Phillips and Goddard v Francis to be revisited in 2014

About this time last year the Chancellor of the High a Court handed down judgment in an appeal of a decision of the Upper Tribunal (Lands Chamber) in a case involving Point Curlew Holiday Park in Cornwall which has has far reaching consequences for residential property management across the country. The decision turned on its head the received wisdom that the consultation process for qualifying works under section 20 of the Landlord and Tenant Act 1985 should be applied on a project by project basis.

Project by project consultation was open to abuse in that landlords would in some cases artificially split a programme of works into sufficiently small portions to deliberately evade the consultation process. Consultation is required where the contribution of any individual tenant to the cost of qualifying works exceeds £250. The consultation process is designed to allow tenants the opportunity to have input into both the scope of works to their block and also to influence the choice of contractor but can prevent landlords from instructing connected or preferred contractors.

As I understand it, the original LVT decision in the Phillips and Goddard v Francis case based it’s reasoning on there being no qualifying works requiring consultation under section 20 (so far as I am aware the had been inadequate or no consultation by the landlord and no claim for dispensation either). Accordingly, the landlord was not capped at recovering only £250 per leaseholder and could recover its expenditure in full.

The result of the tenant’s appeal turned received wisdom of the operation of section 20 on its head and led to landlords and managing agents having to rethink their approach to major works because of the risk of substantial irrecoverable expenditure.

The Chancellor of the High Court rejected the concept that qualifying works could be split into different sets and instead propounded the idea that the intention of the amended statutory scheme was for the landlord to consult on an annual basis for all qualifying works proposed to take place in the forthcoming year. This change to established practice created some practical headaches for property managers who often were not and could not be aware of all the likely qualifying works due to take place in any given financial year sufficiently in advance to properly consult. That has given rise to some criticism of the decision, although a critique on this basis overlooks the availability of dispensation applications to remedy some of these difficulties.

As I understand it the landlord has secured some financial backing from parts of the property management industry in order to move forward with an appeal and recently obtained permission to appeal out of time. It is expected that the appeal will be heard in the early part of next year and could draw a line under the uncertainty of the past twelve months.

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