{"id":11018,"date":"2014-12-11T11:19:10","date_gmt":"2014-12-11T10:19:10","guid":{"rendered":"http:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=11018"},"modified":"2015-09-14T11:56:22","modified_gmt":"2015-09-14T11:56:22","slug":"landmark-court-of-appeal-ruling-balances-contrasting-aggregate-and-sets-approaches-to-service-charges-resulting-in-boon-for-landlords-and-tenants-alike","status":"publish","type":"page","link":"https:\/\/www.propertysurveying.co.uk\/newsletter\/?page_id=11018","title":{"rendered":"Landmark Court of Appeal ruling balances contrasting \u00e2\u20ac\u02dcaggregate\u00e2\u20ac\u2122 and \u00e2\u20ac\u02dcsets\u00e2\u20ac\u2122 approaches to service charges, resulting in boon for landlords and tenants alike"},"content":{"rendered":"

Ref. Francis v Phillips (2014)<\/em><\/strong><\/p>\n

Section 20 of the Landlord and Tenant Act 1985 limits a landlord\u00e2\u20ac\u2122s recovery of the cost of qualifying works from residential tenants by service charge to \u00c2\u00a3250 per tenant, unless the landlord complies with a prescribed consultation process or obtains a dispensation from doing so from the appropriate tribunal. The issue assessed by the Court of Appeal in this case related to the specific meaning of \u00e2\u20ac\u0153qualifying works\u00e2\u20ac\u009d, because interpreting this phrase directly influences the maximum amount of costs that can be incurred without having to consult or seek dispensation.<\/h3>\n

The High Court adopted the \u00e2\u20ac\u02dcaggregating approach\u00e2\u20ac\u2122, by which all works carried out during the year are aggregated together, regardless of work type. Once the combined value exceeds the \u00c2\u00a3250 limit per tenant, the landlord would have to consult or obtain dispensation from the appropriate tribunal. If he or she were to fail to do this, they would have no right to recover the full amount without court dispensation.<\/p>\n

For example, a block of flats has four tenants and the annual regulatory limit is four x \u00c2\u00a3250 = \u00c2\u00a31000. The landlord carries out works to the building costing \u00c2\u00a3275, but does not consult. In the same year, he also carries out door and window works costing \u00c2\u00a3825 and \u00c2\u00a3360 respectively. Under the \u00e2\u20ac\u02dcaggregating approach\u00e2\u20ac\u2122, the door works exceed the limit for the year.<\/p>\n

The \u00e2\u20ac\u02dcSets approach\u00e2\u20ac\u2122 differs, however, and it is this interpretation that the Court of Appeal favoured. Under this approach, Section 20 should be applied by reference to the individual sets of works. As such, in the example above each set of work is distinct and would be treated separately. The Landlord could therefore go ahead and undertake all three work types, without consultation.<\/p>\n

This is significantly more efficient and avoids the expense of a lengthy consultation process. Even so, the tenants still have the statutory protection of the costs being \u00e2\u20ac\u02dcreasonably incurred\u00e2\u20ac\u2122 and the works being of a \u00e2\u20ac\u02dcreasonable standard\u00e2\u20ac\u2122.<\/p>\n

Having established that the sets approach should be applied, the Court went on to distinguish what qualifies as a single set of works. The following relevant factors were established as a result:<\/p>\n