England and Wales Court of Appeal (Civil Division) Decisions

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
Lord Justice Carnwath and Mr N J Rose
LRX/148/2008

		Royal Courts of Justice Strand, London, WC2A 2LL
		28/01/2011

Lord Justice Gross:

INTRODUCTION

1. This is an appeal, brought pursuant to s.13 of the Tribunals, Courts and Enforcement Act 2007 ("the 2007 Act"), by the Appellant ("Daejan"), against the decision of the Upper Tribunal (Lands Chamber), known as the Lands Tribunal ("LT"), dated 27^th November, 2009 ("the LT decision"). In that decision, the LT dismissed Daejan's appeals against two decisions of the Leasehold Valuation Tribunal ("LVT"), dated 11^th March and 8^th August, 2008 (respectively, the LVT's "March" and "August" decisions). Although the LT necessarily had regard to both the LVT's March and August decisions, the principal focus of the appeal before the LT – as indeed the appeal to this Court – concerned the LVT's August decision.
2. In a nutshell:

i) By its March and August decisions, the LVT held that Daejan had failed to comply with the Service Charges (Consultation Requirements) (England) Regulations 2003, SI 2003 No. 1987 ("the Consultation Regulations"), in respect of works to be done at Queens Mansions, Muswell Hill ... "the works" and "Queens Mansions").

ii) By its August decision, the LVT declined to conclude that it was reasonable to dispense with the consultation requirements in the present case and so made no order for dispensation under s.20ZA(1) of the Landlord and Tenant Act 1985 as amended ("the Act"). The consequence is that Daejan failed in its claim to recover some £270,000 from the Respondents, five long leaseholders of flats in Queens Mansions, in respect of the works. Instead, pursuant to the statutory scheme (of which more below), Daejan's recovery from the Respondents was "capped" at £250 each. In reaching this conclusion, the LVT held that the financial effects of the grant or refusal of the application for dispensation on the landlord or tenant were irrelevant and were not to be taken into account. Further, the LVT held that Daejan's failure to comply with the Consultation Regulations had caused the Respondents "substantial" or "significant" prejudice.

iii) On appeal, the LT, whose constitution on this occasion included Carnwath LJ, Senior President, upheld the decision of the LVT. The LVT had been entitled both to conclude that Daejan had committed a "serious breach" and to refuse dispensation with the consultation requirements under s.20ZA(1) of the Act.

3. Before this Court, Mr. Dowding QC for Daejan essentially contended as follows. First, the LT erred in holding that the financial effects of granting or refusing dispensation were irrelevant. Secondly, the LT was wrong to hold that the nature of the landlord was relevant; that Daejan was a corporate landlord was irrelevant and did not justify the LVT adopting a more rigorous approach to non-compliance with the Consultation Regulations. Thirdly, the LT had erred in law, alternatively, reached a conclusion no reasonable tribunal could have reached (Edwards v Bairstow [1956] AC 14), with regard to the question of whether the Respondents had suffered prejudice flowing from Daejan's failure to comply with the Consultation Regulations; it was for the Respondents to prove such prejudice; regardless of where the burden of proof lay, there was none; the only reasonable conclusion was that dispensation should have been granted.
4. The Respondents' case before us, presented by Mr. Rainey QC for the 1^st – 4^th Respondents and Mr. Fieldsend for the 5^th Respondent, was, in essence, that the decisions of the LT and LVT were correct for the reasons they had given. On a proper consideration of the statutory scheme, the financial effects of granting or refusing dispensation were irrelevant. While the nature of the landlord could be relevant, in that a distinction could be drawn between lessee-owned landlords and others, there was no separate point here in this regard and there had been no error of law on the part of the LT. As to prejudice, the LT had not erred as to the burden of proof but, in any event, there had been substantial prejudice to the Respondents, flowing from Daejan's failure to comply with the requisite consultation process. If need be, the 1^st – 4^th Respondents additionally relied on their Respondent's Notice ("the Respondent's Notice"), contending that the evidence of prejudice went beyond that found by the LT.
5. Against this background, the principal issues on the appeal to this Court can conveniently be grouped under the following headings:

i) Are the financial consequences for the landlord or tenant relevant to the grant or refusal of dispensation under s.20ZA(1) of the Act? ("Issue (I): Financial consequences").

ii) Is the nature of the landlord relevant to the grant or refusal of dispensation under s.20ZA(1) of the Act? ("Issue (II): The nature of the landlord").

iii) What is the correct approach to prejudice allegedly suffered by a tenant in consequence of the landlord's failure to comply with the Consultation Regulations? ("Issue (III): Prejudice").

I return to these Issues below and will then deal with them in turn.

THE STATUTORY SCHEME

6. It is next convenient to outline the statutory scheme, with which this appeal is concerned.
7. The background was helpfully explained by Mr. Rainey in his skeleton argument:

" One of the singular aspects of most long leases of flats is that the landlord covenants to repair and maintain the block but the tenants covenant to meet the cost through a service charge. Often, service charges extend beyond repair to cover improvements. How, when and by whom and at what cost the work is done is decided by the landlord, despite the fact that where leases are long, the tenants effectively own the block. (A 99 year term is usually thought to be worth c.99% of freehold value.) The landlord decides how to spend his tenant's money and at common law there is little control or basis for complaint by the tenants. Statutory consultation under ….[the Act]….fills this gap. Its importance must not be understated."

8. The particular position of long leaseholds merits additional emphasis. As observed by Baroness Hale of Richmond in Majorstake Ltd v Curtis [2008] UKHL 10; [2008] 1 AC 787, at [22] – [23], by the 1980s, long leaseholds had become an increasingly common form of tenure of flats. The relationship between leaseholders under such leases and the freehold owners was no longer akin to that of an ordinary landlord and tenant relationship. Long leaseholders not only faced what Baroness Hale termed "the wasting asset problem" but might also encounter poor management and high service charges.
9. Accordingly, legislative policy has sought to strengthen the position of long leaseholders by regulating service charges. How the legislature has sought to do so was summarised in Paddington Basin Developments v West End Quay [2010] EWHC 833 (Ch); [2010] 1 WLR 2735, by Lewison J, as follows:

" 26. ….there are two separate strands to the policy underlying the regulation of service charges. Parliament gave two types of protection to tenants. First, they are protected by section 19 [of the Act] from having to pay excessive and unreasonable service charges or charges for work and services that are not carried out to a reasonable standard. Second, even if service charges are reasonable in amount, reasonably incurred and are for work and services that are provided to a reasonable standard, they will not be recoverable above the statutory maximum if they relate to qualifying works or a qualifying long term agreement and the consultation process has not been complied with or dispensed with. It follows that the consultation provisions are imposed for an additional reason; namely, to ensure a degree of transparency and accountability when a landlord decides to undertake qualifying works or enter into a qualifying long term agreement…..

