Brady Solicitors had the opportunity to ‘test out Daejan’ for real on 10 May, with a successful application for dispensation under Section 20ZA.
Current case law states that a landlord can only recover £250 per leaseholder towards the costs of qualifying works unless he has followed the statutory service charge consultation process or obtained dispensation from the FTT.
And dispensation has been the subject of recent scrutiny, with the high value Daejan Supreme Court ruling setting a precedent for considering the degree of prejudice caused to leaseholders by a landlord’s failure to properly consult.
In our recent FTT (LVT) case there had been a clear breach of the service charge consultation requirements but we were able to demonstrate that the landlord had allowed the leaseholder an active role in planning the works and in determining how his service charge monies were being spent – including having amendments made to accommodate his queries.
The landlord had evidence of the meetings, emails, letters and documents provided to the leaseholder and could demonstrate that no monies had been spent until the leaseholder had been given his say.
The FTT found that the landlord had acted within the spirit of the requirements and the leaseholder had suffered no prejudice from the failure to consult.
Dispensation was granted in full.
This case highlights that dispensation can be a useful tool so long as you can demonstrate to the FTT beyond doubt that you have caused no prejudice to the leaseholders.
This means you need to be able to show that leaseholders have been involved with the qualifying works planning process and are aware of how and where their money is being spent.
Dispensation is a practical and sensible option for managing agents with good leaseholder relations that are willing to engage in regular, open and transparent communications, and to demonstrably act at all times in the best interests of the leaseholder.