The Mayor and Burgesses of the London Borough of Lambeth v Michaela Ann Kelly & Ors

An application for dispensation from statutory service-charge consultation requirements may be made after a determination of payability under section 27A of the Landlord and Tenant Act 1985. The issues are distinct, and the statutory scheme imposes no temporal bar.

Under section 20ZA, the tribunal must decide whether dispensation is reasonable. The central consideration is relevant prejudice: the tenant must identify some disadvantage that would not have occurred if consultation had taken place. The landlord retains the legal burden, but the tenant must identify relevant prejudice. A failure to provide timely and adequate information may impair that opportunity, particularly where works are old. Even a wholesale failure to consult does not itself establish relevant prejudice. Where no actual loss is shown, unconditional dispensation may nevertheless be granted.

The London Borough of Lambeth carried out repair works to a converted property and later charged leaseholders through service charges. The consultation requirements under section 20 of the Landlord and Tenant Act 1985 had not been complied with before the works were carried out.

The First-tier Tribunal determined that one leaseholder’s liability was capped at £250. The council subsequently applied under section 20ZA for dispensation. The FTT refused the application, holding both that it had been made too late after a section 27A determination and that dispensation was not reasonable because of prejudice, inadequate information and delay.

The Upper Tribunal considered whether section 20ZA jurisdiction survived the earlier section 27A determination and how relevant prejudice should be assessed.

1. Appeal allowed. The FTT had jurisdiction to determine a section 20ZA application made after a section 27A determination. Nothing in the statutory scheme imposed such a temporal bar. The two applications concern different issues: section 27A addresses payability, whereas section 20ZA concerns whether it is reasonable to dispense with consultation and may involve additional evidence, submissions and conditions. The FTT’s conclusion that the council was bound by its earlier determination was therefore erroneous.
2. The section 20ZA discretion is governed by whether dispensation is reasonable. The principles in Daejan Investments Ltd v Benson [2013] UKSC 14 provide direction but do not impose rigid rules. Relevant prejudice remains central. The landlord bears the legal burden, while the tenant bears the factual burden of identifying some disadvantage which would not have occurred if consultation had been undertaken. The more egregious the failure, the more readily prejudice may be inferred.
3. The FTT was entitled to find that the council had failed to provide adequate information in advance and that the delay made it more difficult to investigate the works. However, information sufficiency varies with the circumstances, and no general guidance was appropriate. A tenant must still identify some form of loss or disadvantage. The asserted inability to budget was not relied upon on appeal and was disregarded. The absence of evidence that the works caused financial or other prejudice meant that the remaining prejudice was insufficient.
4. The Upper Tribunal therefore granted unconditional dispensation under section 20. The FTT’s section 20C orders remained in force, and a further section 20C order was made for the Upper Tribunal proceedings.

• First-tier Tribunal (Property Chamber): determined that the consultation requirements had not been complied with and capped the relevant leaseholder’s liability at £250; subsequently refused dispensation under section 20ZA and refused permission to appeal.
• Upper Tribunal (Lands Chamber): allowed the appeal, held that a section 20ZA application could be made after a section 27A determination, and granted unconditional dispensation.