What happens if the project changes? Do we have to re-consult?

It is said that life is that thing that happens when you are making plans and this principle often applies during section 20 consultations due to the length of the process. At best, it’s 90 days from start to finish and even if completed in these timescales (rare), few contractors are in a position to begin major works the day after the process has ended. There is always a lead time.

In these times of pandemic, war and economic uncertainty it is inevitable that estimates rather than fixed prices will be the norm potentially making the final cost higher than was initially anticipated. Additionally, the risk of contractors going bust is increased in these difficult economic times. Other variables might include discovering that further works are required (often the case with roof works)

So where does this leave us with Section 20?

Daejan Investments Ltd v Benson & Others [2013] was ground breaking in that it was the first time that a case was judged on the basis of prejudice caused to the leaseholders rather than absolute compliance with a process.

The precedent set in Daejan vs Benson has continued to be applied in the courts.

By way of example, in a recent Upper Tribunal decision of Wynee v Yates and Livingstone [2021], the managing agent appointed a contractor to re-decorate a building following a section 20 consultation. Unfortunately, the chosen contractor withdrew from the works prior to completion and another contractor was appointed to complete the works at an additional cost to the leaseholders.

The leaseholders applied to the FTT for a determination of payability and reasonable of service charges (regarding external works and unpaid interim demands) and subsequently, following a CMC hearing, Mr Wynne also made an application seeking to dispense with s20 consultation requirements

The FTT initially found in favour of the leaseholders, however, on appeal at the Upper Tribunal, it held that Mr Wynne was not prevented by a failure to consult or to obtain dispensation from charging for the additional work and that the interim demands were payable.

Essentially, the onus of proof is now on the leaseholder to demonstrate prejudice and merely demonstrating non-compliance with the section 20 process will not be enough. Whilst these verdicts appear to be a victory for freeholders it’s also a victory for common sense and gives property managers some room for manoeuvre when the unexpected happens.