Property company Daejan Investments Ltd. has failed in its bid to overturn Tribunal decisions concerning repair works carried out at the company’s Queens Mansions property in Muswell Hill, London. The recent Court of Appeal ruling will cost Daejan almost £270,000 in repairs that cannot be recharged to tenants.
The Court upheld decisions made by the Lands Tribunal and the Leasehold Valuation Tribunal that Daejan had failed in its duty to engage in proper consultations with long leaseholders of apartments in Queens Mansions. It was further held that no dispensation order would be made under the Landlord and Tenant Act 1985. A dispensation order would have allowed Daejan to charge the full cost of the works to its leasehold tenants. The company is now only able to charge the statute-capped sum of £250 to each tenant.
Even though this left a bill of nearly £270,000 to be met by Daejan alone, the Court upheld the view that the financial consequences were irrelevant to the statutory requirement to consult on such matters. The statutory principle applied was that there is a clear duty for the landlords of long leasehold tenants to charge leaseholders only for maintenance and repairs that are reasonable and where the work is carried out to a reasonable standard. Before commencing the work, the landlord must give proper notice to tenants, obtain estimates of the cost of the work and allow leaseholders to make their own submissions and otherwise consult on the plans.
Lawyers for Daejan argued that the resulting cost to the company was unreasonable and that it should be granted a dispensation to allow it to follow the normal practice of charging the full cost of such works to its leaseholders. They argued that although consultation was indeed curtailed in error by Daejan, the leaseholders were not unduly prejudiced by the lack of proper consultation as the works were required and would have to have gone ahead regardless of any consultation. The Court disagreed and the appeal was dismissed.
“This case illustrates that the courts will uphold the statutory requirement for consultation in such cases,” says Mark Brown, Head of Property at DFA Law. “In this instance, the leaseholders have benefited considerably by the decision, at a substantial cost to the landlord. The decision further emphasises the need to ensure that correct legal procedures are applied when planning repair and maintenance works to properties.”