United Kingdom Upper Tribunal (Lands Chamber)

UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2012] UKUT 258 (LC)

UTLC Case Number: LRX/49/2011

 

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

LANDLORD AND TENANT – service charges – consultation requirements for major works – Service Charges (Consultation Requirements) (England) Regulations 2003 Sch 4 Part 2 – whether LVT correct in finding phraseology of landlord’s notice and accompanying documents “rendered nugatory to a significant degree” the  opportunity to comment on the estimates – whether landlord sufficiently specified the date on which the relevant consultation period ended

 

 

IN THE MATTER OF AN APPEAL AGAINST A DECISION

OF A LEASEHOLD VALUATION TRIBUNAL

 

BETWEEN (1) PEVEREL PROPERTIES LIMITED Appellants

  (2) PEVEREL OM LIMITED

and

STEPHEN HUGHES Respondents

(and Others being leaseholders of various  flats at Regents Park)

 

 

Re: Various Flats,

Regents Park,

Asgard Drive

Salford

 

Before: His Honour Judge Nicholas Huskinson

 

Sitting at 43-45 Bedford Square, London, WC1B 3AS

On 23 July 2012

 

Alexander Bastin, instructed by Peverel Property Management, on behalf of the Appellants

Stephen Hughes, in person and also on behalf of those other Respondents who were members of Regents Park Management Association

 

 

The following cases were referred to in this decision:

Sheffield City Council v Graingers Wines Ltd [1978] 2 All ER 70

Lower Street Properties Ltd v Jones [1986] 2 EGLR 67

Re Green’s Will Trusts [1985] 3 All ER 455

 

 

DECISION

Introduction

1.            This is an appeal from a decision of the Leasehold Valuation Tribunal for the Northern Rent Assessment Panel (“the LVT”) the date of which is unclear but which was the subject of a correction certificate (dealing with matters not relevant to the present appeal) dated 15 March 2011.

2.            The LVT’s decision was made upon an application to which the lessees of 101 of the 170 separate flats in the Regents Park development were parties.  The application was to decide upon the recoverability of service charges in respect of (i) certain major works which were invoiced in the service charge accounts for 2008 and 2009 and (ii) service charges in respect of non major works for the years 1998 to 2010.  The LVT gave a lengthy detailed and careful decision.  So far as concerns the major works it concluded that there had been a failure by the Second Appellant properly to comply with the relevant consultation regulations such that it was limited to recovering £250 per leaseholder.  However the LVT went on, quite rightly, in the alternative to consider various challenges which had also been made to the reasonableness of the charges and the reasonableness of the incurring of those charges in respect of these major works.  The LVT concluded that, if the Second Appellant were not limited to recovering £250 per flat, then it could recover certain amounts in respect of the major works, being amounts significantly less than those sought by the Second Appellant – the reductions having been made on the basis that certain parts of the cost of the major works were unreasonable or were unreasonably incurred.  The LVT gave separate consideration to the service charges sought in respect of matters that were not major works.

3.            The present appeal to the Upper Tribunal is concerned with only two limited points both of which arise out of the LVT’s conclusions upon whether the consultation procedures had been properly followed.  In summary the LVT concluded that in four separate ways the Second Appellant had failed properly to comply with the consultation requirements.  The Appellants sought permission to appeal against all of these findings, but were granted permission only to challenge the LVT’s adverse decision upon two of them.  Thus as regards two separate points under the consultation requirements there exists an unappealed finding by the LVT that the requirements were not complied with.  It follows therefore that, whatever the decision on the present appeal, there will remain a finding that the consultation requirements were not properly followed, such that the Second Appellant will be limited to recovering only £250 per leaseholder unless the Second Appellant can obtain an order under section 20ZA of the Landlord and Tenant Act 1985 dispensing with the consultation requirements in respect of these major works.  It was made clear at the LVT hearing that if the LVT’s decision on the consultation requirements was adverse to the Appellants then the Appellants would make an application for dispensation.  I am told that in fact an application for dispensation has been made, but this has not yet come before the LVT.  It is not entirely clear to me why this is being pursued in two separate stages, rather than an application for dispensation (if needed) having been made to the LVT at the time of the original hearing.  Thus whatever the Upper Tribunal decides upon this appeal, there will it seems be a subsequent application for dispensation which will need to be considered by the LVT, with the possibility of an appeal to the Upper Tribunal. 

