The recent case of Leaseholders of Foundling Court and O’Donnell Court v London Borough of Camden and others [2016] considered whether the statutory obligation to consult was a requirement imposed on a superior landlord and, if so, whether it was necessary to consult individual leaseholders as well as the intermediate landlord.
Foundling Court and 0’Donnell Court are parts of the Brunswick Centre, a Grade II-listed residential and shopping centre located between Brunswick Square and Russell Square in London.
The modernist development was completed in 1972 and leased to the London Borough of Camden under a lease granted in 1982. The Brunswick Centre contains 408 flats, of which 87 are let on long leases, with leaseholders required to contribute through a service charge towards certain costs incurred by their landlord, Camden. The freehold was acquired by Allied London in 2000, with major works carried out in 2005.
The leaseholders brought an application to determine, inter alia, the extent to which they were required to contribute to the cost of the botched 2005 works. The matter was transferred to the Upper Tribunal due to the complexity of the issues raised.
Who ought to have consulted the leaseholders?
Allied London had given a notice of intention and notification of estimates to Camden in 2004, who subsequently passed these on to the leaseholders. It was conceded by Camden that its letter enclosing the second-stage consultation notice did not allow the required 30 days for a response.
The leaseholders contended that their contribution should be limited to £250; Allied London had failed to consult at all and/or Camden had forwarded the second-stage notice late.
The Upper Tribunal held that the primary purpose of S.20, Landlord and Tenant Act 1985 and the Service Charges Regulations 2003 was to ensure those who are ultimately responsible for paying for the works or services are consulted.
Paragraph 1(1)(a) of the applicable schedule to the regulations requires the landlord to give notice ‘to each tenant’. This provision referred to the landlord who ‘…intends to carry out qualifying works’. As Allied London had intended to carry out the works, the Upper Tribunal determined that it was responsible to undertake the consultation.
To whom should the consultation notice have been given?
The Upper Tribunal considered the landlord’s requirement to give notice ‘to each tenant’ and stressed that when interpreting the requirement, appropriate weight should be given to the word ‘each’. It rejected the argument that there must be a direct contractual relationship between a landlord and tenant before the requirements were engaged, and determined that where a dwelling is sub-let, the expression ‘tenant’ included a ‘sub-tenant’.
The Upper Tribunal recognised the potential practical difficulties in identifying tenants on whom the notices must be served. It was suggested this could be combatted by serving notices addressed to ‘the leaseholder’, by seeking the co-operation of the intermediate landlord, or by applying for dispensation.
Where dispensation needs to be obtained, intermediate leaseholders are likely to have a vested interest in co-operating given that any service charge they seek to collect is limited to £250 per dwelling.
Jeff Hardman is a barrister at Arden Chambers and Ranjeet Johal is a partner at Mills Chody LLP
