LONDON BOROUGH OF HARINGEY V BALL AND OTHERS

JUDGEMENT ON PRELIMINARY ISSUES.

1.This judgement is concerned with a group of preliminary issues , originally some 22 in number ,which were ordered to be tried before me. By agreement four issues have been left until a later stage of the litigation ( assuming that they then arise). But in the course of the trial it became apparent that it was desirable to deal with two new ones . In the event therefore 18 of the original issues have been tried now and are comprised in this judgement together with an additional issue (No 24) which was raised by amendment in the course of the hearing and a further additional issue ( No 23) which arose out of the evidence. The issues concern a very large number of individuals who are all owners of long leases of which the Claimant (“the Council”) is the landlord and affect claims made by the Council under the services charge provisions in those leases. The charges claimed are thought to exceed £7,000,000. For the purpose of the preliminary issues 8 test cases have been selected ( with the object of insuring that there is at least one test case Defendant concerned with each preliminary issue ) and the proceedings have been stayed as regards the remainder.

INTRODUCTION AND BACKGROUND.

2. The Council, the London Borough of Haringey, are the owners of a very substantial housing stock. As with many local authorities, some of that housing stock consists of houses and other parts of flats, generally in purpose built blocks, many of them large. Historically all of these properties would have been let on secure tenancies to tenants who paid a rack rent. However as a result of the “right to buy” legislation of the mid 1980s ( RTB) a number of former tenants have purchased their houses or flats. In the cases of the blocks of flats this has led inevitably to a situation where although some flats ( as I understand it the majority) remain tenanted under the old system, a substantial minority are now held by private leaseholders under long leases who have acquired under RTB (I will distinguish them where necessary by referring to the flats ( and with appropriate linguistic changes their owners) as “tenanted” and “leasehold” respectively. As will appear the regimes which apply to the two types of flat is importantly different and the state of the blocks was referred to graphically by Mr. Brock QC for the Council as like a “Swiss Cheese”.

3.The sale of Council houses which goes back to the Housing Act 1985 and beyond was in its day a matter of great political controversy, with which of course the Court can have nothing to do. It cannot however be much doubted that it has brought with it a crop of legal problems for the Courts to determine. Most commonly these arise because the purchasing tenant is often elderly ( and for that reason entitled to an attractively high discount) , the purchase is funded by family members and disputes about beneficial ownership then follow. But, more relevant to this case is the serious difference between the purchase of houses and the purchase of flats. So long as the relevant properties are tenanted as opposed to leasehold or freehold the differences may be slight. The rent is a rack rent and is charged on the basis that the local authority landlord will be liable to do the repairs under the statutory covenant to repair. But after sale the two types of property differ importantly. Most houses will be sold freehold. The purchaser, like anybody else who owns a freehold house is responsible for his own repairs but if he chooses not to do them, or do them to a low standard then unless he either so neglects the property as to endanger his mortgagee’s security or to offend the Public Health legislation, he can do pretty well what he likes . But flats are quite different. Freehold flats in this country are a great rarity. Flats are almost always sold on long leases and of course are virtually by definition part of a larger physical unit, which has to be managed ,at least to an extent, as one. The leaseholder is responsible for (usually) internal and non structural repairs, the landlord for exterior/structure. In addition the landlord usually provides other services such as central heating , cleaning and porterage. As the rent in a long leasehold is almost invariably a ground rent of not much more than a nominal sum the lease provides for the landlord to recover its expenditure from the leaseholder by means of a service charge, which put at its simplest is a division of the landlord’s total expenditure on what is intended to be a fair and proportionate basis between the leaseholders.

4 What I have said in the preceding paragraph gives rise to three problem areas which are central to the practical difficulties faced by the parties in this case thus

(a) the Council as landlord has to operate two different systems within one block

(b) leaseholders while they may have expected to pay the usual service charge represented by such matters as lighting and heating of the block—generally not large sums—may find themselves facing a share of major repairs to the block ( as in this case things like roofs and renewal of fenestration) which may run into many thousand of pounds, were quite probably never anticipated when they bought and which may be beyond their capacity to pay for. They will probably have had no previous experience of the undoubted reality that flat owners generally have substantial outgoings under their leases in addition to ( in many cases) their mortgage instalments—when there is a prospect of such charges in the future being large but presently unquantified, there is a real risk of being unable to sell, as indeed happened most unfortunately to Mrs Rolph, one of the test Defendants Yet if the local authority do not recover the service charges for major expenditure they are paying out of the ratepayers pockets without recovering what they are entitled to and should recover. It is here of course that the differences between the purchase of a leasehold Council flat and a freehold Council house can be profound.

(c) this leads to a further point. So long as a flat is tenanted as opposed to leasehold the Council as landlord is dealing with it under its statutory obligations to provide public sector housing, together with all the duties that go with that. Once the flat is sold so as to become a leasehold flat this is no longer the position. The landlords remain the Council but the Council is no longer landlord as a provider of social housing , its ownership is limited to the (low value) reversion on a long lease and in many ways it is akin to a private landlord. The position is most uneasy hybrid ( as in (a) above) but this explains why leaseholders and tenants may have to be differently dealt with—a matter of complaint from time to time that emerges from the papers in this case.

5. The problems raised by service charges are well known to several generations of landlord and tenant practitioners, both lawyers and surveyors. The principle is simple and fair enough, the landlord incurs the global expenditure and recovers a fair share from the individual leaseholder. But the history of this simple and ostensibly fair arrangement has shown up many notorious abuses. Work may be done and charged for which none of the leaseholders want or need. The work may be done by contractors who are hand in glove with the landlords and who may grossly overcharge. A system of “final certification” may be so designed as to conceal all the abuses. All of these problems and more have been attacked over the years both by the Courts and the legislature. Later in this judgement I shall have to consider some of the legislation in detail. For the present it is probably enough to say that not all the legislation fits neatly or easily with a local authority landlord, especially in a case where there is inevitably going to be a mixture of leaseholds and tenancies within the same block. The reality of course is that the legislation was primarily designed for private lettings and that before the advent of RTB local authority landlords with leaseholders holding under them would have been practically unheard of. This therefore, and for the present in very short summary, sets the background for the questions which the Court is being asked to determine.

It can readily be seen what difficulties arise out of this framework both for local authority landlords and for leaseholders who have bought their flats. The practical resolution of the problems is not easy as this case shows and both sides are deserving of understanding and sympathy.