Facts

4.            The First Appellant, namely Peverel Properties Limited is the freehold owner of a substantial residential development at Regents Park, Salford which comprises 170 separate flats which are let out on long leases at low rents.  The Second Appellant, namely Peverel OM Limited, is the Management Company.  Both Appellants are part of the same group of companies.  The LVT recorded in paragraph 1 of its decision that the First Appellant had played no role in the application and that therefore, unless the contrary was indicated, all references to “the Respondent” were to Peverel OM Limited.  I will adopt the same approach, save that of course now Peverel Properties Limited and Peverel OM Limited are the Appellants.  I shall hereafter use the expression “the Appellant” to refer to Peverel OM unless otherwise stated.

5.            The nature of the Regents Park development and the history of its construction are summarised in paragraphs 7 and 8 of the LVT’s decision.  The LVT recorded that the leases are in a common format.  A rent of a peppercorn is reserved and by way of further or additional rent there is made payable the lessee’s proportion of the Maintenance Expenses, which are defined as the monies actually expended or reserved for periodical expenditure by or on behalf of the Management Company or the Lessor at all times during the term in carrying out the obligations specified in the Sixth Schedule.

6.            The Appellant commissioned a survey of Regents Park from C A Timm Contract Services Limited and their report was produced on 6 April 2005.  In the light of that report the Appellant instructed SP Projects Limited (“SP”), a firm of Consultant Chartered Surveyors, to provide a condition survey and specification of works.  SP produced a report dated May 2006 which recommended a set of specified works with an estimated budget of £512,250 exclusive of VAT.  The Appellant considered the SP report and decided to act upon it.  Accordingly on 18 September 2006 it issued consultation notices under section 20 of the Landlord and Tenant Act 1985 and the Services Charges (Consultation Requirements) (England) Regulations 2003.  This was in effect the first stage consultation under Part 2 of Schedule 4 to the 2003 Regulations.  Various observations were made in response to this consultation notice.  In due course estimates from potential contractors were sought and four estimates were obtained.  In January 2007 SP produced a Tender Report.  The lowest tender had been from HH Smith & Sons Co Ltd in the sum of £239,595 excluding VAT.  SP in its Tender Report stated in its conclusion that H H Smith’s tender sum was in their opinion a competitive and consistent and bona fide tender; and SP recommended that, subject to their financial status being satisfactory, the tender submission of HH Smith in the amount of £239,595 be accepted.

7.            The LVT did not find any failure on the part of the Appellant in conducting the first stage of the consultation process, i.e. the stage dealt with in paragraphs 8, 9 and 10 of Part 2 of Schedule 4 of the 2003 Regulations.  (Note: the reference in paragraph 50 of the LVT’s decision to paragraph 8(2)(d)(iii) of Part 2 of Schedule 4 to the Regulations would appear to be a slip for a reference to paragraph 11(1)(c)(iii)).

8.            The 2003 Regulations make provision for the obtaining of estimates and regarding from whom estimates should be sought.  It is not suggested that the Appellant failed to comply with these requirements.  Paragraph 11(5), (9) and (10) provide as follows:

“(5) The landlord shall, in accordance with this sub-paragraph and sub-paragraphs (6) to (9) –

(a)                obtain estimates for the carrying out of the proposed works;

(b)               supply, free of charge, a statement (“the paragraph (b) statement”) setting out –

(i)                 as regards as least two of the estimates the amounts specified in the estimate as the estimated cost of the proposed works and

(ii)               where the landlord has received observations to which (in accordance with paragraph 3) he is required to have regard, a summary of the observations and his response to them; and

(c)                make all of the estimates available for inspection

(9) The paragraph (b) statement shall be supplied to, and the estimates made available for inspection by –

(a) each tenant; and

(b) the secretary of the recognised tenant’s association (if any).