27. One other general point needs to be made. The relevant provisions of ….[the Act]… do not prohibit a landlord from entering into whatever contract he pleases for the carrying out of works or the supply of services. They merely prevent him from passing on the cost of the works or services to the lessees unless he has satisfied the statutory requirements about price, quality and consultation….."

10. Turning to the detail, s.18 of the Act defines "service charge" to mean:

" (1)…..an amount payable by a tenant of a [dwelling] as part of or in addition to the rent –

(a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord's costs of management, and

(b) the whole or part of which varies or may vary according to the relevant costs."

11. S.19 of the Act contains the first of the two strands of protection described by Lewison J (supra):

" 19. Limitation of service charges: reasonableness

(1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period –

(a) only to the extent that they are reasonably incurred, and

(b) where they are incurred on the provision of services or the carrying out of works, only if the services or works are of a reasonable standard;

and the amount payable shall be limited accordingly. "

12. Ss.20 and 20ZA of the Act deal with the second strand of protection spoken of by Lewison J and with which this litigation is concerned – namely, consultation requirements.

" 20. Limitation of service charges: consultation requirements

(1) Where this section applies to any qualifying works or qualifying long term agreement, the relevant contribution of tenants are limited in accordance with subsection (6) or (7) (or both) unless the consultation requirements have been either –

(a) complied with in relation to the works or agreement, or

(b) dispensed with in relation to the works or agreement by (or on appeal from) a leasehold valuation tribunal.

20ZA. Consultation requirements: supplementary

(1) Where an application is made to a leasehold valuation tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements. "

13. S.27A of the Act makes provision for applications to a leasehold valuation tribunal (inter alia) to determine the amount of a service charge which is payable; such determinations may be sought either in advance of the costs being incurred or subsequently thereto. Paragraph 6 of the Consultation Regulations, read with s.20 of the Act, provides that the limit of the amount which can be passed on by a landlord to a tenant if the consultation requirements have neither been complied with nor dispensed with is £250.
14. Pausing here, it may be noted that the terms of ss. 20 and 20ZA of the Act, differ from the predecessor statutory provisions. So, prior to amendment, s.20 of the Act had provided as follows:

" 20. Limitation of service charges: estimates and consultation

(1) Where relevant costs incurred on the carrying out of any qualifying works exceed the limit specified in subsection (3), the excess shall not be taken into account in determining the amount of a service charge unless the relevant requirements have been either –

(a) complied with, or

(b) dispensed with by the court in accordance with subsection (9);

and the amount payable shall be limited accordingly.

(9) In proceedings related to a service charge the court may, if satisfied that the landlord acted reasonably, dispense with all or any of the relevant requirements. "

It will be apparent that under these predecessor provisions, dispensation from the relevant requirements could only be granted if the landlord had acted reasonably: see too, Martin v Maryland Estates Ltd. [1999] 2 EGLR 53, at p.56, per Robert Walker LJ, as he then was. The current statutory provisions contain no such limitation; dispensation from the consultation requirements may be granted whether or not the landlord has acted reasonably.

15. Coming next to the relevant consultation requirements, these are set out in Part 2 of Schedule 4 of the Consultation Regulations. With respect, I cannot improve on the summary contained in the LT decision in this case, itself drawing on a previous LT decision in Camden LBC v The Leaseholders of 37 Flats at 30-40 Grafton Way LRX/185/2006, unreported ("Grafton"). As the LT observed (at [4]), the "layout and drafting of the regulations leave something to be desired in terms of clarity". The LT, ibid, then followed the division of the requirements into "stages" adopted in Grafton:

" Stage 1

(1) Notice of intention Notice of intention to carry out qualifying works is given to each leaseholder and any recognised tenants' association ('RTA'). The notice must describe in general terms the proposed works, or specify a place and hours where the description may be inspected. The notice must state the reasons for the works, and invite written observations, specifying where they should be sent, over what period (30 days from the notice), and the end date. Further, the notice must contain an invitation for nominations of persons from whom the manager should obtain estimates. The landlord must have regard to written observations received during the consultation period.

Stage 2

(2) Estimates The landlord must seek estimates. (There are detailed rules as to seeking estimates from nominees of the tenants or RTA).

(3) The paragraph (b) statement The landlord then issues a statement (free of charge) setting out the estimated cost from at least two of the estimates and a summary of the observations received during the stage 1 consultation period, and his responses to them. The statement is issued with a notice (see below). If any estimates have been received from the leaseholders' nominees, they must be included in the statement. (The term 'paragraph (b) statement' is used by the regulations themselves, by reference to sub-paragraph (5)(b) in which this requirement is found).

(4) Notice accompanying paragraph (b) statement The statement must be sent out with a notice….., detailing where and when all of the estimates may be inspected and inviting each leaseholder and any RTA to make written observations on any of the estimates, specifying an address where they should be sent, the consultation period (30 days from the notice) and the end date.

(5) Regard to observations The landlord must have regard to written observations received within this second 30-day consultation period.

Stage 3

(6) Notification of reasons Unless the chosen contractor is a leaseholder's or RTA nominee or submitted the lowest estimate, the landlord must give notice within 21 days of entering into the contract to each leaseholder and any RTA, stating his reasons for the selection, or specifying a place and hours for inspection of such a statement…. "

16. Matching these Stages with the relevant paragraphs of Schedule 4, Part 2 of the Consultation Regulations, Stage 1 corresponds with paras. 1 – 3; Stage 2 with paras. 4-5; and Stage 3 with paras. 6 et seq. As the LT observed, at [6]:

" The issues in the present case turn on the requirements of Stage 2: steps (3), (4) and (5) in the above sequence. They relate principally to the following paragraphs in Schedule 4 Part 2 of the Regulations: step (3) paras 4(5)(b) and 4(9); step (4) para 4(10); step (5) para. 5. "

THE NATURE OF THE HEARING BEFORE THIS COURT

17. As already noted, this appeal comes to this Court pursuant to s.13(1) of the 2007 Act, which grants a right to appeal "on any point of law arising from a decision made by the Upper Tribunal". S.14 of the 2007 Act goes on to provide as follows:

" (1) Subsection (2) applies if the relevant appellate court, in deciding an appeal under section 13, finds that the making of the decision concerned involved the making of an error on a point of law.