SHORT SUMMARY OF THE RELEVANT HISTORY

6. Although there was an earlier history of council house sales the modern RTB legislation came about in Part I of the Housing Act 1980 but was later consolidated into Housing Act 1985 Part V; its particular importance was to enable tenants to enforce their right to buy. Many tenants took advantage of it, especially given the attractive system of discounts. In the later 1980s the Council, along with all other housing authorities found substantial numbers of their tenants wishing to acquire and in due course tenanted properties were sold accordingly. It is the Council’s case ( although the tenants do not by any means agree) that at the time of acquisition by the leaseholders some if not all of the relevant blocks of flats were in comparatively poor state at least as regards structure and common parts ( nobody is seeking to criticise the way the tenants kept the interiors).It is this, says the Council, which was reflected in the comparatively modest prices for which ( even allowing for heavy discounts) the properties were sold.

7 The events which led to the present problems really began in 1992. The then Department of the Environment (DOE) promulgated a project called “Estate Action” (EA). This was intended to be government based funding for the repair and regeneration of housing estates. It invited applications from local authorities and it had the appearance at least of a grant (its nature will be reviewed more fully later). I have no doubt that it was genuinely believed by Councillors and officials alike ( and possibly in far more authorities than this one) that the provision of government funds meant that major repairs could be undertaken without the need to recoup the expenditure from leaseholders under the service charge. It was publicly announced on this basis .in 1994 at about the time that funding was provided to the Council. That proved to be a public relations disaster as events proceeded..

8. It was not long—later in 1994 in fact—that doubts started to emerge and at the end of 1994 or the beginning of 1995 the Council decided to take the opinion of Leading Counsel. They went to Mr. Andrew Arden QC, a well known expert in this field. Mr. Arden had no doubt about it , he considered that it was the Council’s duty to recover from the leaseholders under the service charge provisions in their leases notwithstanding the provision of government funds, a conclusion which he reached with firmness but regret. Not surprisingly this caused consternation in a number of quarters and it is problem which is the basis of the first of the issues which I shall have to determine. There were prolonged exchanges with and lobbying of central government which eventually produced a set of regulations under which in rather limited circumstances the Council could properly decide not to charge. The detailed chronology of these events and others that relate to them will be dealt with in more detail under Issue 1.

9.In the cases before me, the Council carried out in all some 16 relevant projects, some on a large number of blocks and others limited to single blocks or a small number of blocks It is common ground ( and central to the argument in this case) that in order to recover the service charges arising from this expenditure the Council would (and will) have to satisfy s. 20 of the Landlord & Tenant Act 1985 (“s. 20”), which, subject to qualifications contained in the section, requires service of a notice ( “ a s.20 notice”) on each tenant containing a number of specified matters of information. Project 1 began in 1994, the s. 20 notice being given on 25^th October 1994 and the actual start date on 26^th November. The final project, Project 16 had a start date of 12^th November 2001.

10. Notices purporting to be s.20 notices were given in respect of each project, the intention being that they should be given to all affected leaseholders. The form of notice varied and grew in sophistication as time went on. The affected defendants object to all notices served or purportedly served on them. They point to a substantial number of failures to comply with the statutory provisions. The Council’s case is that they have complied with the statute or, insofar as they have not that the Court should use its powers under the statute to dispense with all or some of the relevant requirements. This group of issues forms a central battleground in the matters which I have to decide.

Tenders and estimates

11 It will be helpful at this point to introduce briefly a major consideration affecting the way in which the Council acted. S.20 notices require there to be two estimates for the proposed work, one from a contractor wholly unconnected with the landlords. On a strict construction of the word “estimate” this plainly never happened (and it was this point more than anything else which formed the centre of the leaseholders objection to every notice that was served and the case papers contain a very large number of solicitors letters taking this point again and again in almost the same words). What lies behind what at first blush might be thought to be a deliberate flouting of the statute is this. The Council ( in common so I am told with very many others) operates under standing orders that effectively prevent the simple obtaining of a couple of estimates from a suitable looking builder that a private landlord might obtain and which one might think is the kind of thing to which s. 20 ( which I will examine in detail later) is talking about. What councils ( and certainly the Council) have to do is to go out to tender. The standing orders make no bones about why this is, it is both to get the best price and to prevent corruption. In the present case three different types of tendering operation were carried out

(a) Conventional tenders under standing orders for a particular project. These operated in the usual way. A specification was produced and then tenders invited for a fixed price for the specification. Tenders were submitted and opened in accordance with a fixed procedure. The relevant officers of the Council prepared a tender report with recommendations which were considered by the Director of Housing and the Chair of the Housing services committee ( job titles changed over the years but these will do as examples) A letter of intent would then be issued to the chosen contractor followed by a contract at later date.

(b) Term tenders. These were another, but different procedure under standing orders. Here contractors were invited to submit tenders valid for a specified period of time in the form of a single percentage adjustment to a priced schedule of rates specified or issued by the Council. Such schedule was intended to cover those items of buildings and engineering serviced and work normally required in building maintenance repair and improvements works. On the whole it was system more suited for the more straightforward type of project.

(c) Tenders via the London Housing Consortium (LHC). I will refer to this fairly briefly because LHC has an issue to itself. It is consortium of local authorities with a permanent expert staff which undertakes the examination of prospective tenderers through a competitive open tender process, which are advertised on a Europe wide basis.(put very shortly LHC with its expert staff deals with the competitive element and take this burden off the member authorities. ) There is an arrangement whereby a levy is charged on the tender price for a particular project which is paid by the successful tenderer to meet the expenses of running LHC and any surplus goes back to the member authorities. Criticism of LHC were made in a number of witness statements and are found by me to be ill informed and unfounded. I will come back to all of this later.

For the sake of completeness, the former Council works department (HCS) was treated like any other contractor and required to tender.

Persons involved

13. It is not necessary to comment on all the test Defendants by name, though I shall refer later to the evidence of some of them. Some individuals and bodies however recur and it will be useful to note them now.

(a) The Northumberland Park Leaseholders Association (NPLA). Northumberland Park is one of the major estates with which I am concerned. The Association has been in being since some time before April 1995 and its Treasurer is Mrs Joan Rolph ,one of the test Defendants.

(b) Windsor & Co. They are a firm of solicitors the relevant principal being Mrs Janes. They have acted for NPLA since April 1995 and a great deal of the professional correspondence in response to the s. 20 notices came from them. They now act for all the test Defendants and bore the burden of preparing the Defendants’ case for the present hearing.

(c) The Haringey Leaseholders Association (HLA) . This was established in 2000 and is officially recognised by the Council (although not as a “recognised tenants’ association within the meaning of Section 29 of the Landlord & Tenant Act 1985).

(d) Mr. Derek Martin . He was the first chair of HLA and gave evidence before me.

(e) Mr. Scott Reeve ( formerly Councillor). I will have more to say about him later. He has been involved in housing issues in the Borough from the later 1980s ( having been a RTB leaseholder between 1993 and 1996)He was a councillor from 1994 to 2002 and from 1998 to 2001 was first chair of Housing an d later ( when committees were abolished) lead member. For two years from May 2002 he was an adviser to HLA. He has been extremely vocal in the present dispute and gave evidence and was extensively cross examined .