(10) The landlord shall, by notice in writing to each tenant and the association (if any) –

(a) specify the place and hours at which the estimates may be inspected;

(b) invite the making, in writing, of observations in relation to those estimates;

(c) specify –

(i) the address to which such observations may be sent;

(ii) that they must be delivered within the relevant period; and

(iii) the date on which the relevant period ends.”

Regulation 2 of the 2003 Regulations provides that the expression ‘relevant period’, in relation to a notice, means the period of 30 days beginning with the date of the notice.

(Note: At some stage the numbering sequence for the paragraphs in Schedule 4 Part 2 to the Regulations has been amended so that the first paragraph within Part 2 is numbered 1 rather than 8.  I have retained a reference to the previous numbering as this is the basis on which the LVT proceeded).

9.            The LVT concluded that the paragraph (b) statement, served in accordance with paragraph 11(5)(b) of Schedule 4 to the Regulations, failed to summarise certain responses which, so the LVT held, were observations made in response to the first stage consultation.  The LVT concluded that failure to summarise these responses invalidated the paragraph (b) statement.  The LVT also found that the Appellant had failed to make available all the estimates provided and that therefore once again the Appellant had failed to comply with the consultation requirements in paragraph 11 of Schedule 4 to the Regulations – this time the relevant provision is paragraph 11(5)(c).  The Appellant has been refused permission to appeal these adverse findings by the LVT.  The LVT’s decision upon these points is therefore not before me and the decision on these points stands.

10.        For the purpose of complying with paragraph 11(10) the Appellant gave a notice in writing to each lessee dated 13 February 2007.  There is evidence in a written statement from David Arthan, who was at the relevant time the property manager for the Appellant, that this notice was served on 13 February 2007.  It has not been suggested by the LVT or by Mr Hughes that this is inaccurate.  Accordingly I proceed on the basis that this notice was indeed served on 13 February 2007.

11.        This notice bore on its face the date 13 February 2007 and was headed “Second Notice”.  It was addressed to all owners at Regents Park.  It was headed as being –

“Statement and Notice of Estimates in Accordance with Section 20 (as amended) and Section 20ZA of the Landlord and Tenant Act 1985.”

The notice stated it was given pursuant to the first notice dated 18 September 2006; that estimates had been obtained; that the works were based on the condition survey undertaken in 2006; and that the works could generally be described as the refurbishment of the external communal structural parts of the development as advised by independent Chartered Surveyors, SP Projects.  A brief description of the work, in summary form, was then given.  The notice then continued in the following terms:

“Contractors Name Amount Excluding VAT

HH Smith & Sons Co, Ltd £239,595

Lawlor Construction Ltd £354,461

B & D Croft £373,660

Simmon Services Ltd £415,442

J Greenwood Builders Ltd Not Submitted

SDC Contract Ltd Not Submitted

Ibis Roofing Not Submitted

Surveyors fees in the sum of 4.45% plus VAT of the final contract price are payable in addition to the above.  Planning Supervisor services for this project represent 0.65% plus VAT of the final contract price.  Our administration costs total 4.90% plus VAT.

During the course of the works other repairs to communal areas not allowed for within the specification may become apparent and in order not to disrupt the progress of the contract we reserve the right to place instructions should this be necessary without further consultation.

A report on the tender evaluation can be viewed at the caretaker’s office between the hours of 09:00 and 17:00 Monday to Friday.

Or

A copy will be made available on written request to the address at the bottom of this notice.

A copy of the estimates obtained will be made available on written request to the address at the bottom of this notice.  Please note that because of the large size of the documents a charge will apply to cover the photocopying and postage costs.

3.      Should you wish to make observations in relation to any of the estimates please do so in writing to us.  Observations must be made within the consultation period of 35 days from the date of this notice.

4.      A copy of the written responses received during the first consultation period will be made available on written request to the address at the bottom of this notice.  We received no owner contractor recommendations during the first consultation period.

It is now our intention to enter into an agreement with HH Smith & Sons Co Ltd of Smith’s Yard, rear of 96 Bury Old Road, Whitefield, Manchester M45, 7AY, on the recommendation of SP Projects, after the expiry date of this second consultation notice.”

