Court of Appeal reverses controversial decision: when does a residential landlord's duty to consult on service charge works arise?

Court of Appeal reverses controversial decision: when does a residential landlord's duty to consult on service charge works arise?

When does a residential landlord's duty to consult on service charge works arise? The Court of Appeal has reversed a controversial High Court decision, confirming that the High Court’s ‘aggregated’ approach to qualifying works was wrong.

What was the issue?

The Landlord and Tenant Act 1985, s 20.provides that the service charge contributions recoverable from tenants in respect of 'qualifying works' are limited to the 'appropriate amount' (currently £250 per tenant) unless the consultation requirements have either been complied with in relation to the works or dispensation has been obtained.

Before the High Court decision in Phillips v Francis [2012] All ER (D) 225 (Dec), the generally accepted view was that the correct approach to the meaning of 'qualifying works' was to identify separate sets of works or projects for the purpose of identifying whether the relevant costs exceeded £250 per tenant so triggering the statutory consultation process.

In the High Court, the Chancellor decided that the correct approach was to aggregate all works in any given year (aggregating approach) without division into separate sets of qualifying works (sets approach). The decision is unpopular with landlords and has been the subject of considerable criticism. The Secretary of State intervened in the appeal to the Court of Appeal because:

'...the point raises a question of statutory construction of public importance with the potential to affect a large number of residential landlords and tenants throughout the country. The Chancellor had construed the legislation in a way which is at odds with what, it seemed, had previously been the general understanding of the position'

Court of Court of Appeal has held that the High Court's aggregating approach was wrong

Phillips and another v Francis and another (Secretary of State for Communities and Local Government) [2014] EWCA Civ 1395

The Court of Appeal decided that the aggregating approach in interpreting 'qualifying works' in LTA 1985, s 20 was wrong:

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About the author:
Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.