Preface to the issues/Methodology

14(a) In the ordinary way I would proceed to set out the relevant facts and law in detail at this point. But the issues are largely discrete from one another ( or at least one group from another) both factually and legally, so having given a comparatively brief introduction it will be of use to go straight to the issues , setting out the relevant matters under each heading.

(b) Although what I aim to do is to give a reasoned answer to each question, its precise legal formulation as an answer to the issue on the Court record and which will affect the future conduct of all these cases is a matter I propose to leave to further debate with Counsel once they have had an opportunity of considering the judgement in detail. That formulation will then be incorporated in my formal order.

THE ISSUES

15 Issue 1. “What is the meaning of the words “incurred by” in Clause 2(2) or Clause 4(2) of the relevant lease (as the case may be) in the context of the manner in which funds were provided by the Claimant for the carrying out of the relevant works?”

This issue is carefully formulated linguistically but some explanation of how the point arises is likely to assist. Thus

(a) There are two different types of lease which the Council used. Earlier sales were covered by the “old” form of lease. In the old lease the relevant clause empowering the recovery of the service charge is 2(2). More recent sales were under the “new” form of lease. The relevant provision of the new lease is Clause 4(2).Differences between the two clauses are slight and probably of no significance as regards this issue.

(b) What this issue is about in practical terms is whether, given the receipt by the Council of funding from Central Government under Estate Action, the Council is entitled nonetheless to recover the cost ( or part of the cost) of the works from the leaseholders. It is necessary to go back to the history some of which I briefly stated in paragraphs 7 & 8 above.

Issue 1—history and surrounding circumstances.

16. I look first ( though it is only necessary to do so on one of the alternative arguments) both at the remainder of this part of the chronology and on those facts and documents which identify what the EA payment actually was.

17 The evidence of Mr. Travers ( the Council’s present director of finance) and the disclosed documents shows typically how EA funding was administered thus

(a) DOE ( in 1994) informed the Council that it would be prepared to offer supplementary credit approval for a named project .A provisional sum was earmarked and provision of the actual money dependent on the satisfactory progress of the scheme and the Council’s contribution. Once the funds had been borrowed by the Council ,DOE would then increase the amount paid to the Council under the Revenue Support Grant or Housing Revenue Account subsidy to reflect the cost of borrowing

(b) from the 1996/7 financial year onwards EA funding was provided by DOE in the form of a grant rather than supplementary credit approvals.

(c) Taking 1996/7 as a typical year the Government Office for London ( “GOL” now the relevant department) would write to the Council prior to the start of the financial year to agree the proportion of EA funds provided by government compared with funds provided from other local government sources

(d) then somebody from the Council’s housing directorate would prepare a return at the end of the first quarter setting out actual expenditure on the subject estate in the relevant quarter and the projected spend. This would be checked and sent to GOL .If GOL approved then the Council would receive a payment which would go into the general account.

18. On my analysis of this evidence it seems to me that

(i) Central Government do not make a direct payment towards the works—what is more the payment is into general funds

(ii) the payment is not expressed as a straight indemnity

(iii) the payment is a contribution to the cost but not necessarily the whole of the cost

(iv) however the payment is related to a specific project.

(v) it should also be borne in mind that in any one project there are likely to be a number of tenants as well as leaseholders. In the case of the tenants the Council’s source of funding ( absent EA contribution)_ would be either what it could get from the rack rents ( quite possibly not enough for major projects) or from other resources.

19. As I have already said it became apparent quite early on both because of Mr. Arden’s opinion and what DOE itself was saying that there was a real risk that leaseholders would be called upon to pay their share and this would not be avoided because of EA. An interesting letter was written to Mrs Rolph by the DOE as early as 21^st September 1994, even before the Arden opinion, which said “ Government financial support to local authorities for EA schemes is intended for works to council owned properties .The local authority may therefore wish to recover all or part of the cost of any works to leasehold properties through service charges as it would for improvements not connected with EA schemes”. I read this as suggesting that Government thinking was along the lines that in reality the leasehold properties were the property not ( save as to the freehold reversion) of the Council but of the leaseholders and that Government was not perhaps intending in the ultimate analysis to benefit the leaseholders. Though seemingly harsh from the leaseholder’s point of view it has a clear logic about it.

20 The Arden advice was communicated to leaseholders in February 1995. In short summary a lengthy dialogue proceeded between DOE, the Council and others including the local MP ,the late Bernie Grant, who took a vigorous part. The then Chair of Housing, Cllr Meehan became involved in personal correspondence with the responsible minister Mr. Curry. The general thrust of the exchanges was concern by ( and on behalf of) the leaseholders that they would have to pay, notwithstanding that the work ( effectively the first four projects) was receiving EA funding and some indications from Government that they were considering the position and might do something

21. On 9^th August 1995 there was a meeting between Council officers and leaseholders’ representatives (including Mrs Janes of Windsor & Co). This is of particular relevance to the estoppel issue to which I will come later , the essential feature being that the Council officers said that they would only issue bills once the matter had been resolved.. Exchanges with Government and consultation papers rumbled on into 1997.

22.Eventually on 4^th February 1997 the Government gave its answer. It was not a particularly generous one Two sets of directions were issued, one set was mandatory, the other discretionary. Under the discretionary directions, Social landlords were given a discretion where (i) there was a service charge leviable and (ii) relevant assistance—which would include EA—had been given for the works prior to the directions coming into force , to waive all or part of the service charge up to the amount of the relevant assistance .However regard had to be had to certain criteria, among others (a) exceptional hardship and (b) any benefit which the leaseholder has or will receive from the works including an increase in value of the lease . In practice for most people this was unlikely to mean very much assistance .There were I believe some hardship cases where the Council acted appropriately but in the main given the sort of work being done I would have thought it almost inevitable that the Council took the view, as they did, that there was an element of improvement. The Council acted appropriately, no attempt was made to question its actions by way of judicial review and I cannot say that I am surprised.

The provisions of the leases

23. As I have said for practical purposes here both types of lease say the same thing. I will take the relevant covenant as 4(2) of the new form which says this

To pay to the Corporation…….. a proportionate part of the reasonable expenses and outgoings incurred by the Corporation in the improvement repair maintenance renewal and insurance of the Building and the Estate and the provision of services therein [and other matters etc as set out in the Third Schedule….]

In the Third schedule the relevant expenses and heads of charge forming the service charge are defined. It begins as follows

All costs charges and expenses incurred or expended or estimated to be incurred or expended by the Corporation [in provision of services as there and in subsequent paragraphs set out]

As Mr. Brock pointed out there followed in the subsequent paragraphs a list of ten categories each headed with the word “expenses” or “cost” but save in paragraph 8 no reference to the cost being incurred by the Corporation. I would for my part think that the opening paragraph really embraced everything.

