Daejan Investments Limited – v – Benson & Others

On 6 March 2013, The Supreme Court handed down Judgment in the case of Daejan Investments Limited -v- Benson & Others [2013 UKSC 14] (on appeal from The Court of Appeal). The outcome of this appeal has been much anticipated by those working in the residential property management field.

Background

Pursuant to Section 20 of the Landlord and Tenant Act 1985 ("the Act") a landlord is required to consult with lessees prior to undertaking "qualifying works". The procedure is as prescribed by the Service Charges (Consultation Requirements) (England) Regulations 2003, with similar regulations applying in Wales. Should a landlord fail to comply with the consultation process, the relevant contributions of the lessees can be capped (currently at £250 per lessee).

Qualifying Works are defined as works which are "works on the building or any other premises" and include therefore works of repair, maintenance or improvement. By way of background, during 2005, the landlord (Daejan Investments Limited) ("Daejan") indicated to lessees of property at Queens Mansions that major works were required to the building. The lessees were all members of the Queens Mansions Residents Association ("QRMA").

Daejan obtained and sent to QRMA a specification of proposed works. Following a request by QRMA, Robert Edward Associates (who had previously been advising QRMA on the proposed works) were approached to provide a further specification for the proposed works.

A Notice of Intention was sent out to the lessees on 6 July 2005 following which the specification from Robert Edward Associates was received and utilised by QRMA to make observations on the proposed works.

The Stage 2 process of consultation was then commenced and Daejan obtained estimates for the proposed works. Robert Edward Associates reported to QRMA on the tenders.

The most competitive tender appeared to be that of a company called Rosewood Building Contractors followed by a tender from Mitre Construction Limited (Daejan's preferred contractor).

Notices were served on the lessees on 14 June 2006 purportedly in compliance with the ongoing consultation process, but these Notices did not include the Rosewood tender (albeit QRMA commented and provided observations on the Notices stating however that the points made were provisional until all priced tenders had been seen).

Daejan then served amended Notices including all estimates obtained. These Notices were served on 28 July 2006 and the lessees/QRMA had until...