BDW Trading Ltd & Anor v South Anglia Housing Ltd

The consultation requirements for a qualifying long-term agreement under the Landlord and Tenant Act 1985 apply only where the agreement is entered into by an existing landlord. The expression “the landlord” does not extend to an owner who may become a landlord in the future. The statutory definitions provide no basis for that enlarged meaning. The possibility of seeking dispensation from the Leasehold Valuation Tribunal does not justify imposing consultation obligations where no tenant exists. Contemporaneous regulations and consultation material may assist statutory interpretation, but they do not control the meaning of the Act and carry little weight where the statutory language is clear and the subordinate legislation appears to rest on an unexamined assumption.

The claim concerned a 25-year agreement for the supply of heat, hot water and electricity to a residential development. When the agreement was made, no part of two of the blocks had been let and there were no tenants with whom consultation could take place.

The claimants argued that the agreement was not a qualifying long-term agreement because section 20ZA of the Landlord and Tenant Act 1985 referred to an agreement entered into by “the landlord”, meaning an existing landlord. The defendant argued that the expression included a prospective future landlord. It relied on the statutory dispensation procedure and on the Service Charges (Consultation Requirements) (England) Regulations 2003, which contemplated agreements made when there were no tenants.

The central issue was whether the statutory consultation regime applied to a long-term agreement made before the relevant buildings were constructed or let.

1. The claimants succeeded. The court held that the consultation requirements in sections 20 and 20ZA of the Landlord and Tenant Act 1985 did not apply to the agreement.

2. The statutory definitions in sections 30 and 36 used “landlord”, “tenant”, “lease” and “tenancy” in their conventional senses. They did not extend “the landlord” to a person who might later become a landlord. If Parliament had intended the provisions to cover agreements made before construction or letting, it would have said so expressly. The original statutory scheme, which concerned works to an existing building, also supported that construction.

3. The absence of consultation did not make that interpretation absurd. Later tenants retained the protection of section 19, since unreasonable service charges could still be challenged. They could also investigate the likely charges before taking a lease. Requiring an owner to consult non-existent tenants, or to seek dispensation in a normally adversarial tribunal without respondents, strongly militated against the defendant’s construction.

4. The reasoning in Paddington Basin Developments Ltd v West End Quay Estate Management Ltd [2010] 1 W.L.R. 2735 did not govern the case. That decision concerned difficulty in applying consultation requirements, whereas the present case concerned the complete absence of any possible consultees.

5. Following the principles stated in Hanlon v The Law Society [1981] A.C. 124, the regulations and consultation paper were admissible as contemporaneous material. They could not control the Act’s meaning. Their apparent assumption that the Act applied where there were no tenants appeared to result from a failure to consider the statutory wording. They therefore had little persuasive weight and did not displace the clear meaning of section 20ZA.

6. The consultation requirements of the Act had no application to the agreement in question.

First-instance decision. No earlier decision in the same proceedings is stated in the judgment.