24. Primarily Mr. Brock approached the question as a very short point of construction, really to be settled by asking three questions:

Q Who entered into the relevant contractual obligations ? A The Council

Q Who paid the contractors A The Council

Q Who would have been sued if the contracts had not been honoured or the sums not paid ? A The Council

On the basis of those answers he submits that the only answer to the point is that the liabilities were necessarily incurred, or the sums in satisfaction of those liabilities necessarily expended by the Council. Therefore they are within the clause and the service charge.

If, he says, but only if the Court does not find those the convincing tests then he prays in aid the factual matters which I have set out above as showing that EA, especially in the mind of its own provider and consistently from the start was not a provision that was intended to debar the Council from recovering the appropriate service charges, indeed it was not intended to have any effect on them.

25. Mr. Ashfield in his able and careful argument for the leaseholders put it quite differently. Focusing on the words “incurred by the Corporation “[Cl 4(2) and “incurred or expended…” [Third schedule], he says the question is whether this means “incurred” or “expended “ by the Council from its own resources ( and thereby excluding such sources as gifts grants from other or insurances monies, or does it merely mean money passing through the Council’s hands as,( I would put it) a conduit pipe. In developing his argument he drew attention to and developed the following analogies

(a) Insurance; absent specific provisions in the lease for the laying out of insurance on repair/reconstruction can a landlord simply pocket the insurance money and charge the leaseholder under the service charge?

(b) A not wholly dissimilar situation where the cost of repair is recovered from a tortfeasor.

(c) Where there is (not uncommonly) an arrangement whereby the Council carries out a repair/work for the benefit of one tenant alone can the Council also charge the long leaseholders through the service charge for the same work? (d) If somebody makes a gift for and thereby pays the Council to carry out some work can the Council recover it also through the service charge?

The answer to all and each of these rhetorical questions must be, says Mr. Ashfield, plainly “No” .In order to achieve that (obviously desirable) answer you construe “incurred” so as to exclude such a situation, and hold that “incurred” or expended” means that what is expended is from the Council’s own resources and not resources provided (specifically) by others. If you do that then he says, a similar process of construction should be applied where a specific sum is received from Central Government for expenditure on a specific project on the estate.

Mr. Brock’s riposte is that all these apparent analogies are “irrelevant and unhelpful” though he did not go on to elaborate why this was. He maintains that the question is the short and straightforward one which I set out above

26. In my judgement

(i) While Mr. Ashfield’s various anomalies ( not by any means exhaustive) might (though I am dubious) support a restrictive construction of “expended” I cannot see how ( without more) they support a restrictive construction of “incurred”. I find Mr. Brock’s proposition that the Council has incurred the cost irrespective of its source of funding really irresistible and that is enough to decide the point

(ii) Although in the light of (i) above I do not really need to go on it does seem to me that the obviously unjust situations instanced by Mr. Ashfield’s analogies may well be capable of solution on the individual principles applicable to each of those situations rather than on a forced construction of the service charge clause .Thus ( though none of these points was really argued)

(a) I would have serious doubts whether the insurance analogy works. Insurance premiums are paid by leaseholders through their service charge. I can see strong arguments for saying that in those circumstances the Council has fiduciary duties in respect of the insurance monies and cannot simply pocket them

(b) Again where the cost of repair is recovered from a tortfeasor the question would most obviously arise whether money coming in as damages to satisfy a specific indemnity could then be pocketed.

(c) I would have thought that the analogy of the private arrangement fails to achieve its object because a Court would be likely to regard a private arrangement as just that and not within the service charge at all.

(d) One answer to the gift analogy might be that if the Council then pocketed the gift and imposed the service charge the argument would be not so much with the leaseholders but with the donor who might well argue that his gift should be regarded as conditional and seek to get it back.

(iii) I can see the argument that if the Council is a mere conduit pipe then it has not in truth expended the money at all—somebody else has, much as if the Council were a mere nominee. But it still does not get over the problem of the alternative use of “incurred”. I think to do that it would be necessary to postulate a situation where the arrangement was that the Council in incurring the expenditure was doing so simply on behalf of its paymaster in a virtually nominee capacity. But on the facts that case is not this case.

27.Strictly I need go no further, but Mr. Brock raised three other arguments as alternatives with which I will briefly deal

(1)If one looks at the factual matters that I set out at the beginning of my consideration of this issue all doubt is removed because that nature of EA funding as there described is not in any way inconsistent with recovery from the leaseholders. This is, he emphasises, not an attempt to construe the leases by reference to these facts ( which in my judgement—agreeing this far with Mr. Ashfield-- would be a flawed approach) but to show what EA funding was-- not least in the minds of those who set it up in central government. To my mind the whole pattern of how DOE and its successor department behaved shows clearly that EA was not provided so as to obviate the need to recover from the leaseholders. Two things to my mind put that beyond doubt, one is the letter to Mrs Rolph of 21^st September 1994 ( mentioned and quoted above) which drew the distinction between funding “council owned” properties and the quite different position of leasehold properties ( see also my general remarks on the differences earlier in this judgement).The other is the directions which eventually government produced and which show quite clearly the basis on which they had proceeded. It is a great pity it was not made clearer at the start but that is outside my province. Once one sees these matters to my mind all need for a special construction of the lease disappears.

(2) As a further alternative he relies on s 20A of the 1985 Act. This is one of the fasciculus of sections ( including of course s 20, to which I have already referred) which primarily regulate the administration of service charges. In short summary what it provides is that if a landlord receives a Housing Act grant for the work, that has to be deducted from the sums which would be recoverable from the leaseholder under the service charge. So, Mr.Brock’s argument runs, this show plainly that the draftsman of the 1985 Act proceeded on the basis that service charges were recoverable even if all or part of the cost were funded by grants, unless and until statute said differently. Mr. Ashfield protests that this is all irrelevant because, as is obvious, s 20A can only apply to private landlords ( Local authorities are not eligible for Housing Act grants). But in my judgement that misses the point. It does not matter whether 20A refers to public or private housing or both, what it shows ( and this is the whole of the point) is that ,absent a special provision, grants ( or to my mind any other type of outside funding) are not regarded for the purposes of this part of the law as affecting what the leaseholder is charged by way of service charge. In my judgement this is a further strong support for Mr. Brock’s case.

(3) He finally relies on the 1997 directions to make a similar point. I have ,as appears, found these useful as resolving the issue raised by Mr. Brock’s first alternative as well. I agree however that they give strong support for the point already made by alternative 2 above.

28.Accordingly I would declare in answer to issue 1 that the words “incurred by” mean “became liable to pay” to the contractor and their meaning is not affected by the way in which the works were funded.