(2) The relevant appellate court –

(a) may (but need not) set aside the decision of the Upper Tribunal, and

(b) if it does, must either –

(i) remit the case to the Upper Tribunal or, where the decision of the Upper Tribunal was on an appeal ….from another tribunal…. , to the Upper Tribunal or that other tribunal…, or

(ii) re-make the decision. "

18. For reasons upon which it is unnecessary to elaborate (and which may be of limited duration), it is common ground that this is not a "second appeal" to which CPR 52.13 and other related provisions apply.
19. A question which is in dispute, relates to the true nature of this appeal. Daejan contends that the decision which is reviewed pursuant to CPR 52.11 is that of the LVT. Weight may be given to the views of the LT if and to the extent that this Court agrees with those views; special weight may be given to those views if and insofar as they reflect any special expertise of members of the LT – though it is also Daejan's contention that there was no relevant special expertise. Essentially, therefore, this Court is concerned with the August decision of the LVT rather than the decision of the LT.
20. By contrast, the Respondents place much greater weight on the decision of the LT, submitting that, in the light of the failed first appeal, this appeal can only succeed "if the review by the …[LT]…can be vitiated on the usual grounds…" – namely, erroneous construction of the statutory provisions in question, failing to take account of a relevant factor and so on. The Respondents further submit that, however the matter is approached, the appeal can only succeed if this Court is satisfied that the LT was wrong in law. It would seem to follow on the Respondents' approach that even if this Court was of the view that the LVT had erred in law, the appeal must be dismissed if the LT had reached a decision to which it was entitled to come.
21. In my judgment, the correct position lies somewhere in between the submissions of the parties; both the August decision of the LVT and the LT's decision fall to be considered as follows:

i) In the light of ss. 13 and 14 of the 2007 Act, this appeal cannot succeed unless this Court is satisfied that the decision of the LT involved the making of an error on a point of law.

ii) That said, the starting point on this appeal is the August decision of the LVT. It is the LVT – not the LT – which is entrusted by statute with determining whether there has been compliance with the Consultation Regulations and, if not, whether dispensation should be granted; the LT's function is appellate only. I am thus unable to accept that this is an appeal where this Court's consideration is effectively confined to a "review" of the decision of the LT – so that provided only the LT reached a decision it was entitled to reach, the appeal must be dismissed regardless of any flaws in the decision of the LVT. This Court must instead explore whether the LVT erred in law; but, in conducting that inquiry, it seems to me right that such weight as is appropriate should be given to the views of the LT as the designated and specialist appellate tribunal in this area. What weight is to be given to the LT's views must depend on the issue under consideration and all the circumstances of the individual case; this Court cannot be prescriptive in that regard.

22. On reflection there may be less in this particular dispute than first meets the eye; or, put another way, the theory may suggest more complexity than will be encountered in practice. The examples which follow suggest why this is so:

i) If this Court is of the view that there was no error of law in the LVT's August decision, that would be an end of the matter, having regard to the dismissal of Daejan's appeal to the LT.

ii) If, conversely, this Court, having given such weight as it thought appropriate to the views of the LT, was nonetheless satisfied that the LVT had erred in law in its August decision, then it would seem to me very difficult to resist the conclusion that the LT had itself erred in law in deciding otherwise.

iii) Should the situation arise where this Court was of the view that a range of decisions was properly open to the LVT, then this Court would need to consider whether the decision to which the LVT had come was within the permissible ambit of that range. Once again, in considering that question, this Court would no doubt pause before rejecting the views of the LT on a "discretionary" decision of that nature.

THE FACTS AND THE KEY CONCLUSIONS OF THE LVT AND LT

23. (1) Factual introduction: A very brief mention of the facts (largely taken from the "statement of agreed facts and issues" before the LT) is helpful to an understanding of the key conclusions of the LVT and the LT.
24. Queens Mansions is a block of shops and flats in Muswell Hill. There are seven flats on the ground and upper floors. Five of the flats, nos. 1, 3, 4, 5 and 6 are held under long leases which provide for the payment of service charges. Daejan is the freehold owner of the building and the landlord under those long leases. The Respondents are the lessees of those flats. For completeness as to the other two flats, at all material times one was vacant and the other was occupied by a tenant under a statutory tenancy protected by the Rent Act 1977; no more need be said of them.
25. The Respondents are all members of the Queens Mansions Residents Association (the "QMRA"), which is a recognised tenants' association under s.29 of the Act. Ms. Marks was the chairman of the QMRA.
26. The property was managed for Daejan by Freshwater Property Management ("Freshwater"), the trading name of Highdorn Co. Limited.
27. By the start of 2005, it was clear that major works were needed to the property. The Stage 1 notice of intention was sent on 6^th July, 2005. By December 2005, four priced tenders had been received by Freshwater. On the face of it, two contractors, "Rosewood" and "Mitre" appeared to be the most competitive; as an indication of the scale of the works, all the tenders were priced in excess of £400,000. The Respondents were, however, concerned that only Mitre's priced specification had been provided to them; in 2006, Ms Marks pressed Daejan for the opportunity to inspect all the priced tenders. By June 2006, this concern had not yet been addressed but Freshwater, through a Mr. Shevlin were indicating a preference for instructing Mitre to proceed with the works. Mr. Shevlin attempted to serve Stage 2 notices from June 2006 but unhappiness as to the unavailability of the priced estimates to the Respondents continued to simmer. A further Stage 2 notice was purportedly served on the 28^th July. Daejan accepted before the LVT that the priced specifications were not made available to those of the Respondents who wished to see them until the 11^th August, 2006.
28. However, as the LVT recorded in its August decision:

" 56. ….by 11^th August 2006, the leaseholders had already been informed that the contract had in effect been awarded to Mitre, and the statutory consultation process was for all practical purposes ended.

57. It was not disputed that at the pre-trial review hearing in early August 2006, it was stated by the legal representative of Daejan, that Mitre Construction had been awarded the contract. This was confirmed in a letter from Mr. Shevlin to Ms Marks dated 10^th August 2006. In his oral evidence Mr. Shevlin said that this was a mistake, but it had never been corrected."

29. As already foreshadowed, the dispute centred on Stage 2 and, in particular, on the events of June – August 2006.
30. (2) The LVT: In its March decision, the LVT determined that Daejan had failed to comply with the provisions of Schedule 4, Part 2 of the Consultation Regulations. Subsequently, the August decision both clarified the LVT's findings "in respect of the nature and extent of the landlord's non-compliance" and addressed the issue of dispensation.
31. At [24] of the August decision, the LVT set out its conclusions on Daejan's non-compliance with the Consultation Regulations in the following terms: (Note: Paragraph numbers have been amended to conform to the version used by the LT)

" Having considered the evidence as a whole, the Tribunal considers that Daejan:

1] failed to comply with the requirements of paragraph 4(5)(b)(ii).

A summary of the observations received and the landlord's responses thereto, were not properly included.