The notice then went on to state that in view of the costs involved it would be necessary to issue a further demand so as to meet some of the costs.  It stated that about £85,000 would be utilised from the reserve fund and that the remainder of the cost would need to be collected through an additional invoice.  Each lessee was told that the relevant invoice was attached.  This invoice was stated to be calculated upon the total project cost as being £322,000 including VAT fees and a figure for insurance.  It is clear that this demand was based upon estimated costs as revealed in the HH Smith estimate – had the demand been based on any other of the estimates then the amount demanded would have been substantially higher.

The LVT’s findings

12.        I have already noted (see paragraph 9 above) two aspects of the LVT’s decision upon the consultation requirements which are not the subject of the present appeal.  The LVT then considered two further points, namely whether the phraseology of the Appellant’s notice, coupled with the other documents enclosed and in particular the fact that the estimated cost (on the basis of which the demand was framed) was based upon the HH Smith estimate, was such as to result in there having been no proper compliance with the consultation requirements.  The other point the LVT had to consider was whether the Appellant’s notice, by stating that –

“Observations must be made within the consultation period of 35 days from the date of this notice”.

had failed to “specify … the date on which the relevant period ends.”

13.        The LVT dealt with these two points in paragraph 50(5) and (6) of its decision in the following terms –

(5) Ms Meacher submitted that there was no reason why the fact that an advance service charge request was sent with the stage 2 notice should of itself invalidate the notice.  Mr Arthan in evidence said that this simply meant that if costs subsequently proved to be different, adjustments by way of refund or increased demands would need to be made.  The Tribunal agrees that sending an advance service charge demand at the same time as the second section 20 notice does not of itself invalidate the notice.  However, the Respondent’s calculated cost of the project was based on the estimate provided by HH Smith.  When coupled with the unqualified statement of intention in the notice to appoint HH Smith “after the expiry date of this second consultation notice” the opportunity to comment on the estimates was thereby rendered nugatory to a significant degree so as to invalidate the consultation.

(6) The consultation regulations require that the section 20 notices “specify the date on which the relevant [consultation period ends].”  The relevant period is defined in Article 2 of the consultation regulations as meaning “the period of 30 days beginning with the date of the notice.”  In the present case, for whatever reason, the Respondent stated that the period ended 35 days after the date of the letter.  This raises the issue of whether a statement in the notice that the period ended 35 days after the date of the letter satisfies the requirement in paragraph 8(2)(d)(iii) of Part 2 of Schedule 4 to the Consultation regulations that the notice “shall specify … (iii) the date on which the relevant period ends.”  The Tribunal considers that, quite apart from the insertion of the longer period of 35 days rather than 30 on which neither party sought to take issue and which may not in itself be critical, the notice failed to state a correct end date as required and therefore was invalid as such.”

The hearing and the parties’ submissions

14.        The President, in granting permission to appeal, ordered that the appeal should proceed by way of rehearing.  However neither the Appellant nor the Respondents sought to place any evidence before me.  Instead they were content merely to rely upon the documents which were before the LVT and to make submissions on the basis thereof.

15.        At the hearing Mr Bastin of counsel represented the Appellant.  Mr Stephen Hughes attended the hearing on behalf of himself and also on behalf of all those other lessees who were applicants before the LVT who were members of Regents Park Resident’s Association of which he was the chairman at the relevant time.  He indicated he was still authorised to represent these lessees, although he informed me that there is now (and has since August 2011 been) a right to manage company in place.  I was grateful to both Mr Bastin and Mr Hughes for their written submissions which they developed in oral presentation.

16.        On behalf of the Appellant Mr Bastin advanced the following arguments:

(1)         He pointed out that the notice dated 13 February 2007 expressly stated that the lessees could make observations in relation to any of the estimates.

(2)         He submitted that the passage in the notice stating “It is now our intention to enter into an agreement with HH Smith & Sons Co Ltd …” was doing no more than stating what the Appellant would do if the consultation did not throw up a reason for doing otherwise.  In fact several responses were received in response to the notice.