29. Issue 2. What was the expenditure incurred by the Claimant in respect of each of the projects.

This issue was I think formulated before full disclosure ( which is very extensive) was complete and before the trial bundles were prepared.( A continuing problem was when and whether VAT should be included in the service charge accounts) As a result of those processes the parties have had the opportunity of considering a set of records kept by the Council which are referred to as the “FMS Records”. Both sides take the view that these records show the best evidence of what was spent and clarify the apparent VAT issue. Indeed it seems most unlikely that anything better could possibly emerge. As these are test cases it would be wrong simply to deal with this sort of issue by consent, but I treat it on the basis that common submissions are made with which I wholly agree. I therefore propose to declare in answer to this issue that the expenditure on each project is such expenditure as is shown in the FMS records and that ( subject to any further detailed directions) calculations shall be made in respect of each project on the basis of these records and that if any doubt or difficulty arises in carrying that process through the Court will direct such account or inquire as seems to it appropriate upon an application made to it for that purpose.

30.Issue 3. What works were actually carried out by the Council in respect of each project?

This issue has, in the event, not been dealt with at the present hearing but will so far as necessary be tried at some future date in accordance with further directions.

31 Issues relating to the s 20 notices. ( Issues 4-10 and issue 22)

This highly important group of issues all turn on consideration of s 20 of the Landlord & Tenant Act 1985 (“LTA 1985”) to which some short references have already been made. The most useful course to my mind is that prior to considering the individual issues I should examine s 20 and its related sections as a whole.

32. At the start of this judgement I referred briefly to why statutory control of service charges is necessary, the area having been found to be one which is wide open to abuse. As Mr. Brock reminded me provisions akin to s 20 in fact go back to the long forgotten Housing Finance Act 1972, so that these sort of provisions which have reached their modern form in s 20 and its neighbours substantially antedate the RTB legislation. However neither in the RTB legislation nor in the Landlord & Tenant Act 1985 did Parliament give any consideration to the peculiar problems of local authorities with “mixed” blocks of flats. The one area where consideration was given to service charges as they relate to RTB leaseholders was in relation to the purchase process itself as covered by s. 125 of the Housing Act 1985.There the landlord’s notice has to contain the provisions which the landlord proposes should be in the lease and if those include service charge provisions then the notice has also to contain estimates and information about the charges as provided for in s. 125A. In very short order ( taking in s.125C for this purposes) the provisions require estimates for the first 5 years of the lease and a statement by reference to schedule 6 paragraph 16B which restricts the amount recoverable. What of course it does not do is require anything to be said about what will happen in the longer term. I mention it for completeness but it does not have a lot to do with this case. Apart from that though, Sections 18 and ff of the Landlord and Tenant Act 1985 apply ( save for s. 20A) to local authority landlords and private landlords alike.

33.It is important in considering what the rights of the parties are to have in mind s. 19 ( which is the section which will affect issue 3 and issues 13-16 should they come to be tried). The section allows the Court or the Leasehold Valuation tribunal (LVT ) to consider ( in very short summary) whether the charges are reasonable whether the services or works were of a reasonable standard and whether the charges were reasonably incurred. This provision in its modern form ought to be adequate for the purposes of moderating “rogue” or excessive charges. Mr. Brock observed that although the hearing before me concerned a large number of fairly technical preliminary points one might think that the real “meat” of the dispute would end up as matter for s. 19.

34. S. 20 is concerned with a different matter. Its primary object appears to be to force the landlord, against a severe sanction of having his charges arbitrarily limited, into a consultation process before works are undertaken. The section is not particularly well formulated and raises a number of problems. In short summary it works like this

(a) Unless either (i) the relevant requirements have either been complied with or dispensed with by the Court under subsection (9), the costs incurred on the carrying out of the works shall not be taken into account in determining the amount of the service charge so far as they exceed a prescribed figure

(b) The prescribed figure ( subsection (3) as altered by regulation) is for all material purposes here £50 multiplied by the number of dwellings concerned or £1000 whichever is the less. Quite how this works in practice, i.e. how far items of work may be allowed to subdivide or whether the totality of work of any description has to be added together to produce one figure is apparently uncertain ( although some guidance is given in Martin v Maryland to which I refer in the next paragraph )and this is not the case in which to decide it—at least not yet.

(c) The relevant requirements as regards tenant who are not members of a recognised tenants association—this case—are set out in subsection (4) thus

(a) at least two estimates for the works shall be obtained, one of them from a person wholly unconnected with the landlord

(b) a notice accompanied by a copy of the estimates shall be given to each of the tenants or shall be displayed in one or more places where it is likely to come to the notice of all the tenants.

(c)The notice shall describe the works to be carried out and invite observations on them and on the estimates and shall state the name and address in the United Kingdom of the person to whom the observations may be sent and the date by which they are to be received.

(d)the date stated in the notice shall not be earlier than one month after the date on which the notice is given or displayed as required by paragraph (b)

(e) the landlord shall have regard to any observations received in pursuance of the notice; and unless the works are urgently required they shall not be begun earlier than the date specific in the notice.

Importantly it is to be noted that there is no statutory prescribed form of notice, all the statute says is what the notice must contain. So the notice may in fact take any number of different forms, from an informal letter to something that might look very like a legal document.

A slightly different system operates where there is a recognised tenants association(not applicable to these issues)

(d) Subsection (9) provides that

In proceedings relating to a service charge the court may ,if satisfied that the landlord acted reasonably, dispense with all or any of the requirements,

The section refers to “tenants “ rather than “leaseholders” and despite the terminology I have used elsewhere , when I use the expression “ tenants” in discussing the section I use it for the purpose of that discussion and not to identify people who are not leaseholders.

35. There is very little authority on how the section works or indeed on the strictness with which it has to be construed. The only authority to which I was referred is an important Court of Appeal decision on subsection (9) Martin v Maryland Estates 1999 L&TR 541. The relevant findings may shortly be summarised thus

(i) The power to dispense is not a general dispensing power but a two stage process. The court has first to consider whether the landlord acted reasonably and only then does the discretion arise.

(ii) “acting reasonably” is acting reasonably in all the circumstances where s. 20 is not complied with.

36.The scheme of the section has a number of lacunae and raises a number of practical problems

(a) it is simply not geared to dealing with either local authorities who ( see above) as a matter of practice are bound by their standing orders to proceed by tender or are commercial organisations dealing with large properties who may well for excellent commercial reasons proceed by tender.

(b) On its face it requires estimates to the exclusion of any other process. The virtue of tenders, as Mr. Brock rightly submitted, is that they are rigorous as a process and they produce a fixed price. Estimates are just what their name suggests, an estimate of what it may cost not what it will; they need no detail, they can be on half of the back of an envelope, much less need they be linked to a specification. The whole of this provision is much more geared to the small landlord ( of a house conversion or something like that) who is using a local builder and possibly might like to use his uncle’s services. It does not relate at all well to the ways in which public or large commercial organisations in fact operate. Arguably though it may be said that a tender necessarily contains within it an estimate of a rigorous kind

(c) if it be the case, as arguably it may be, that a local authority operating on a tender system simply cannot comply to the letter with the “estimates” provision then it is left in a most unenviable position. On the face of things it has not complied with the requirements and cannot do so; unless it receives a dispensation from the Court it is in breach, but it has to commit resources ( probably many thousands of pounds of taxpayers’ money) to the project in the hope that there will be a dispensation if proceedings have to be taken. It may reasonably suppose that the chances of a dispensation are good but everybody knows that nothing in litigation is certain.