2] failed to comply with paragraph 4(5)(c), 4(9), 4(10) and 4(11)

All the estimates were not available for inspection at a place, during the hours and for the period specified in the notice. The relevant period of thirty days was cut short as it was indicated to the leaseholders that the contractor for the major works had been decided by the landlord. As a result they concluded that further representations were futile. The consultation process was for all practical purposes curtailed, and the invitation to inspect the estimates and make observations was rendered ineffective at that point.

3] failed to comply with paragraph 5.

The relevant period of thirty days was cut short before the leaseholders were provided with copies of all the estimates and had had an opportunity to make observations. The landlord did not have regard to the observations in respect of the estimates which the leaseholders may have made, had they had the opportunity to do so within the relevant period."

32. At [84] et seq, the LVT set out its conclusions overall. The LVT found that the failure by Daejan to comply with the statutory consultation requirements had caused substantial prejudice to the Respondents. The LVT underlined that it had been a matter of great concern to the Respondents that Daejan had not provided copies of all the estimates for their consideration. At [90], the LVT said this:

" The Tribunal considers that the cutting short of the consultation period, by indicating to the leaseholders that the decision had been made to award the contract to Mitre, both at the pre-trial review and in Mr. Shevlin's letter dated 10^th August 2006, removed from the leaseholders the opportunity to make observations on the estimates to which [the] landlord was obliged to have regard. This opportunity to make informed comment on these matters was central to the consultation process. It had been stressed in correspondence how important this was to the leaseholders. "

33. The LVT acknowledged that there had been "extra-statutory" consultation carried out, notably through a Mr. Harris, a surveyor originally engaged by QMRA to advise the Respondents and at their suggestion appointed by the Appellant as contract administrator. The LVT did not, however, consider that this made good Dajean's failure to provide the estimates and an opportunity to make observations.
34. Drawing on the Grafton decision (to which reference has already been made), the LVT then addressed the submission advanced by counsel for Daejan, that Mr. Lapes (one of the Respondents) had been unable to identify the comments he would have made had he seen the Rosewood priced tender earlier. In the LVT's view (at [98]):

" …..it is a matter of speculation what comments may or may not have been made by Ms Marks, Mr. Lapes and the other leaseholders and how this may have influenced the carrying out of the major works, had they had the opportunity to comment having seen all the estimates. The overall result of the landlord's failure to consult the leaseholders was that the Respondents lost the opportunity to make observations in respect of the estimates provided by contractors for the major works to Queens Mansions for which they would be contractually obliged to contribute substantial amounts of money…..The Tribunal considers that the fact that they did not have this opportunity amounts to significant prejudice. "

35. The LVT next considered and rejected an offer on the part of Daejan to deduct £50,000 from the cost of the works; in the LVT's judgment, this offer did not alter "the existence of substantial prejudice suffered by the leaseholders".
36. Counsel for Daejan submitted that it was not proportionate in all the circumstances for the LVT to refuse to make an order for dispensation; such refusal would result in Daejan having to bear all but £1,250 (£250 per long leaseholder) of the cost of the works. Once again guided by Grafton, the LVT held that:

"104 …..the financial effects of the grant or refusal of the application for dispensation on the landlord or tenant are not to be taken into account."

The LVT thus concluded that it did not consider it reasonable to dispense with the consultation requirements in this case and declined to make an order for dispensation under s.20ZA of the Act.

37. (3) The decision in Grafton: Before the LT in this case, the decision in Grafton (supra) loomed large and must now be summarised, given its importance to the LT's reasoning.
38. In Grafton, the landlord was the housing authority; there were 40 leaseholders of whom 21 had formed a committee to represent them in discussions with the landlord. The dispute was concerned with Stage 2 which, in Grafton, had been omitted altogether through an administrative error. In these circumstances, the LT in Grafton had upheld the LVT's decision not to dispense with compliance.
39. The central reasoning of Grafton appears from the following passages:

" 32. Any process of consultation consists of giving information, inviting observations and taking those observations into account, and this is what paragraphs 1 to 6 make provision for. Information has to be given to tenants at three stages – when there is an intention to carry out works, when estimates have been obtained and when a contract has been entered into. Observations from tenants are to be invited at the first two stages. Those observations must be taken into account and the landlord's response to them must be given. This is the scheme of the provisions, which are designed to protect the interests of tenants; and whether it is reasonable to dispense with any particular requirements in an individual case must be considered in relation to the scheme of the provisions and their purpose.

33. The principal consideration for the purpose of any decision on retrospective dispensation must….be whether any significant prejudice has been suffered by a tenant as a consequence of the landlord's failure to comply with the requirement or requirements in question. An omission may not prejudice a tenant if it is small, or if, through material made available in another context and the opportunity to comment upon it, it is rendered insignificant. Whether an omission does cause significant prejudice needs to be considered in all the circumstances. If significant prejudice has been caused we cannot see that it could ever be appropriate to grant dispensation.

34. It was urged on us by Miss Holland that the consequences, for LBC and their tenants, was a material consideration, and indeed an important one. Also material, she suggested, was the unjustified benefit that the leaseholders here would receive in the event that dispensation was not granted. We can accept that the general nature of the provisions, with the £250 limit imposed as the consequence of section 20(1) and section 20ZA, forms part of the background to the consideration of reasonableness. We cannot accept, however, that the particular effects on the landlord or the tenant in the case in question are properly to be taken into account. It is in the very nature of the provisions that the landlord will suffer financially and the tenant will gain financially in the event that dispensation is not given. If it were material to take into account the degree to which the landlord might suffer or the tenant might gain, this would mean that a failure might achieve dispensation if the contract was a very large one but might not do so if the contract was small. We do not think that this could be the effect of the provisions. There would in any event be real practical difficulties for an LVT in dealing with a contention relating to the consequences for the landlord or other persons affected since the evidence relevant to these could be very far-reaching, time-consuming and costly to pursue and potentially inconclusive.

35. The requirements relating to estimates are clearly fundamental in the scheme of requirements. The landlord must obtain estimates (in the plural), must include in the paragraph (b) statement the overall estimate of at least two of them and must make all of the estimates available for inspection. The purpose is to provide the tenants with the opportunity to see both the overall amount specified in two or more estimates and all the estimates themselves and to make on them observations, which the landlord is then required to take into account. In the present case stage 2 was completely omitted. It was a gross error, which manifestly prejudiced the leaseholders in a fundamental way. "

40. (4) The LT: In the present case and after a review of the facts, the LT turned its attention to Grafton. The LT underlined that it was not bound by Grafton but would "naturally treat it as persuasive". Having considered the matter, the LT saw no reason to depart from the approach taken in Grafton, supported, in the LT's view by the statutory language. As the LT put it:

"40. …..The power given to the LVT is to dispense with the consultation requirements, not with the statutory consequences of non-compliance. The principal focus, therefore, must be on the scheme and purpose of the regulations themselves. If Parliament had intended to give a power to remove or mitigate the financial consequences, it could easily have done so……The potential effects – draconian on one side and windfall on the other – are an intrinsic part of the legislative scheme. It is not open to the tribunal to rewrite it…… "

For the same reasons, the LT was not attracted to Daejan's alternative submission – or offer – of allowing a deduction from the charge rather than refusing dispensation in its entirety.

