The recent case of Assethold Limited v Alexandra Adam and others [2022] UKUT 282 (LC) illustrated that, prior to being able to recover costs in respect of interim fire safety measures as service charge from tenants, the landlord must be able to demonstrate a reasonable decision-making process was followed in implementing the measures and those measures must achieve a reasonable outcome.
The Landlord and Tenant Act 1985 makes detailed provision for the regulation of residential service charges payable by leaseholders. Section 19(1)(a) provides that a tenant is only liable to pay service charges to the extent that they were reasonably incurred.
The Upper Tribunal (Lands Chamber) (UT) considered here whether interim safety measures put in place by the landlord in response to recommendations in a fire risk report that said the fire risk at a residential property was “intolerable” were both rational and reasonable, and therefore whether the costs of such measures could be charged via the service charge.
The landlord of a block of flats carried out a health, safety and fire risk assessment of the building and the report stated that there was a medium risk of fire at the building but the potential consequences of a fire were extreme. Various remedial measures were recommended including interim measures, being the installation of an extended alarm system or the use of a waking watch. A waking watch was organised and the tenants were charged via the service charge and subsequently applied to the First Tier Tribunal (FTT) for a determination as to whether the charges were recoverable. The tenants argued that the cost of the waking watch was not reasonably incurred as the waking watch was not required.
The tenants succeeded on this point. The FTT found the report was flawed and overstated the risk meaning that no waking watch was necessary and thus the cost was not reasonably incurred. The landlord appealed to the Upper Tribunal (UT). The UT held that, despite the issues with the report, the landlord followed a rational process in commissioning and following the report, and that the outcome – setting the waking watch as an interim measure – was a reasonable one. The UT said the charges were therefore reasonable and recoverable subject to the usual assessment as to whether the service provided was carried out to a reasonable standard as per Section 19(1)(b) of the Landlord and Tenant Act 1985.
The UT went on to confirm that there may be more than one reasonable course of action available to a landlord and a court or tribunal should not impose its own decision as to what should have been done in place of the landlord’s decision. However, even if a landlord followed a rational decision-making process, if the outcome arrived at following that process was not reasonable, then the cost would not have been reasonably incurred.
This decision is consistent with previous decisions from the FTT and UT that the costs of interim fire safety measures such as a waking watch will be recoverable as service charge from tenants in circumstances where the leases allow for such recovery and the landlord can demonstrate the decision to implement such measures was a rational and reasonable measure to take. However, this decision also highlights the importance of such decisions being based upon competent assessments of the fire safety risk at a particular block.
For more information, please contact Lee Russell or Mark Foxcroft.