(d)For what is meant to be statutory consultation process there are some curious gaps, two in particular

(i) although the landlords cannot start work until after the consultation period, the tenant can leave it until literally the last moment of that period before making any representations. Coupled with this is

(ii) there is no machinery provided for the landlord to communicate the fact that he has considered the tenants’ observations. It may be very difficult for the tenant to show that the landlord has not done so, all the landlord has to say is “ I read his letter, I considered it, I rejected it, I started work next morning” .Further the rejection can be thoroughly unreasonable, it need only have actually happened. One is left wondering about the utility or purpose of this.

(e) probably the most useful feature of the section and what particularly it is aimed at is that the tenant has to be told what is going to be done and given a proper idea of what the works may cost so that the landlord is forced into giving the tenant proper information and know that in due course he will have to justify ( under s. 19) what has been said at this stage, the more so if in fact there are sensible observations from tenants that are simply not given proper weight.

37. I turn next to consider ( in the light of all of this) how one ought to approach the construction of the section. It must of course be borne in mind that this is meant to be a practical tool and not a ritual dance. Mr. Brock made two submissions in the course of his final remarks in reply

(a) it should be given a purposive rather than a literal construction

(b) the language should be regarded as directory rather than mandatory.

Dealing with these in turn

(as to (a) ) It seems to me to be sensible, bearing in mind as I do that it is a working tool for ordinary landlords that where the substance of the requirement can be and has been complied with the court ought to lean more to a purposive approach than a literal one. The object after all is to tell tenants what the act says they are entitled to know and some flexibility about the exact meaning in particular cases may be appropriate .

(as to (b)). Mr. Brock did not develop this very far and it was not one of his primary submissions .I think when analysed it does not work .The difference between mandatory and directory provisions is a well known opine frequently to be met in decided cases especially in parts of the law of landlord and tenant. The difference in effect is that a breach of a mandatory provision may have fatal consequences, the breach of a directory one will not. Two points seem to me to show that these provisions have to be regarded as mandatory

(i) there is a serious sanction provided for breach. This cannot fit with a directory provisions

(ii) the Act itself provides a way out of strict compliance by means of the discretion to dispense under ss (9). That would hardly be necessary if the provision were intended to be directory only.

The factual background

38. I was referred to a sample notice for each project. I propose to set out the relevant details of each. A number of the matters required by s.20 were included in the notices and are uncontroversial. I have sought to limit my description of each notice to matters which have some bearing on the argument

Project 1

The sample notice dated 25^th October 1994 was addressed to Mr. Martin in respect of the group of properties at 1-168 Edgecot Grove. The work was described as replacing lifts ( and various related machinery) updating electrics and remedying water ingress to the lift shaft.

No estimates were attached. It was stated that the Council proposed to accept the tender of a named contractor and stated that a full specification for the works and schedule of rates could be inspected by prior arrangements with a named official whose professional address was given.

The notice bore the date 25^th October 1994 and invited observations to the named official “within one month from the date hereof”

Project 2

This related to 1-16 Whittingham House (on the Northumberland Park estate) and was sent to Mr. Harris as executor of his mother ( there are issues as to service of notices on Mr. Harris as executor to which I will come later).

In form it was to all intents and purposes the same as the Project 1 notice. These details however need to be noted

(i) The works were briefly described as removal of existing asphalt roof coverings and then went on to give some technical detail in fairly technical language

(ii) It was stated that the works were to be carried out by HCS ( the old works department) under a Term Tender contract. Specification and Schedule of Rates to be inspected by prior arrangement with the named official

(iii) The notice bore the date 4^th November 1994 and invited observations to the named official ”within one month from the date hereof”

Project 3

This related to 1-5 and 239-253 Waverley Rd (Northumberland Park estate) and was sent to Mr. & Mrs Rolph. The form was the same as before. Details to be noted are

(i) There was a list of briefly described works including the replacement of UPVC windows

(ii) It was stated that tenders had been obtained from two named contractors, for different parts of the work( specified briefly_) which it was proposed to accept and other work would be done by HCS on term tender

(iii) Specifications and schedule of rates could be inspected by prior arrangement with the named officer

(iv) The date was 15^th November 1994 and observations were invited according to the same formula as the earlier notices.

Project 4

It was addressed to Ms March in respect of 59-98 Blaydon Close (Northumberland Park estate).The general form was similar to the earlier ones. In detail

(i) The works were identified in a similar brief way in respect of new roof coverings and copings to parapets

(ii) HCS was to do the works under a term tender

(iii) Specifications etc could be inspected by prior arrangement with the named officer

(iv) Observations to be addressed to the named officer within one month of date of notice.

Project 5

This was addressed to Mr. Harris again as his mother’s executor in respect of six of the blocks on the Northumberland Park Estate .The form was now a little more sophisticated thus

(i) The works ( replacement of heating system) were identified by reference to a Summary of Tenders attached to the notice

(ii) It was stated that they would be done under a tender contract .Detail was given as to the number of tenderer and the decision to propose to appoint a named contractor.

(iii) The full specification could be inspected by prior notice to named officer

(iv) Observations to the named officer within one month of the “dated hereof”, the date being given as 2^nd July 1996

Project 6

It was addressed to Mr. & Mrs Ball relating to 1-73 odd Haynes Close. The form was similar to the earlier notices. In detail

(i) The works were referred to in a short summary , window replacements, construction of new pitched roofs, renewal of cold water storage tanks.

(ii) The intention was stated to be a by a named contractor under Term Tender

(iii) Inspection of the specification etc in the usual form

(iv) Observations to named officer within one month of the date of the notice which was given as 20^th September 1996.

Project 7

This was another notice addressed to Mr. Martin in respect of certain of the flats at Edgecot Grove.

(i) the works were described briefly—this time not in what had become the usual schedule but in the course of the first numbered paragraph

(ii) The works were expressed to be under a term contract, the tender year being briefly referred to as also the successful contractor.

(iii) Specification/schedule of rates dealt with in the usual way

(iv) Observations within one month of the date of the notice to the named official. Date given on the notice as 13^th December 1996.

