We covered Daejan Investments Ltd v Benson and others [2011] EWCA Civ 38 when it was in the Upper Tribunal (Lands Chamber) (our note, here). For a summary of the relevant law and facts, please see that earlier post (slightly lazy, I know, but I am very tired).
Daejan, as I suspected, pursued the case to the Court of Appeal and their appeal has now been dismissed. It’s a not uninteresting judgment.
The Court of Appeal notes that the primary focus of an appeal is likely to be the decision of the LVT and not the UT(LC), although it would be appropriate to give some weight to the approach taken by that specialist appellate tribunal. Although they don’t say so, this must only be so where (as here) the UT(LC) conducted the appeal by way of review and not re-hearing.
On the power to dispense with the consultation, the Court of Appeal held that financial consequences of failing to grant dispensation were irrelevant:
(a) if that were not so, then it would mean that, the more expensive the works in question, the more likely it was that dispensation would be granted;
(b) it was impractical to look at the financial consequences for the parties, since this would require the LVT (or UT(LC)) to have to examine how financially secure each landlord and tenant was;
(c) the power to dispense was with the consultation requirements, not the consequences of non-compliance with those requirements.
The nature of the landlord might be a relevant factor in deciding whether to grant dispensation (i.e. a lessee-owned/controlled company might enjoy greater flexibility than a private party) but that did not arise in the present case
The key feature was likely to be the degree of prejudice caused to the tenants. A proper consultation process was the essence of the statutory scheme and curtailing consultation was a serious failing that could cause significant prejudice.
So, what sort of cases might be suitable for dispensation? In the view of the CA, there were three: (a) emergency works; (b) where there was only one possible contractor; (c) where there had been a minor breach which had caused no prejudice.
at the risk of disrespecting their lordships, isn’t one possible measure of prejudice to the tenants how much the lack of consultation will cost them??? or is that just me.
But the consultation process has to be looked at as a whole; it is an end (and a good) in itself. Once you detract from that, why should the circumstances of any particular tenant matter?
A useful result for leaseholders.
J will no doubt correct me if I’m wrong, but I always thought that the introduction of s.20ZA was to give the LVT greater power to penalise landlords who had failed to consult, but had acted reasonably, so that it ensured that landlords bothered actually bothered to consult (that being the whole purpose of the section).
However, it seemed to me that the way they did it – i.e. just giving the court an even broader discretion – just gave the LVT more leeway to let landlords off the hook. So long as their judgment was not irrational – and therefore not appealable – the landlords could get off scotfree.
Thus, where a landlord had not bothered to consult and actually acted completely unreasonably, when challenged about that at a later date they were now able to run defences, such as in this case, that it was reasonable in the circumstances to dispense with consultation because it would have made little difference. While they didn’t succeed here, we all know that they often do.
This case must surely change that and (hopefully) ensure that what Parliament intended is actually given effect.
I’m not really sure what s.20ZA was supposed to do, other than bring everything into the LVT.
The problem with the old dispensation powers was that they were far too limited; not only did the landlord have to have acted reasonably (in the circumstances of the breach of the consultation requirements) but it then had to be reasonable to grant dispensation. In practice, it was usually limited to emergency works: see, e.g. Wilson v Stone (only an LVT case, but an oft-cited one).
I think Parliament probably did intend for consultation to be the norm and, certainly, I agree that consultation is a good in itself. But I can’t help but feel that the leaseholders here probably got a bit of a windfall.
I’ll be honest, I’m not too worried about how this pans out in the private sector. There are clear indications that lessee-owned freeholders/landlords (enfranchisement companies or RTM companies) will get a more generous approach (and probably rightly so). The private sector landlords will, in most cases, have managing agents / surveyors to do the s.20 consultation for them (and, hence, an insured party to call on if this goes wrong).
What I am more troubled by is the public sector; but I’ve not quiet thought the implications through yet. And I need to sleep.
Appeal to be heard by the Supreme Court (Hope, Mance, Clarke, Wilson & Sumption) on 4 December.