41. The LT went on (at [41]) to express agreement with Grafton, that the potential consequences for the parties "are relevant as part of the context in which the matter is to be considered". It was neither helpful nor accurate to describe the provisions as "penal":

" ….the tribunal should keep in mind that their purpose is to encourage practical co-operation between the parties on matters of substance, not to create an obstacle race. If the non-compliance has not detracted significantly from the purpose of the regulations and has caused no significant prejudice, there will normally be no reason to refuse dispensation….."

Tribunals should use their own common sense to examine submissions as to the significance of non-compliance, given the parties' financial interests in playing such significance up or down as the case may be.

42. The LT added this:

" 43. Finally, we emphasise the need to consider these issues having regard to the particular facts of each case, including the nature of the parties and their relationship. For example, the tribunal may reasonably take a more rigorous approach to non-compliance by a local authority or commercial landlord, than to a case where the landlord is simply a group of lessees in another form….."

43. Thereafter, the LT sought to apply these principles to the facts of the present case. It began with this observation:

"44. ……We have no doubt that the LVT was correct to find failures of compliance at Stage 2, but it is equally clear to us that for the most part these failures were minor and did not cause any significant prejudice to the lessees…."

44. The LT held that although Daejan's notice had not contained the requisite "summary of observations", it was "quite unable to see what prejudice was caused by the absence of such a summary". As to the Stage 2 notices, these had not in terms specified the "place and hours" at which the estimates could be inspected and the estimates were not available for inspection at the time they were sent (whether on the 14^th June or the 28^th July); moreover, the notices had failed in terms to "invite" the making of written observations. The LT was, however, of the view that none of these failures to comply with the Consultation Regulations caused the Respondents any prejudice:

" 50. …..provided that, once they received the estimates, they had an appropriate opportunity to consider them and to raise any significant points that might emerge from them, and that they were taken into account before a final decision was made."

45. The question of consultation being curtailed was different; this was the issue which had most concerned the LT. In its view, the LVT's conclusion that consultation had been curtailed was "difficult to criticise"; the LVT had been entitled to conclude that by the 10^th August, 2006, Daejan had "effectively closed its mind to any new observations on the choice of contractors, and that the lessees had reasonably formed the view that this was so".
46. It remained for the LT to consider whether the Respondents had been prejudiced by the curtailing of consultation:

" 57. …..in particular whether the estimates did in fact disclose any new material, and whether the lessees would have had anything new to say."

The LT remarked on the LVT dismissing this inquiry as speculative, echoing the language used in Grafton. The LT, however, underlined that the circumstances in Grafton were different: there were many more lessees, not all represented by the main group and it could not be said that all the same information had been made available in another form.

47. After a somewhat critical review of the evidence and submissions as to prejudice, the LT expressed its own conclusions as follows:

" 61. We have not found this an easy case. Although the LVT was entitled to find a material breach of the regulations, the evidence of actual prejudice is weak. However, we remind ourselves that we are reviewing their decision, not substituting our own judgment. It is common ground that we can only interfere if the LVT has gone wrong in principle, or left material factors out of account, or its balancing of the material factors led it to a result which was clearly wrong. The LVT was in our view entitled to regard this as a serious breach, rather than a technical or excusable oversight. It involved a failure by a corporate landlord to ensure that those responsible in their office for the stage 2 consultation properly understood its requirements and its significance. The result was that the lessees' statutory right at stage 2, to make further representations following examination of the estimates, was nullified.

62. As to prejudice, the tribunal was entitled to start from the position that, given the seriousness of the breach, it was not for the lessees to prove specific lack of prejudice. It was enough that there was a realistic possibility that further representations might have influenced the decision. We bear in mind that, as is clear from the tender report, Mr. Harris' decision to recommend Mitre in preference to Rosewood was a very close one. Although the issue was raised in Ms Marks' letter of 14 July, she made clear that it was an interim comment, pending access to full information. The lessees were entitled to proceed on the basis that they would have a further opportunity to present their case in its strongest terms and in the light of the full information; and that, given the marginal difference between the two tenders, they might be able to persuade the landlord to change its mind. In these circumstances, we are unable to say that [the] LVT has erred in principle, or that its decision was clearly wrong. The financial consequence may be thought disproportionately damaging to the landlord, and disproportionately advantageous to the lessees, but, as we have said, that is the effect of the legislation. "

ISSUE (I): FINANCIAL CONSEQUENCES

48. (1) The rival cases: For Daejan, Mr. Dowding submitted that both the LT in Grafton and the LT (and LVT) in this case had fallen into error in treating the financial consequences of the grant or refusal of dispensation as irrelevant. The "strict" approach adopted in these cases resulted in "draconian consequences". The purpose of the dispensing power in s.20ZA(1) was to ensure that the landlord did not suffer the penalty imposed by s.20 except where it was reasonable that it should do so.
49. Mr. Dowding emphasised that the discretion to grant dispensation under the Act as amended was broader than under the predecessor provisions. Dispensation could now be granted even if the landlord had conducted itself unreasonably. The statute conferred a broad dispensing power and it was not for the Court to restrict it. The consequence of doing so was that each tenant obtained the benefit of all the work done for his benefit in excess of £250 for nothing; yet service charges were the mirror images of the landlord's obligation to repair.
50. Importantly, Mr. Dowding said this: it would be impractical to have regard to the circumstances of the individual landlord and tenants; his submissions did not require it. Instead, he contended that the size of the sum itself (here hundreds of thousands of pounds) should be taken into account.
51. The exercise of the discretion (namely, whether it was reasonable to grant dispensation) required a balancing act. As a matter of fairness and principle, substantial financial consequences, albeit not decisive, had to be relevant and should be weighed in the scale. The weight to be given to those consequences depended on the circumstances of each case. As Mr. Dowding put it:

" There is clearly a difference between a case where there is a modest degree of prejudice to the tenants and a huge financial loss to the landlord, and one where there is a modest degree of prejudice to the tenants and a modest financial loss. "