Project 8

This was addressed to Ms March in respect of a number of flats at Blaydon Close. The form had become a little more sophisticated. In particular

(i) the works were described by a global description and then listed with a price against each item in the list

(ii) A form of information sheet explaining a number of things about s. 20 notices ( including how the costs are typically divided up was attached

(iii) A schedule of tenders was attached .It was stated that they proposed to appoint a named contractor with the usual provisions for inspection. The tenders were in facts LHC tenders though the notice did not say so

(iv) There were also the usual provisions for observations “within one month of the date hereof” the notice bore the date 25^th June 1997.

Project 9

This was addressed to Mr. Edwards in respect of two groups of flats in Waverley Rd. It was accompanied by a covering letter with a reference to the senior Technical officer, Mr. Byrne as the person to answer questions and also an information sheet. It followed the more sophisticated form. In particular

(i) the work ( removal of asbestos) was briefly described with a breakdown of the figures

(ii) The work was stated to be under a Term tender with HCS “won in fair competition”

(iii) There were the by now usual provisions for inspection and for observations within one month of the date of the notice which was given as 17^th December 1997.

Project 10

This was also addressed to Mrs Edwards again in respect of the Waverley Rd flats It followed a very slightly different form. In particular

(i) the description for the works was much as the more recent notices

(ii) the works were stated to have been put out to tender—there was schedule of tenders and the proposal to appoint a named contractor was stated. These were LHC tenders though the notice did not so state.

(iii) There were the usual provisions both as to inaction and as to observations—again within one month of the “date hereof” the date being stated to be 22^nd December 1997

Project 11

This was addressed to Ms W Harris in respect of a number of blocks in the Northumberland Park estate. It was a Term contract stated to be to HCS and it was accompanied by an information sheet and a covering letter. There were the usual provisions for inspection and observations “within one month from the date hereof” the date being 16^th January 1998. The works were described in much the same way with much the same particulars as the more recent notices and the notice not call for any particular comment beyond this. Ms Hairs was I think in fact the late Mrs Harris ands issues as to service may arise.

Project 12.

This was another notice addressed to Mr. & Mrs Rolph relating to some of the Waverley Rd properties on the Northumberland Park estate. It was accompanied by a covering letter which explained its purpose .As to detail

(i) the works were briefly but comprehensibly defined as demolition of ramps and provision of new lift lobbies and various other items relating to entry.

(ii) It was stated that the works were put out to competitive tender , there was one tender and the name of the proposed contractor was stated.

(iii) Observations were invited to a named official within the usual one month from the date of the notice—that date being stated on the notice to be 10^th December 1998

(iv) Unusually there was no invitation to inspect specifications.

Project 13

This was another notice addressed to Mr. & Mrs Ball. It related to Haynes Close 51-73 odd. It was again accompanied by a covering letter which explained the workings of the notice. In detail

(i) The works were, this time, defined in the first paragraph of the notice –they were works of maintenance which were described fairly briefly but in terms that clearly identified them.

(ii) It was stated that two tenders had been received and which contractor was proposed to be chosen

(iii) The tender tabulation and specification were stated to be able to be inspected by arrangement with the named officer

(iv) Observations were to be within the usual one month of the date of the notice , the date appearing on the notice as 22^nd June 1999

Project 14

This notice was addressed to Mrs March in respect of 59-98 Blaydon Close on the Northumberland Park estate. It was accompanied by what had now become the usual covering letter. In detail

(i) The works were defined in the schedule as decommissioning the district heating system and installation of individual central heating systems

(ii) It was stated that the project had gone to tender, that there were three tenders and to whom it was proposed to award the contract

(iii) Observations were invited to a named officer within one month from the date of the notice which was stated on the notice to be 31^st January 2000

(iv) There was no invitation to inspect specifications

Project 15.

The notice was to Mr. & Mrs Perlman in respect of Corbridge 1-16 on the Northumberland Park estate. It was accompanied by the usual covering letter. In detail

(i) The works were this time described in the opening paragraph of the notice as the repair of various external matters which were briefly described.

(ii) It was stated that there had been four tenders and to whom it was proposed to award the contract.

(iii) There was an invitation to inspect specification and tender tabulation by appointment with a named officer

(iv) Observations were invited within the usual one month from the date of the notice , the date being given as 3^rd March 2000

Project 16.

The notice was sent to Ms Gill accompanied by the now usual covering letter. It related to Anderton Court 7-12 and 14-16. In detail

(i) the work was described briefly in the schedule as window and door replacement “etc” and installation of extractor fans.

(ii) It was stated that there were tenders from four contractors and the identity of the contractor to whom it was proposed to award the contract. It as an LHC tender but the notice did not so state.

(iii) There was no invitation to inspect specifications etc.

(iv) Observations were invited within one months of the date of the notice which was expressed as 24^th August 2001.

One fact that may be useful to add at this stage is that the evidence was that all notices were, as a matter of course and apparently invariably sent by recorded delivery.

39 The criticisms of the notices and the procedures followed.

Most though not all of the criticisms are primarily matters within Issue 4 and Issue 5. It is however convenient to set out now the whole series of questions which encapsulate most of those criticisms. They were usefully set out in Mr. Brock’s written closing submissions thus

(A) On Issues 4 & 5 & ( in case of one question )22

(i) were at least two estimates for the works obtained ?

(ii) Was at least one of them from a person wholly unconnected with the landlord ( this is Issue 22)

(iii) Was the notice accompanied by a copy of the estimates?

(iv) Alternatively to (iii) were the estimates displayed in one or more places whether they were likely to come to the notice of all the tenants ?

(v) Did the notice describe the works to be carried out?

(vi) Did the notice invite observations on the works and on the estimates and state the name and address of the relevant person to whom the observations could be sent and the date by which they were to be received ?

(vii) Was the date stated not earlier than one month after the date on which the notice was given or displayed ?

(B) On issue 6

(viii) Did the landlord have regard to any observations received in pursuance of the notice ?

(C) On Issue 8

(ix) Did the works begin earlier than the date specified in the notice ?

I will identify where these questions arise as I come to deal with the issues.

39 Issue 4 Did the [s20] notice served by the Claimant comply with the statutory requirements set out in section 20(4)

(a) by the obtaining of at least two estimates for the works one of them from a person wholly unconnected with the Claimant?

(b) by a notice being given to each of the tenants accompanied by a copy of the estimates or being displayed in one or more places where it was likely to come to their notice ?

(c) by a notice describing the works to be carried out an inviting observations on them and on the estimates with the information required by s 20 (4)(c)

Issue 22 To what extent |(if any) is the involvement of London Housing Consortium relevant to the recoverability of the claims brought by the Claimant ?

Having set out the issues I return to thether Questions.

40.Question (i) Were at least two estimatesestrimates obtained?

