Marshall v Northumberland & Durham Property Trust Ltd [2022] UKUT 0092 (LC)

The First-tier Tribunal (Property Chamber) granted unconditional dispensation for works to replace boilers because:

1. The works were urgent;
2. The landlord had begun to consult: it had sent out stage 1 notices of intention;
3. The leaseholder was made aware of possible works before buying his lease;
4. The FTT “was not swayed” by the leaseholder’s evidence.

The Upper Tribunal (Lands Chamber) allowed the leaseholder’s appeal however allowed on the following grounds.

The FTT placed the urgency of the works at the head of its reasoning when granting unconditional dispensation from the obligation to consult.

Prejudice to the leaseholder is not however negated by the urgency of works.

Martin Rodger QC reminded himself of the the words of HHJ Bridge in Aster Communities v Chapman [2020] UKUT 177 (LC):

“The exercise of the jurisdiction to dispense with the consultation requirements stands or falls on the issue of prejudice”.

The FTT should therefore have:

• Identified the steps taken and those omitted by the landlord and for which it required dispensation;
• Determined the consequence of those omissions, and
• Said whether it considered that any of the leaseholders had been caused prejudice by the failure of consultation.

The landlord abandoned consultation after stage 1 notices – but made no urgent application for dispensation.

Mr Marshall was not however given even the stage 1 notice, because the managing agent refused to recognise him as a leaseholder until the landlord acknowledged the assignment of the lease, even though the assignment was not conditional on any such approval.

It was true that Mr Marshall had been informed that about the works in pre-contract enquiries, but in Martin Rodger QC’s view, the information provided was irrelevant – it was insufficiently detailed and was “not in any sense a substitute for statutory consultation”.

“The failure to consult one leaseholder”, said he, “represents a second error of principle on which the appeal must succeed.”

Finally, the FTT’s assessment of the leaseholder’s evidence was flawed, because:

• It could have admitted the leaseholder’s expert evidence from a firm of heating engineers, or treat that evidence as evidence of fact as to what the engineers would have done. It did neither; and
• It considered that the engineers’ evidence was an alternative tender designed to procure the contract for the works and therefore “self-serving”. In fact, it was a review of the works after their completion.

“While the weight to be given to any evidence is a matter for the fact finding tribunal, an appellate tribunal can interfere with its conclusions if they have been arrived at based on a fundamental misunderstanding of the facts, as appears to have occurred here”, said Martin Rodger QC. 

The FTT’s decision was therefore set aside, and the application for dispensation determined afresh.

Martin Rodger QC granted dispensation on the following conditions:

• That there should be a reduction of about 15% in the amount recoverable from the leaseholders;
• That the landlord must pay the leaseholder’s costs of responding to the dispensation application, including reimbursing the Tribunal fees that he had paid.