52. For completeness, Mr. Dowding did not quibble with the outcome in Grafton. The complete failure to follow Stage 2 in that case outweighed all other considerations.
53. In the upshot, the LT and LVT had misdirected themselves in law by treating the financial consequences of the refusal of dispensation as irrelevant and this Court should now itself exercise the s.20ZA(1) discretion.
54. For the Respondents, Mr. Rainey's submissions (supported by Mr. Fieldsend) proceeded as follows. The LT and the LVT had rightly treated the financial consequences of the refusal of dispensation as irrelevant; there had been no error of law or misdirection. Daejan had approached the consultation requirements as "an annoying and artificial set of legal hoops to be jumped through prior to getting on with doing whatever works that a landlord had decided to do"; these submissions betrayed a misconception. Statutory consultation was a substantive right of a tenant; the reason was that X (the tenant) was being asked to pay for expenditure decided upon by Y (the landlord); hence the legislative scheme. The landlord could do what it liked but if it wished to be reimbursed by the tenants, then it was obliged to comply with the consultation requirements. That did not mean that the landlord was obliged to follow the views expressed by the tenants; but it did mean that the landlord had to pay due regard to the consultation. The consultation was an end in itself and the landlord's failure (if significant) to comply with the consultation requirements, by itself gave rise to prejudice to the tenants. When, as here, consultation was curtailed, the tenants lost the opportunity to consider making representations and to have those considered by the landlord.
55. As to where the line was to be drawn, Mr. Rainey submitted that circumstances rather than consequences were relevant to the decision whether to grant or refuse dispensation. Thus, the circumstances going to the integrity of the consultation process were relevant; by contrast, the consequences flowing from the decision to grant or refuse dispensation were not. It was common ground that the test for dispensation under the Act as amended was wider than the previous test and the Respondents were not seeking to circumscribe it; but they did seek to identify what was relevant and irrelevant.
56. Mr. Rainey suggested the following as examples of when dispensation with the consultation requirements might be granted: (1) the need to react to an emergency; (2) a situation where (realistically) only one contractor could undertake repairs to (say) a particular type of boiler or lift. In such circumstances, compliance with the consultation requirements would not be practical.
57. There was nothing in the point that if dispensation was refused the excess of the cost of the works over £250 per tenant would fall to be borne by the landlord; the obverse was that if dispensation was granted the tenants would be liable for that amount. Such consequences were simply what the legislative scheme provided.
58. If wrong in these submissions, then the Respondents invited the Court to remit the matter to the LVT, rather than seeking to exercise the s.20ZA(1) discretion afresh.
59. (2) Discussion: Having introduced this Issue at some length, my conclusions can be relatively briefly stated. With respect to Mr. Dowding's forcefully presented submissions, I have a clear preference for those of the Respondents. The Issue is one of statutory construction. In my judgment, as a matter both of context and the wording of the statute, the financial effect of the grant or refusal of dispensation is an irrelevant consideration when exercising the discretion under s.20ZA(1). My reasons follow.
60. First, it is instructive to identify the answer for which Daejan contends. It might have been expected that the attraction of the argument for weighing financial consequences in the balance lay in their impact on the individual parties – but that is not Daejan's case. Indeed, it is noteworthy that Mr. Dowding drew back from contending that the financial impact of the grant or refusal of dispensation on the individual landlord and tenants should be considered. As a matter of practicality, Mr. Dowding was right to hold back – even though, in logic, his submissions pointed to such an inquiry. The burden imposed on LVTs undertaking an inquiry into the financial circumstances of any particular landlord would be considerable. All the more so, in that any such inquiry would necessitate a similarly burdensome exploration of the financial circumstances of the tenants in question. However, Mr. Dowding's pragmatic restraint means that he is left with the argument that the size of the sum is, by itself, relevant to the grant or refusal of dispensation. I am wholly unable to accept that submission, entailing, as it does, taking account of the sum involved but not the effect on the parties. The submission must contemplate that the higher the service charge, the more readily dispensation should be granted. Whether or not Mr. Rainey was right to characterise such an outcome as "perverse" it would, on any view, be a curious outcome – and not one which I would be inclined to spell out of s.20ZA(1) unless driven to such a conclusion. With rather more plausibility, it could be argued that the higher the sum involved, the more necessary it is for consultation requirements to be observed.
61. Secondly, regard must be had to the statutory language. Here, I respectfully agree with and adopt the LT's observations at [40] (set out above). S.20ZA(1) gives the LVT power to "dispense with ….the consultation requirements", not, as the LT put it, "with the statutory consequences of non-compliance". Here too, the Respondents' submission had force; the legislature did not employ the well-known drafting technique of granting relief from sanctions. Accordingly and, as it seemed to me, plainly, the focus of the statute is on the consultation requirements not the consequences of non-compliance. At least generally (it would be unwise to be unduly rigid), the distinction drawn by the Respondents - between the relevance of circumstances going to the integrity of the consultation process and the irrelevance of the consequences flowing from the grant or refusal of dispensation – seems well-founded.
62. Thirdly, if perhaps a matter arising both under this Issue and Issue (III) (Prejudice), the legislative focus on the consultation requirements serves to highlight that a proper consultation process comprises the substance of the scheme. Prima facie therefore, curtailment of consultation (at least unless de minimis) involves substantial non-compliance with the consultation requirements. That is not to elevate process above substance – something I would be most reluctant to do – and against which the LT properly cautioned at [41]. This is not, as the LT remarked, about creating "an obstacle race". It is instead to identify and from the outset, the true nature of the statutory purpose and substantive considerations in this area. Once again, this suggests that (other than as part of the context in which the matter is to be considered) the financial consequences of the grant or refusal of dispensation are unlikely to be relevant to the exercise of the discretion under s.20ZA(1); in any event, that non-compliance with the consultation requirements may involve significant financial loss is, by itself, no more than an intrinsic part of the statutory scheme.
63. Fourthly, some examples of when dispensation might be granted can readily be postulated. They are, it should be emphasised, no more than examples; there is no closed list. So, all other things being equal, the following situations might commend the grant of dispensation:

i) The need to undertake emergency works;

ii) The availability, realistically, of only a single specialist contractor;

iii) A minor breach of procedure, causing no prejudice to the tenants.

It may be noted that none of these examples undermines the integrity or importance of the consultation process.

64. Fifthly, I do not see this approach as in any way failing to give effect to the width of the dispensatory discretion conferred by the Act as amended. For instance, under the current (amended) statutory provisions, the landlord may obtain dispensation in any of the examples given in the preceding paragraph, even if it has not "acted reasonably". But, granting that the reasonableness of the landlord's conduct is no longer a condition precedent for an order for dispensation, it does not at all follow that the financial effects of a refusal of dispensation are or ought to be a relevant consideration to the exercise of the statutory discretion.
65. For all these reasons, I am amply satisfied that the LT in Grafton, the LVT and the LT in this case did not err in law or misdirect themselves in treating the financial consequences of the grant or refusal of dispensation as irrelevant to the exercise of the discretion under s.20ZA(1). To the contrary, I would uphold their approach to this Issue.

