Lehner v Lant Street Management Co Ltd [2024] UKUT 135 (LC)
19 December 2024
In 2019, the lease of Flat 44, 4 Sanctuary St, London SE1 was transferred to Mr Markus Lehner.
The plans
On 14 February 2020, Lant Street Management Company Ltd wrote to all leaseholders to inform them that it intended to carry out works to ensure that the blocks complied with advice from MHCLG, and to ensure that the flats were mortgageable.
To that end, it proposed to do the following:
(i) appoint a contractor to open up the cladding;
(ii) have an engineer review the base wall and fixtures;
(iii) agree of a suitable and compliant outline scope of works;
(iv) address identified breaches in respect of the cladding, insulation and party wall and fire breaks; and
(v) prepare a specification of the required works.
The costs
Just under a year later, on 05 February 2021, the leaseholders were notified that the total cost of the works would be £211,119.00, of which £61,119.00 would be paid from reserves.
Three days later, on 08 February 2021, Mr Lehner received a service charge demand for £1,244.85, which was said to be his contribution towards
Removing and replacing combustible insulation and
Installing extra fire stopping in cavities between interior and exterior surfaces of walls of parts of the building.
The demand wrongly stated that his landlord was Damgate Freeholds Ltd, and, frankly, that would have been the easy way out for the Upper Tribunal.
A demand that does not contain the landlord’s name and address and an address in England and Wales for the service of notices does not comply with sections 47 and 48, Landlord and Tenant Act 1987 and is not payable until those addresses are supplied.
The FTT’s decision
Mr Lehner disputed his liability under Schedule 8 to the Building Safety Act 2022, to pay the demand.
The FTT determined that Mr Lehner was liable to pay the demand in full.
It also suggested to Mr Lehner that, because of the complexity of the Building Safety Act 2022, it may be preferable for him not to rely on its provisions but to reserve his position for another occasion.
It was said that adopting that approach would not prejudice Mr Lehner’s right to rely on the leaseholder protections at a later stage.
The appeal
The parties headed for the Upper Tribunal.
Should Mr Lehner have reserved his position on the Building Safety Act 2022?
Martin Rodger KC and Peter McCrea FRICS, who heard the appeal, were polite but firm.
“We do not consider that to have been correct advice”, they said.
They continued:
The complexity of the new statutory provisions is obvious, but it is essential that they be grappled with in any case where liability to pay a service charge relating to building safety defects is in issue. It was suggested by [Counsel for the landlord] that the FTT had not been required to consider any issue under the Act which had not specifically been raised by Mr Lehner, but that is a misunderstanding of the role of the FTT, which was to determine the amount of the service charge payable.
It is incumbent on the FTT to consider whether there is some statutory provision (of which the parties may be unaware) which affects the answer to that question. That responsibility is particularly engaged where the parties’ rights may be affected by new or complex legislation, such as the 2022 Act.
They then turned to the nuts and bolts of the leaseholder protection scheme in Part 5 and Schedule 8 to the Building Safety Act 2022.
Working their way systematically through the protections, Martin Rodger KC and Peter McCrea FRICS concluded that Mr Lehner was not liable to pay anything towards the works, even if a valid demand were raised:
The work in respect of which the demand was made was “cladding remediation”;
As the owner of a qualifying lease, Mr Lehner was protected by paragraph 8 of Schedule 8 to the Building Safety Act 2022, and
Was therefore not liable to contribute towards the cost of the works.
The leaseholder protections
The FTT was not wrong when it described the Building Safety Act 2022 as complex.
Recognising the convoluted character of the Act, Martin Rodger KC and Peter McCrea created a framework of questions, saying:
It may assist in other cases if we suggest a sequence of questions which a decision maker should address when determining whether service charges are payable in respect of work to which the leaseholder protections may apply. We identify the headline issues below and provide a fuller list of the questions and sub-questions which may arise in the appendix to this decision. The headline list addresses the issues in this appeal and additional questions may need to be considered in other cases.
That sequence of questions, adopted as a series of steps in Mr Lehner’s appeal, transform the Upper Tribunal’s decision from a dispute about £1,244.85 into practical guidance on how (on earth) to work out whether a leaseholder is protected from the cost of remedying “relevant defects”.
In the webinar that I ran on this case in July, I turned the narrative steps into visuals, with a flow chart for the various steps to follow.
I have included the four most summary graphics below. You can download the suite of flow charts here.
TOOLS!!