By Joshua Dubin, the barrister who won for the leaseholders
The Aster Communities v Chapman decision does not entirely redress the balance which tipped in favour of landlords in the Daejan v Benson judgment. But it might go a little way to ameliorate the position of tenants. It is important to remember that in Benson the Supreme Court said that costs incurred by tenants would have to be shown to be unreasonable before a landlord could avoid paying them as a condition of dispensation (see ); that dispensation would be granted often on (three) conditions – that landlords bear their own costs, that they pay the tenants’ reasonable costs of investigating and challenging the application for dispensation, and that tenants are accorded a reduction [in service charges] to compensate them fully for any prejudice (see ). Lord Neuberger JSC also said that any conditions could be imposed that were ‘appropriate in their nature and effect’ (see ).
To that extent, HHJ Bridge was straightforwardly applying Benson. The conditions imposed by the FTT in Chapman fall within the Benson guidance. However, this was the first substantive decision of the UT on the conditions themselves. OM Property Management Ltd  UKUT 9 (LC) looked at the Benson exercise of discretion in relation to the prejudice question but did not deal to any significant extent with the conditions point, because in that case there was no prejudice.
The two areas where Chapman treads on what may be new (and potentially fertile ground) are in the related areas of prejudice and evidence.
First, the tenor of Benson is that ‘prejudice’ means that the tenants can demonstrate that, absent the consultation failure, the works would have cost less (see particularly Benson ,  and ), so that prejudice is measurable by the costs of the works. Chapman goes beyond this. The prejudice may lie in the tenant’s inability to say whether or not the works should cost less. Thus, in Chapman, the service charge cost is not the lodestone by which to judge prejudice, as Benson strongly suggested. The tenants may be prejudiced by an inability to test the landlord’s assertion that works are necessary. Key to this is that the landlord cannot argue that testing the appropriateness of the relevant works must be part of the reasonableness argument on a s.27A L&TA 1985 application, because being able to put off such an argument to a substantive application would almost wholly neutralise the statutory dispensation power. See Chapman at , .
Secondly, though Chapman accepts that the legal burden lies on the landlord but the factual burden to prove prejudice lies on the tenant, HHJ Bridge says that it is a fallacy to equate the factual burden with an evidential one. In major works cases particularly, the Tribunal dealing with the application to dispense may well already have heard much evidence from the parties on an s.27A or similar application. The Tribunal is entitled to take that into account. And moreover, where the landlord does not supply its evidence at the outset of the application, it cannot later complain that the tenants have not supplied rebuttal evidence. This is new, though it may not be a new principle.
In those limited ways, the Chapman decision shows that FTTs may apply and extend Daejan in a flexible way that meets a variety of prejudices.
There is also useful guidance at the very end of Chapman on how to turn a condition expressed by the FTT in very broad terms into a workable mechanism using both cooperation and the FTT’s power to give directions on paper application. This may come as news to some practitioners, but it really shouldn’t.
Andover asphalt major works war sees landlord forced to pay for leaseholders’ expert – Leasehold Knowledge Partnership
By Harry Scoffin Leaseholders denied consultation are entitled to have their surveyor fees put on the landlord’s tab, an upper tribunal judge has ruled. New costs have been imposed on landlords looking to rush through contentious major works programmes due to an upper tribunal ruling last month that has sent shockwaves through the sector.
Epic leasehold battle ends with victory of freeholder in the Supreme Court – Leasehold Knowledge Partnership
The seven-year legal battle over a £280,000 major works contract ended today in defeat for the leasehold residents at the Supreme Court. But it was a Pyrrhic victory. Freeholder, Daejan, a part of the Freshwater empire, which had failed to follow the correct consultation procedure, was ordered to lop £50,000 off the bill and pay the leaseholders’ legal costs.
Supreme Court ruling on Daejan v Benson gives freeholders the whip-hand and is ‘a judgment that tenants might consider disappointing’ – Leasehold Knowledge Partnership
The lawyers representing the leaseholders in the Daejan v Benson Supreme Court case earlier this week have given their analysis of the case. Philip Rainey, QC, and colleagues at Tanfield Chambers, represented leaseholders at Queens Mansions, Muswell Hill, in north London, who had not been properly consulted on £280,000 of major works.
I wonder if this ruling can be used in defence of leaseholders being forced to pay for cladding replacement?
I note that in reference to cladding mention is made of “Appropriate” costs not the more usual “reasonable” costs?
So, as I understand it the landlord did receive dispensation for the works and is able to charge the full cost to lessees, even though the LTT ruled that most of the work was unnecessary. All that the lessees get out of two court cases is that the landlord has to pay their costs. Lessees still have to pay for the cost of unnecessary work. They might as well not have bothered in the first place and would still be in the same position having saved themselves a lot of trouble. Or am I missing something.