ISSUE (II): THE NATURE OF THE LANDLORD

66. Upon reflection, this Issue can be taken extremely briefly. In its decision, the LT referred to this question at [43] and touched upon it at [61]. Rather seizing on these two mentions, Mr. Dowding submitted that the nature of the landlord was irrelevant; there was no warrant for treating a corporate (or local authority) landlord more rigorously than a lessee owned or controlled landlord. On the footing that the legislative provisions were not penal and the focus was on the prejudice caused to tenants by the landlord's non-compliance with the consultation requirements, there was no basis for any such distinction, turning on the nature of the landlord. The LT had accordingly erred in law and/or misdirected itself.
67. With respect, I cannot agree.

i) For my part, I do not think that the LT was saying more than (as Sedley LJ observed in argument) "context is everything"; that is certainly the impression created by the opening sentence of [43]. If so, the observations are unexceptionable and this Issue simply falls away.

ii) If it is necessary to go further, then cases can be envisaged where a less rigorous approach may be justified in respect of lessee owned/controlled landlords. So, where the lessees are their own landlord, the consultation requirements have to be considered against the background that they are spending their own money; it may no longer be the case of X spending Y's money. Furthermore, in such a situation, there may be a greater likelihood of canvassing the relevant information by way of informal or extra-statutory consultation.

iii) Even, however, if the LT was in error in contemplating a less rigorous approach in (some) cases where the tenants are their own landlord, the point does not go anywhere. It does not follow that the LT erred in holding that the consultation requirements were to be applied according to their terms in the case of a corporate (or local authority) landlord. There is certainly no suggestion in its decision that the LT applied a more rigorous standard than that provided for in the statute.

iv) Finally, if error there was in this regard, it was an error on the part of the LT – there is no hint of any such "error" in the August decision of the LVT. For this reason too, as it seems to me, the point goes nowhere as a self standing ground of appeal.

ISSUE (III): PREJUDICE

68. (1) The rival cases: I focus here on the curtailing of consultation, the issue which most concerned the LT.
69. For Daejan, Mr. Dowding drew attention to the differences between this case and Grafton. In Grafton, Stage 2 had been omitted altogether; here it had not been. Moreover, in Grafton there had been a much larger number of tenants, so (as the LT itself observed) there could be no question of all the information having been made available in another form. In those circumstances, Mr. Dowding, as before, did not quarrel with the outcome in Grafton.
70. In the present case, however, Mr. Dowding contended that there was nothing further to be said or considered; in a letter dated 14^th July, 2006, Ms Marks had said all that could be said based on the information in Mr. Harris's tender report. There was no basis for supposing that if the consultation had not been curtailed it would have made any difference. There were only five Respondents. Accordingly, Mr. Dowding submitted that the LVT (and LT) should have answered the "what if" question. If that question had been posed, it could not have been answered as the LT did at [62] (a conclusion in any event unsupported by any fact finding of the LVT). The only conclusion which could reasonably have been reached was that the Respondents had not proved any prejudice flowing from Daejan's non-compliance with the consultation requirements. It was, however, for the Respondents not simply to assert but to prove prejudice: see, the decision of the LT in Eltham Properties Limited v Kenny LRX/161/2006 (unreported), at [29] – [30], together with the observations of LT in this case at [42]. In any event and whatever the incidence of the burden of proof, there had been no prejudice. If right thus far, then there was no proper basis for the LVT or LT refusing to grant dispensation; their decisions to refuse dispensation were either perverse (within the meaning of Edwards v Bairstow, supra) or disclosed an error of law.
71. For the Respondents, Mr. Rainey submitted that if this Issue turned on the burden of proof, then as Daejan was seeking dispensation, it was for Daejan to prove that its non-compliance had not cause any prejudice so that it was reasonable for dispensation to be granted; it was not for the Respondents to prove specific prejudice flowing from Daejan's non-compliance with the consultation requirements. In any event, the curtailment of the consultation process amounted to substantial prejudice; the Respondents had been deprived of the opportunity to make representations and to have them considered. It was unnecessary to speculate as to the outcome of such further consultation had it taken place; a landlord could always say that nothing further said by the tenants would have made any difference. So far as concerned other communications between Daejan and the Respondents (even assuming that they were capable of curing the position), these could not save the day for Daejan as the full facts had not been available until too late.
72. (2) Discussion: For my part, I readily accept Mr. Dowding's submission, as far as it goes, that significant prejudice to the tenants is a consideration of the first importance in exercising the dispensatory discretion under s.20ZA(1). I respectfully and entirely agree with the observations to this effect in Eltham (supra), at [29] – [30], Grafton, at [33] and the LT in this case, at [41] – [42].
73. I part company, however, with the Daejan case when it comes to determining whether the Respondents did suffer significant prejudice in consequence of Daejan's non-compliance with the consultation requirements. In my judgment, Daejan's non-compliance in curtailing consultation constituted a serious failing and did cause the Respondents serious prejudice.

i) As already emphasised, a proper consultation process is of the essence of this statutory scheme, devised as it is to protect the interests of tenants such as the Respondents.

ii) In my judgment, the LT and the LVT were entirely right to treat the curtailment of the consultation process as a serious failing. It is striking that the observation of the Daejan legal representative at the LVT hearing in early August 2006, that Mitre had already been awarded the contract for the works, was never corrected; to the contrary, it was confirmed in Mr. Shevlin's letter of the 10^th August, 2006. Even assuming this failing to be the result of a lack of understanding or ineptitude rather than a flouting of the consultation requirements, it is impossible to view it as a technical, minor or excusable oversight.

iii) Against this background, I can detect no error of law or misdirection in the LVT's refusal to speculate (at [98] of its August decision) as to what might have been the outcome had the consultation been allowed to run its proper course. Indeed, given the seriousness of non-compliance in this case, I would endorse the LVT's approach of treating the Respondents' loss of opportunity (to make further representations and have them considered) as itself amounting to significant prejudice. On any view, as it seems to me, that was a conclusion to which the LVT was entitled to come.

iv) This view is reinforced by reflection on the rival contention advanced by Daejan. In many cases, a landlord could readily assert that further consultation would have made no difference. Disproving such assertions would inevitably give rise to an invidious exercise in speculation, quite apart from difficulties of proof (if and insofar as a burden rests on the tenants in this regard – see below). While there will no doubt be some instances where a landlord may demonstrate that a failure to comply with the consultation requirements was, on the facts, such as to make no difference and to give rise to no prejudice to the tenants, arguments of this nature need careful scrutiny; there would otherwise be a risk of undermining the purpose of the statutory scheme or, as Pitchford LJ remarked in argument, a "premium on recalcitrance". Suffice to say that on the facts of this case, involving a serious failing on Daejan's part, I am not at all attracted to the argument.

v) With respect to Mr. Dowding's argument, I do not see a tension between the LVT's conclusion (that the curtailment of the consultation itself amounted to significant prejudice) and the observations of the LT, already referred to, as to the importance of prejudice to the tenants, in Eltham, Grafton and in this case. The conclusion of the LVT involves a finding that there has been significant prejudice. Moreover, given that the LVT found as a fact that the extra-statutory consultation had not made good Daejan's failure to comply with the Consultation Regulations, nothing turns on the difference between the number of tenants in this case as compared with the much larger number in Grafton.

vi) Accordingly, the LVT was amply justified in refusing dispensation in this case. Its conclusion betrays neither any error of law nor perversity.