(3)         He pointed out the necessity, as explained by Mr Arthan in his witness statement, for getting some money in on account towards the imminent costs of the works.  He submitted that there was nothing sinister in basing the calculation of the demand for costs on account by reference to HH Smith’s estimate (being the lowest estimate).  Indeed he suggested the Appellant could have been criticised if it had based the demand on any higher figure.

(4)         He submitted there was no evidence to suggest that the Appellant had closed its mind to any observations that might be made upon the estimates.

(5)         He pointed out that the Appellant had not already awarded the contract – and did not do so until 4 June 2007.  Thus this is not a case where a landlord has effectively rendered the consultation period negatory by jumping the gun and entering into contractual arrangements for the works before the consultation period has expired.  Nor is there any complaint in the present case that the Appellant failed properly to take into consideration such observations as were made.

(6)         In summary he submitted the LVT were wrong in concluding that the consultation process was “rendered nugatory to a significant degree” and was thereby invalidated.

17.        As regards the separate point regarding whether the notice complied with the requirement that it should “specify … the date on which the relevant period ends” Mr Bastin advanced the following arguments:

(1)         He accepted that the notice did not specifically state a particular day of the calendar year as the date on which the relevant period ends.

(2)         However the notice on its face made clear how to calculate this date: thus the notice stated that observations must be made within the consultation period of 35 days from the date of the notice.  The notice bore the date 13 February 2007.  Accordingly all the recipient had to do was to count on 35 days from then to find out what was the date on which the consultation period ended.

(3)         He referred to Sheffield City Council v Graingers Wines Ltd [1978] 2 All ER 70.  That case was concerned with whether the council had validly brought into effect its ability to rate unoccupied property.  The material statutory provision was to the effect that:

“A rating authority may resolve that the provisions of Schedule 1 to this Act with respect to the rating of unoccupied property – (a) shall apply … to their area, and in that case those provisions shall come into operation, or, as the case may be, cease to be in operation, in that area on such day as may be specified in the resolution.”

The council had failed on the face of the resolution itself to specify 1 April 1974 as the date on which the relevant provisions were to come into operation.  However the Court of Appeal held the provisions had been validly brought into operation.  In particular he referred to the analysis of Scarman LJ:

“The word “specified” in my judgment means no more than “made clear.””

(4)         He also referred to Lower Street Properties Ltd v Jones [1986] 2 EGLR 67.  In that case an order for possession could only be made if the appropriate notice under section 21(4) of the Housing Act 1988 had first been served.  Section 21(4) so far as relevant provided that:

“… a court shall make an order for possession of a dwelling house let on an assured shorthold tenancy which is a periodic tenancy if the court is satisfied –

(a) that the landlord … has given to the tenant a notice stating that, after a date specified in the notice, being the last day of a period of the tenancy and not earlier than 2 months after the date the notice was given, possession of the dwelling house is required by virtue of this section.”

It appears that the notice given did not specify an actual date but instead stated that the notice would expire “at the end of the period of your tenancy which will end after the expiry of 2 months from the service upon you of this notice.”  The court held that this was a form of words which did meet the requirements of section 21(4) because the tenant knew or could easily ascertain the date referred to.  The decision in Sheffield City Council v Graingers Wines was referred to.  Reference was also made to Re Green’s Will Trusts [1985] 3 All ER 455 where Nourse J stated at p460 F:

“There is plenty of other authority, including that of commonsense, to the effect that “specified” merely means “unambiguously identified” or “made clear”.”

(5)         Mr Bastin pointed out that more than 30 days had been given rather than exactly 30 days, but neither the LVT nor the Respondents had suggested that giving a little more than 30 days invalidated the notice (the position would of course be different if less than the statutorily prescribed period was given).

18.        On behalf of the Respondents Mr Hughes advanced the following arguments:

(1)         He pointed out that, prior to the notice of 13 February 2007, there had already been obtained from SP a written Tender Report which recommended the HH Smith estimate.

(2)         Each lessee received with the notice a demand for payment based on the HH Smith tendered price.

(3)         The foregoing points, coupled with the phraseology of the notice itself and its statement that “It is now our intention to enter into an agreement with HH Smith…” was such as to carry the implication that it was not really worthwhile making any representations upon the estimates.

