This section of our Case Law Library looks at cases related to the application of:
- Section 20 of the Landlord and Tenant Act 1985 which states that Landlord must consult before undertaking Qualifying Works or entering into Qualifying Long Term Agreements
- and, the Service Charges (Consultation requirements) (England) Regulations 2003 which sets out in more detail how and when a Landlord is required to consult service charge payers.
Definition of ‘Qualifying Works’:
Decision by the Court of Appeal that the Section 20 consultation threshold of £250 applies only to an identifiable single set of works (“qualifying works”). An early Judgement by the High Court in the same case had determined that the £250 threshold applied to the aggregated cost of all works and services supplied within the relevant Service Charge period. The Judgement allows provides guidance on how to assess whether costs were incurred through a single set of works or through multiple sets of works.
Definition of a ‘Long Term Qualifying Agreement’ (QLTA):
Paddington Walk Management Ltd v The Governors of the Peabody Trust  L&TR 6
County Court decision that an agreement initially set for a period of 12 months or less, but containing wording which permitted the contract to ‘roll over’ to further terms if not terminated, was not a QLTA and the requirement to consult did not apply. Although this decision was made by the County Court, and does not therefore set a binding legal precedent, it is often cited as a persuasive legal authority on the issue of defining QLTAs.
In this case the Upper Tribunal decided that a contract with no stated end date was a QLTA. The existence of a clause which allowed, subject to notice, for the agreement to be terminated was not seen as relevant to the issue of whether the term was for more or less than 12 months.
Case where the High Court decided that the statutory definition of a QLTA contained three elements. An agreement which contains all three elements, and does not fall within the exclusions in the 2003 regulations, is a QLTA and the requirement to consult applies.
Consultation for Qualifying Long Term Agreements:
This case states that the requirement for a landlord to consult on a long term agreement to provide goods and services to which a Leaseholder will be expected to contribute, does not apply if the contract is let before any Leases are granted for a building. This case has significance for new developments, where purchasers of Leasehold properties could find themselves paying for the cost of contracts let for a very long duration (possibly decades) without any possibility of having a say in how, and to whom, those contracts were let.
Decision by the Lands Tribunal in respect of the correct consultation procedure when a Qualifying Long Term Agreement is let by Public Notice in the Official Journal of the European Union (OJEU), with contractors bidding for participation in a Framework Agreement with works then subsequently procured through ‘call-off’ contracts with one or more participants in the initial Framework contract. The Land Tribunal decided that in this situation the initial Framework Agreement was a Qualifying Long Term Agreement for the purposes of Section 20 so long as the the terms of the call-off contract are not substantially different to those of the Framework Agreement – which the Tribunal reasoned would mean that for the purposes of Section 20 in effect the costs were in fact incurred under the the terms of the Framework Agreement, even though the liability for payment to contractors only arose under the call-off contract. The Judgement does not go so far as to explicitly state whether consultation must be undertaken once only in respect of the Framework and call off contract together, or whether two sets of consultation must be undertaken, or whether consultation is only required in respect of the Framework Agreement and not the call-off contract. However, we note at paragraph 74 the Tribunal concludes that the “Framework Agreement and the specific contract cannot be regarded in isolation from each other“.
Provision of Information as part of the Section 20 consultation process:
This case deals with Section 20 and Section 20B. The Lands Tribunal decided that estimates sent out with a Section 20 notice must be broken down into individual buildings if more than one building is involved in a programme of work.
Decision by the Upper Tribunal that when consulting upon a qualifying long term agreement all that a landlord is required to do is to provide an estimate of the costs under the agreement, or alternatively the current unit cost or hourly or daily rate, within 21 days of the information becoming available. Failure to make such information available at the Notice of Proposal stage is therefore not a breach of the consultation requirements in circumstances where the information is not available to the landlord.
In this decision the Land Tribunal decided that the question of whether a description of proposed works was sufficiently detailed or accurate enough for the purposes of Section 20 depends on the facts of each individual case.
Decision by the Lands Tribunal that the Local Authority landlord has not breached the consultation requirements when the final bill for major works was 75% greater than the amount estimated when the section 20 notices were issued because the works carried out were those described in ‘general terms’ within the notice and because the quote from the builder contained a provisional sum which accounted for part of the increase in costs.
Service of Section 20 notices:
The Lands Tribunal found that Section 7 of the Interpretation Act 1978 applies to the service of Section 20 notices. Under Section 7, the Tribunal found that a notice could only be deemed to have been “properly addressed” if sent to the Leaseholder’s last known place of abode or business, or a contractually agreed address for the service of such notices. The Tribunal also thought it relevant to consider whether the manner in which the Section 20 was served in this case complied with the requirements of the Lease.
The Upper Tribunal decided that although there is no statutory time limit on the period between the end of the Section 20 consultation period and the commencement of the relevant works, this should be a matter of months rather than years. In this case it was decided that the 2 year gap between the end of the Section 20 consultation period was too long and that the consultation requirements had not been met as a consequence.
Case where the Upper Tribunal found that a Landlord had not breached the consultation requirements by failing to include an end date for the consultation period because they had made it clear what that date would be in another way; the Tribunal decided that the Landlord had met the requirements of Section 20 by stating that the consultation period ended 35 days from the date of the notice.
Observations made during the Section 20 process:
Decision by the Upper Tribunal that if a leaseholders fails to make an observation during the consultation period a landlord is entitled to conclude that there are no serious objections to the proposed works.
For the purposes of determining the date when the 30 day consultation period ends, the Upper Tribunal decided that the date of the notice was not the date it was printed and not the date it was posted, but rather the date upon which (depending on the means of delivery) it can expected to be delivered to the person being consulted.
Decision by the Upper Tribunal that in order for correspondence to be considered an ‘observation’ for the purposes of section 20 it must relate to the proposed works. The failure to reply to correspondence which is not relevant to the proposes works, or summarise that letter and a landlord’s response, does not therefore constitute a breach of the consultation requirements.
Right to Inspect Estimates
Decision by the Upper Tribunal that the provision of access to inspect the estimates between 9am and 12 noon on weekdays, and only with 48 hours notices, failed to meet the consultation requirements and consequently the amount recoverable by the landlord from each lessee was limited to £250 pending a dispensation of the consultation requirements.
Dispensation of the Consultation Requirements:
Definitive case law on the rules regarding an Application by a Landlord for Dispensation of the Section 20 consultation requirements. This case also provides definitive guidance to Leaseholders on what they must do in order to have their Major Works Service Charge reduced on the basis that they were not consulted properly.