74. Having reached this view (which is sufficient to decide Issue (III)), it is strictly unnecessary to decide whether the LT was correct to say (at [62]) that further representations might have influenced the Daejan decision as to the award of the contract for the works. For the avoidance of doubt, however, I am not at all persuaded that the LT fell into error. I acknowledge the difficulty of pointing in terms to a finding of fact by the LVT supporting the LT's observation. That said, I am satisfied that the LT's conclusion involved no more than the drawing of a permissible inference from the LVT's findings.
75. Accordingly and whether by the route followed by the LVT or that taken by the LT at [62] (if and insofar as it differed), I entertain no doubt of the correctness of the LT's conclusion – namely that it was unable to say that the LVT had erred in principle on the question of prejudice, or that its decision was clearly wrong.
76. For completeness, it remains simply to mention a number of additional matters:

i) First, in agreement with both the LT (at [40]) and the LVT (at [101]), I do not think that Daejan's offer of a £50,000 "discount" off the price of the works, provides a ground for the grant of dispensation. I incline to the view that, as the LT reasoned, the statutory scheme does not provide for such an alternative; however, even if it was open to Daejan to avert the refusal of dispensation by making a suitable offer of this nature, I agree with the LVT that the only offer on the table did not suffice.

ii) Secondly, there was some debate as to the burden of proof with regard to prejudice suffered by the Respondents. As will be apparent, it did not seem to me that the outcome in this appeal turned on the incidence of the burden of proof. Insofar as it rested on the Respondents and as already discussed, they have satisfied the burden. I am accordingly reluctant to express a concluded view on a point, not without complexity, which does not require resolution in this case.

iii) Thirdly, in the light of the decision to which I have come on the curtailment of consultation, it is unnecessary to say anything of the additional points canvassed in the Respondent's Notice.

OVERALL CONCLUSION

77. For the reasons set out, Daejan's case fails on each of the principal Issues. I would dismiss this appeal.

Lord Justice Pitchford:

78. I agree with the judgments of both Gross LJ and Sedley LJ and would dismiss this appeal.

Lord Justice Sedley:

79. I agree with the reasoning and conclusions of Lord Justice Gross and, like him, would dismiss this appeal.
80. At §19-22 Lord Justice Gross considers the arguments about the precise role of the appellate bodies below this one. On the face of them the successive roles of the LT (that is to say the Lands Tribunal, now reincarnated as the Upper Tribunal) and this court are identical: each is concerned with whether the LVT made an error of law, and there is no apparent reason why either appellate tier should defer to the view of the law reached by the tribunal below it.
81. But these are early days in the new tribunal system. For reasons touched on in R (Cart) v Upper Tribunal [2010] EWCA Civ 859 (where the Upper Tribunal had resolved an issue of natural justice by asking simply whether substantial prejudice had resulted), it is distinctly possible that a body of administrative law will develop which is not entirely lawyer's law: see Cart §42-44. It will always, I hope, be bounded by principles of legality and fairness of which the High Court is the custodian, but within that perimeter individual chambers may develop their own understanding of the law and practice which are peculiar to their jurisdiction.
82. This is why I would endorse the way Lord Justice Gross resolves the argument at §21(ii) in relation to the view reached by the Tribunal. It may follow that the Lands Tribunal needed at §44 of their decision to explain why their view that most of the stage 2 shortcomings "were minor and did not cause any significant prejudice to the lessees" was not their own re-evaluation of the facts found by the LVT. On the other hand, their conclusion at §61 (see §47 above) seems to me a model of how the Tribunal's appellate function is to be carried out.
83. Turning to the substantive questions of law, I would emphasise (what must have been well to the forefront of the minds of the successive tribunals) that the tenants of a block of long-leasehold flats like Queens Mansions have a real interest not only in the cost but in the quality of major maintenance works. As the sign in the Fleet Street shirtmaker's window used to say, there is nothing that someone else cannot do a little cheaper and a little worse. This is why it was no answer to say that Daejan, albeit prematurely, had accepted the lowest tender. Like Lord Justice Gross (see §73 above), I would uphold the finding that cutting the tenants out of the consultation was a serious and a prejudicial failure.
84. Lastly, it is relevant to examine the consequences of Daejan's casuistic submission that the magnitude of the sum involved should alone be the determinant of whether it is reasonable to dispense with compliance. Daejan, as it happens, is part of a large and prosperous group of property companies which would have difficulty in pleading poverty; but Mr Dowding would not be thanked by a small and struggling lessor if he were to succeed in this aspect of his argument.
85. Beyond this, divorcing the cost from the means of the paying party would leave the LVT with the task, plainly outside the statutory intent, of setting a cash tariff. If it were to hold here, for example, that because the contract price was over £250,000 consultation should be dispensed with, it would have in fairness to do the same in all other cases. By parity of reasoning, a cut-off point would come, somewhere down the monetary scale, at which the LVT declined to grant dispensation, again necessarily in all cases. What would then happen to cases falling in the gap between the two? The answer, happily, is that this adjudicator's nightmare has no foundation in legal reality. What may make dispensation reasonable, as Lord Justice Gross has explained and as the tribunals below correctly understood, has to do with the circumstances in which the omission has occurred and its impact on the purposes of the consultation process.
86. Lastly, I would add a word to what Lord Justice Gross says in §76(ii) about the burden of proof. It is common for advocates to resort to this when the factual case is finely balanced; but it is increasingly rare in modern litigation for the burden of proof to be critical. Much more commonly the task of the tribunal of fact begins and ends with its evaluation of as much of the evidence, whatever its source, as helps to answer the material questions of law. In nine cases out of ten this is sufficient to resolve the contest. It is only rarely that the tribunal will need to resort to the adversarial notion of the burden of proof in order to decide whether an argument has been made out, and tribunals ought in my view not to be astute to do so: the burden of proof is a last, not a first, resort.