(4)         Mr Hughes accepted that there was no evidence before the LVT, and he did not seek to call any evidence before me, to the effect that any particular lessee read the notice of 13 February 2007 as carrying the implication that there was no point in making observations, nor was there any evidence that any such lessee was put off making such observations as they wished to make.  He said the closest that he could get to suggesting that lessees might have been put off making observations was to be found in Mr Pugh’s witness statement to the LVT wherein he described how (outside the first consultation period) he had oral discussions with Mr Arthan and raised certain substantive points, but was told that those were best dealt with separately and outside the present programme of major works.  He suggested that Mr Pugh’s statement might be some indication regarding whether people thought it was pointless to make observations.

19.        As regards the second point namely the fact that no calendar date was stated as the last date for making observations, he left it to the Tribunal to decide in the light of the legal authorities.  He said it was unhelpful for the recipient to have to calculate the date and that this could give rise to potential confusion.

Conclusions

20.        The points with which I am concerned in this appeal are very limited.  There is no appeal before me in respect of the LVT’s decision that the Appellant failed to comply with the consultation requirements in the 2003 Regulations in the two manners referred to in paragraph 9 above.  The only question before me is whether the LVT was correct in concluding that there are also two other separate failures by the Appellant in the consultation procedures, namely:

(1)         a failure properly to give notice to the lessees inviting them to make observations, in writing, in relation to the estimates, and

(2)         a failure to specify a precise date as the end of the consultation period.

In these circumstances I am conscious of the fact that it appears there will be in the near future an application to the LVT by the Appellant for dispensation from the consultation requirement (indeed I was told that the application has already been made).  Such an application will have to be decided upon its merits by the LVT.  There will of course exist the possibility of an appeal to the Upper Tribunal from the LVT upon this application for dispensation.  Accordingly it seems to me that I should, so far as I can, limit my findings in this decision to the bare question of whether either or both of these further failures in the consultation procedure in fact occurred and that I should refrain from making any observations which might touch upon the merits of any subsequent application for dispensation.

21.        I note that it is not suggested that in fact the consultation period after 13 February 2007 was pointless, such as would be the case in hypothetical circumstances where a landlord had already committed itself either contractually (or perhaps in principle) to a particular contractor.  The LVT did not find that the Appellant had jumped the gun in any such manner.  Instead the LVT’s decision was (as I understand it) to the effect that the message carried to a reasonable lessee by the notice, coupled with the accompanying documents (and especially the demand for payment based on the HH Smith estimate), was that it was in effect pointless (or perhaps merely of little value) for such lessee to trouble to make any observations.  It was in this sense that the LVT concluded that the opportunity to comment on the estimates was “rendered nugatory to a significant degree so as to invalidate the consultation”.

22.        The Regulations provide that the Appellant must, by notice in writing to each lessee,

“… invite the making, in writing, of observations in relation to those estimates.”

The notice in paragraph 3 stated

“Should you wish to make observations in relation to any of the estimates please do so in writing to us.  Observations must be made within the consultation period of 35 days from the date of this notice.”

23.        The notice therefore expressly stated that the lessee could, should the lessee wish to do so, make written observations in relation to any of the estimates to the Appellant.  Bearing that in mind, I consider that substantial reasons would be required for concluding that what the Appellant was expressly giving with one hand (namely the right to make written observations) was being taken away by the other hand such that in substance no proper invitation was being made to the lessees to make observations in writing in relation to the estimates.

24.        The principal matter that appears to have concerned the LVT is the phraseology of the paragraph which commenced:

“It is now our intention to enter into an agreement with HH Smith … on the recommendation of SP Projects, after the expiry date of this second consultation notice.”

