Websters Accountants - Property Accounting & Property Auditors

An article by John Levy of Lewis Silkin solicitors

The Landlord and Tenant Act 1985 (as amended) imposes stringent procedural requirements on landlords who wish to carry out repairs to residential premises and recover the costs from the tenants. The Leasehold Valuation Tribunal (“LVT”) has power to dispense with those requirements if it is reasonable to do so.

In the case of Daejan Investments v. Benson and others, Daejan sought to recover approximately £270,000 from five leaseholders. The leaseholders complained that Daejan had not complied with a number of provisions of the Act. The LVT upheld that complaint.

The Lands Tribunal of the Upper Chamber examined each of the breaches and found, with one exception, that the breaches had not prejudiced the tenants to any significant extent. However, it agreed that the curtailment of the period within which the tenants could examine the estimates was capable of being a serious breach. The final words of the judgment are interesting: “we are unable to say that LVT has erred in principle, or that its decision was clearly wrong. The financial consequence may be thought disproportionately damaging to the landlord, and disproportionately advantageous to the lessees, but, as we have said, that is the effect of the legislation.”

It could be inferred that the Upper Chamber felt that the decision was wrong, but not ‘clearly wrong’, and on that technicality Daejan was only able to recover £250 from the five leaseholders, rather than £270,000.

So, a rather expensive mistake. And a salutary lesson that, if there is a clear set of rules, stick to ‘em!

Field Fisher Waterhouse also wrote about the same case