Opinion Flat Living WHAT THE EXPERTS THINK


Bob Smytherman


What arethe implications of therecentHighCourt decision in Phillips and Goddard v Francis


THE HIGH COURT decision in Phillips andGoddard-v-Francis lastDecember has sent theleaseholdsectorinto atailspin. Thecasehasimportant repercussionsfor themeaning of “qualifyingworks”inSections20 and20ZAofthe Landlord andTenant Act1985and couldhavefar reaching implications forlandlords,RMCs, RTMCos andmanagingagentsalike. Asweareallwellaware, Section


20 requires landlords to consult with flatownersbeforecommittingto building andmaintenancework that will cost morethan£250 perleaseholderortolongterm agreements with contractorsworth morethan£100per leaseholder. Failuretogothrough this consultation processmeans the landlord will not be able to recover thecost of theworkfrom individual flatowners. Thereasonwhy thedecisionin


Phillips andGoddard-v-Francis is important, is becauseitruled that theapproach takensince thecaseof MartinvMarylandEstates [1999]of consideringwhetheraparticularset ofworksare “qualifyingworks”is wrong. Instead of looking at projects individually theHighCourt ruled that allthese qualifyingworks should be broughtintothe account forcalculatingthe flatowners’ contribution. In otherwords, thecaseseemsto


indicate that landlordsand property managers should considerwork collectively over theservice charge year.The decision suggeststhatit is nottheimpact in servicecharge terms on a leaseholder as the result of an individual projectthatone should be concernedabout,but the impact of all of theworks thatmight beundertaken in thewhole service chargeyear. If,collectively, they will result in anyflatownerpaying


30


morethan£250towards them, then consultation is required forall those projects, howeverminor they mightbe.Unless youare living in a very large block, thismeans that consultation will be required on virtuallyall proposedworks, as not manymaintenanceprogrammes will comein at less than £250each forthewholeyear.Most landlords (rightly)won’twanttotakethe risk that thetotal cost ofminor or urgentwork will notexceed the£250 threshold; thenewrulesare likely to prove both time-consuming and onerous for all concerned. Theproblemwith this judgement


is that it failstotakeintoaccount thecomplexitiesofleasehold propertymanagement.Landlords andpropertymanagers arenow goingtohavetoconsidertheir budgetsmorecarefully andconsult farmorefrequentlythanbefore- whichcould endupcostingmorein thelongrun. Untilsuchtimeasthisdecision


is appealed,landlordswillneed to startviewing qualifyingworks as a whole or runthe risk of beingunable to recoveranyamountsthatexceed thecurrent consultation limitof £250 per flatowner. It seems there is no longer anyscope forseparating thequalifyingworks into “setsof works” nor of treating somework as fallingbelowa‘triviality’threshold and being recoverable separately. Someleaseholdersmightat


first sight thinkthatitwas a good decision,inthatlandlords andtheirmanaging agents will have to consultmorefrequently. Ithink this ismisguided, as the cost of consultationswould have to be added to theservice charge andthe expenseislikelytobe disproportionate to anysavings. It alsomeans that landlordswill


The expense is likely to be disproportionatetoany savings


Unless you arelivingin a very large block, this means that consultation will be required on virtuallyall proposed works


be reluctanttoundertake evenminor emergencyrepairs withoutconsulting residents andweall knowhowlong it cantaketoget an urgent dispensation fromthe LVT. There has been somesuggestionthat


itwould be possible to enter into long termagreements to provide qualifying worksand then deal with themore limitedrequirementsimposedwhen qualifyingworks areproposed, but Ican’t seehowthiswouldwork. Onewould have to consultonthe agreement and howcould you consult on a contractwhichwould be entirely open-ended, in terms of thework it wouldinvolve? Thewhole point of the consultation is that thepayingleaseholders have the


chancetocomment on n Whether theworkisnecessary; n Howitisproposedtodoit; n Whoshould carryitout;and n What the proposed contractors are


goingtochargefor it. TheFPRAwillbeprovidingmembers


with further informationon this High Courtdecisioninthemonthsahead andwillcontinuetoprovideimpartial advice on servicechargeand leasehold disputes.Inthemeantime,Iamvery interested to hear readers’ views on this subject either at the FPRAor addressed to the Editor at Flat Living.●


BobSmytherman Chairman,TheFederationofPrivateResidents AssociationsLtd Emailbob@fpra.org.uk Gotowww.fpra.org.ukto find out more about theFPRAand itslegal advice service whichis free tomembers.


Issue 14, Spring Flat Living


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64