It was this passage, coupled with the fact that the estimated cost of the project (on the basis of which the demand for payment was made) was based on the HH Smith estimate, which led the LVT to conclude as it did.  If the notice had said “It is at present our intention …”, that might have carried more clearly the message that this was a provisional intention capable or being changed and that it depended upon the consultation exercise.  However as a matter of the English language there is in my view little difference between “now” and “at present”.  I consider the notice as given which stated “It is now our intention …” should be read as though it said “It is at present our intention…”  Reading it this way I do not consider the consultation was rendered nugatory.  The relevant words did not say (and cannot be read as saying): “we have already made a final decision to enter into an agreement with HH Smith….”  I do not see any reason why the Appellant should not give the lessees information as to what the Appellant’s provisional thinking was on the subject of the estimates.  I do not consider that the fact that the notice made reference to the report on the tender evaluation (which recommended the HH Smith estimate) should be read as in some way telling the lessees that there was no real point in making observations.  It would have been of understandable interest to the lessees to know how the Appellant’s mind was provisionally working.  It may be that, in hindsight and as a matter of caution, the relevant passage in the notice would have been better framed if it had been along the following lines:

“It is at present our provisional intention (subject always to further consideration in the light of any observations received in accordance with paragraph 3 above) to enter into an agreement with HH Smith ….

However in my view the notice as served in substance carried this message, rather than carrying the message that it was pointless to make observations.

25.        Accordingly I am unable to read the notice, even coupled with the accompanying documents including the demand for payment, as carrying some sub text so as in effect to stifle the express invitation to the lessee to make written observations on the estimates and so as in effect to imply: our mind is made up so it is not worth your while putting in observations.

26.        I consider it significant that there is  no evidence from anyone that they were in fact misled about their ability to make observations or that there were some observations they wished to make but which they refrained from making in the light of the phraseology in the notice.  I do not consider that anything in Mr Pugh’s written statement can be taken as even suggesting that he refrained from making observations because of the phraseology of the notice coupled with the demand for payment – indeed his statement is dealing with matters at the end of 2006 and not with matters subsequent to the notice of 13 February 2007.  In summary the Appellant was obliged by the Regulations to serve a notice inviting the making, in writing, of observations in relation to the estimates.  The Appellant did so.  There is nothing to justify the conclusion that, although the Appellant expressly told the lessees of their right to make observations in writing, the Appellant was implying that it did not really mean this.

27.        As regards the question of whether the notice specified the date on which the relevant consultation period ended, it is true the notice did not specify a date of the calendar year by name.  However the notice did say that the consultation period was a period of 35 days from the date of the notice.  The date of the notice was 13 February 2007.  I realise there is the potential for ambiguity in that it is not entirely unknown for persons to be uncertain as to whether a period of 35 days from 13 February 2007 means a period of 35 days commencing on 13 February or a period of 35 days commencing on 14 February.  However the latter in my judgment is (a) correct and (b) the sense which was made clear by this notice.  I accept Mr Bastin’s argument based upon Sheffield City Council v Graingers Wines and also Lower Street Properties v Jones that it is not essential that the notice specify a date of the calendar year by name.  It was sufficient if the date was made clear.  In my judgment it was made clear.

28.        Accordingly I disagree with the LVT upon the two points which are before me in this appeal.  I do so respectfully and paying tribute to the detailed and careful way in which the LVT dealt with numerous separate matters in its decision.  Of all the matters the LVT decided, it is only these two discrete points which have been the subject of the appeal.

29.        In the result therefore I allow the Appellant’s appeal and I find that the Appellant was not in breach of Part 2 of Schedule 4 to the 2003 Regulations by either:

(1)   failing to comply with paragraph 11(10)(b), which required the service of a notice inviting the making, in writing, of observations in relation to the estimates, or

(2)   failing to specify in such notice the date on which the relevant consultation period ended.

30.        There is now, and has since August 2011 been, a right to manage company in place which has taken over the management responsibilities from the Second Appellant.  It was not made clear to me to what extent (if at all) there is the potential for the Appellants to seek to recover through the service charge their costs incurred in connection with these proceedings before the Upper Tribunal.  However when the question of whether a section 20C order should be made was raised at the hearing, Mr Bastin did not seek to advance any argument to the effect that such an order should not be made.  I consider it

would be just and equitable in the circumstances to make an order that the costs incurred or to be incurred by the Appellants in connection with these proceedings before the Upper Tribunal are not to be regarded as relevant costs to be taken into account in determining the amount of any service charge payable by the lessees at Regents Park.  I do so order.

 

Dated:  25 July 2012

 

 

 

His Honour Judge Nicholas Huskinson