Court of Appeal Service Charges Decision in Phillips and Goddard V Francis
Leading managing agent RMG says outcome balances a tenant’s right to be consulted on qualifying works with the practical realities of residential property management
On 31 October 2014, the Court of Appeal gave judgement in an important service charge case. It concerned the consultation requirements for qualifying works arising out of section 20 of the Landlord and Tenant Act 1985 (“the Act”).
Section 20 of the Act places an obligation upon landlords to consult with tenants before undertaking works to a building which exceed a particular value. The case has given helpful guidance upon the circumstances where consultation is required.
In December 2012 the High Court had suggested that a landlord/management company should consult with the residential tenants if any tenant would be required to contribute more than £250 to the total costs of qualifying works in an accounting period.
The Court of Appeal has confirmed that the correct approach to consultation under section 20 of the Act is that it should be applied to discrete sets of works and not to the aggregate works over an entire accounting period.
This is a common sense decision and is in the interests of both landlords and tenants. The traditional project by project approach has been comprehensively endorsed by the Court of Appeal. Adopting an aggregated approach to consultation for qualifying works could have placed a near impossible burden upon landlords and management companies to the detriment of tenants and the estates in which they live.
Chris Alexander, Head of Legal Services at RMG welcomes the decision: “We are pleased that this decision has removed the uncertainty surrounding the statutory consultation process for qualifying works. The Court of Appeal has resolved the issue in a sensible and practical way which balances a tenant’s valuable right to be consulted on qualifying works with the practical realities of residential property management.”
Passionate about being the best in the business, RMG continues to campaign for increased regulation for the property management sector, in a bid to eradicate unscrupulous operators and to engender a more positive reputation for the industry.
RMG is one of the UK’s largest independent managers of residential property for the private and public sectors with an annual turnover of some £26 million and 370 employees. A truly nationwide business, the company has four main offices located in Hoddesdon, Northwich Central London and Glasgow.
RMG has a strong trading history dating back over 50 years and is backed by a dynamic senior management team, comprehensive back office, financial, compliance and customer service functions as well as a stringently controlled approved contractor scheme for supervision of repairs and maintenance.