding that the Appellant was sent a copy of the draft minutes of the Meeting;
- The learned judge committed an error of law in his interpretation of the 2003 Regulations; and
- Serious procedural irregularity.
The Respondent did not cross-appeal yet sought to take issue with the idea that it should comply with the 2003 Regulations. Nonetheless it advanced a contradictory position by also asserting that the judge at first instance could not be challenged. Further, in the hearing, it questioned whether the Non-Resident Tenant was a tenant of the Management Company given he was also a director. It sought to maintain the position that the Non-Resident Tenant had always known about the works and so should pay the sum invoiced.
Natasha submitted that the trial judge’s finding of fact was inconsistent with the witness evidence of both parties and he should have arrived at a determination that no written notice was sent. Alternatively, if it were the case that written notice was sent, said notice did not comply with Part 2 of Schedule 4 of the 2003 Regulations and the judge at first instance had been incorrect to say there was no requirement for the written notice to be in any particular form. In either circumstance the Non-Resident Tenant’s liability would be limited to £250 in accordance with Regulation 6 of the 2003 Regulations and section 20 of the Landlord and Tenant Act 1985.
As to whether the Non-Resident Tenant was in fact a tenant of the Management Company, Natasha relied on the case of Leaseholders of Foundling Court and O’Donnell Court v Mayor and Burgess of the London Borough of Camden and others [2016] UKUT 366 (LC) which confirms that an intermediate landlord is the tenant of the superior landlord for the purpose of the 2003 Regulations.
Natasha also argued that it was irrelevant whether the Non-Resident Tenant had suffered any prejudice (Ashleigh Court Right to Manage Company Limited v De-Nuccio and others [2015] UKUT 258 (LC)) given this was not a case involving an application for dispensation with the consultation requirements. The focus of the case was whether the consultation requirements had been complied with and the court had no jurisdiction to dispense with those requirements.
HHJ Denyer QC noted it was clear that section 20 of the Landlord and Tenant Act 1985 must be complied with. He referred to the fact that the 2003 Regulations made stipulations as to the form and content of the notice. HHJ Denyer QC accepted that the trial judge’s finding of fact was unsustainable. The minutes of the Meeting were not sent to the Non-Resident Tenant thus no written notice was sent and the consultation requirements of the 2003 Regulations had not been complied with. This meant that the Non-Resident Tenant’s liability was limited to £250.
The application for permission to appeal was successful and so was the appeal. Natasha also secured an order under section 20C of the Landlord and Tenant Act 1985 to prevent the Management Company from attempting to recover costs as part of the service charge.
This case reminds landlords of the importance of complying with the Landlord and Tenant Act 1985, the 2003 Regulations and dealing with their claim in the appropriate forum. Failure to do so can result in limitation of the tenant’s liability such that the landlord may be out of pocket by a substantial sum, particularly if the landlord does not seek a dispensation from the appropriate tribunal and instead commences proceedings in the County Court.
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