.As shown in the notices to which I referred in detail above

(a) In many notices, there was an ordinary tender process in which a varying number of tenders (in all but one case at least two in number) were obtained, though the notices did not always so state. The exception was Project 12 where there was only one tender. The argument here really has to be whether the tenders can be considered to be “estimates” for the purposes of s 20. In a literal sense they probably are not. An estimate is something that is estimated without the estimator being bound by the price, it is what he thinks it will cost rather than what he promises it will cost. But to my mind a tender which is a fixed price offer which if accepted becomes a fixed price contract contains within it the essential purpose of an estimate which is to tell anybody to who reads it what the project is likely to cost. To say that for the purposes of s. 20 a tender cannot be an estimate because it is a firm figure as opposed to a less than firm figure which the statute positively requires seems to me to be dangerously close to “cloud cuckooland”; what would be the practical purpose of a provision so construed? In my judgement an ordinary tender is capable of being an “estimate” for the purpose of s. 20. It follows that (a) in the case of all the ordinary tenders except for Project 12 two estimates were obtained (b) in the case of Project 12 only one was obtained.

(b) Term tenders of course operated differently. They amounted to an estimate/offer for the “going” rate for work that might be wanted ( in various combinations) during the term of the tender. There was of course competition and in each case at least two tenders were obtained for the “term contract”. Mr. Brock argues that the use of the term contract contained within it a process which had involved at least two tenders and accordingly two contractors more rigorously investigated and tested than if they had provided estimates. Simply as an analysis of what had happened I have no trouble with this formulation. The difficulty as regards the term tenders may arise I think because it might be said that they cannot actually be made to do what, on the most purposive of constructions, the statute requires ( though Mr. Brock’s formulation would in any case be a powerful basis for an argument for dispensation to which I will come later). The argument is that what the statute requires at minimum is a contractors price for the instant job, as opposed to what as I understand it a term tender is, which is an acceptable set of rates ( effectively by way of unit costs) to be applied to a project. In practical terms the difference may not be very great but the trouble may be that at no time is the tenant able to look at anything which is the project as a whole priced by the proposed contractor. However if one looks, for example, at the notice for Project 7 it can be seen that what forms the basis of the proposed price is the tender tabulation the specification and the schedule of rates which if taken together must produce the contractors estimate/commitment for the job, where the only competitive element is the unit cost The unit cost having been the subject of the “estimates” obtained to produce the term tender. Although it is an unconventional and unusual application of the expression “estimate” I think on at least a purposive construction it works and there was compliance. If there was not the non compliance arises because of the need to construe the requirement more technically.

(c).I propose to leave over the answer to this question as regards LHC tenders until I have dealt in some detail ( under the next question) with what LHC is and how it works.

41. Question (ii) ( and Issue 22) is a contractor wholly unconnected with the landlord ?

The reason for this provision is fairly obvious. There is a long history in many cases of less than scrupulous landlords charging fancy prices through contracting organisations which they own or control or with whom they are in a commercial relationship where there are elements of mutual benefit ( simply to give examples of a multi-headed phenomenon). The requirement to have at least one of the estimates from somebody wholly unconnected is a potentially valuable check to the tenants who can then see whatever the “connected” contractor may be charging above the market, and is of course a potentially useful weapon to stop landlords misbehaving in this way.

I pause to make an observation. Local authorities are not of course, historically, immune from this sort of thing. One or two famous scandals in particular in the earlier 1970s made it all to clear that unscrupulous behaviour of this kind is something that may happens where chairmen of spending committees get too close to contractors. It is of course with precisely that sort of problem in mind that local authorities are nowadays ( as Haringey is) required to go out to tender. In places in the witness statements there is more than a suggestion that individuals have believed that contracts may be being given to favoured contractors. This sort of belief dies hard and has a long history and one cannot blame ordinary members of the public for believing that it is possible however much the facts of the individual case point the other way. Ms Gill, a most intelligent and well balanced witness indeed formed some such belief about the LHC contractors though she was no longer able to tell me where she got it from. Rather surprisingly Mr. Martin, a businessman of many years’ experience who was thoroughly familiar with tenders as a concept had failed to understand how it all worked until he was cross examined by Mr. Brock. But no excuse can really be given for Mr. Reeve. He had been a major political figure on the Council, directly concerned with housing, over a number of years. A good deal of what happened actually happened “on his watch”. He should have known or made it his business to know how things worked . He did not hesitate to mount a serious attack on LHC. Put very shortly what he sought to say was that LHC contractors were disproportionately expensive, that their prices were not really market prices and to give the impression that it was a cosy little arrangement out of which the Council made some sort of profit. In the face of Mr. Reeve’s evidence and of the apparent criticisms that were going to be made of LHC Mr. Brock considered it right to call Dr Eli Kienwald the director of LHC to give evidence as to how LHC worked. Before he gave his oral evidence Dr Kienwald in a two page email which was admitted as part of his evidence in chief responded to Mr. Reeve’s detailed criticisms. Even before Dr Kienwald gave his oral evidence this additional evidence alone showed without the smallest doubt that Mr. Reeve’s criticisms were ill informed, jejeune and prejudiced. It is unlikely that anybody who heard Dr Kienwald give his evidence will easily forget how impressive a witness he was. A man of obviously high professional competence, obvious integrity and an ability to deal clearly and definitively with anything that was asked of him. By the time that he had finished it must have been clear to any fair minded person present that the attacks on LHC were utterly without foundation.

42. Mr. Ashfield with a clear and proper sense of reality withdrew on behalf of his clients and upon instructions any attack made on LHC and limited his case to whatever could be made out of the way in which LHC’s levy arrangements worked—to which I will come. Mr. Reeve , who attended for almost the whole of the case, was not present when Dr Kienwald gave his evidence—I do not know why. He did not feel able to make a similar withdrawal. I can only say that this part of his evidence, if no other, stands discredited and I place no reliance on it.

43. I come to the “levy” point—issue 22. In order to understand it ( and to deal with question (i)(c) that I left over, above) I need to make some brief findings about how LHC works ( the facts are taken from the evidence of Dr Kienwald who knows most about it).

(i) LHC is a consortium of local authorities

(ii)The Council is one of the member authorities.

(iii).LHC maintains a fulltime technical team “the Development Group) headed by Dr Kienwald. It operates as an independent unit.

(iv).What it aims to do in broad outline is to sponsor and manage specialised procurement arrangements for buildings component sand services in all sort of public sector buildings

(v).The arrangements known as “LHC Bulk quotation arrangements “ are set up as a result of Europe wide competitive open tenders.

(vi).Taking ( as Dr Kienwald did) as an example the bulk quotation arrangements for windows and doors (eg Project 16)

(a) the process starts by drawing up a list of possible companies ( 195 were the example given) from a variety of sources and on a Europe wide basis. Having done that the companies are asked if they would like to take part in the selection procedure . If they do they are then subjected to a preliminary questionnaire ( which in the way described sounds a thoroughly searching one). There is then an evaluation based on the questionnaires which reduces the candidate companies to ten.

(b) Offer documents for the relevant bulk quotation—in the example given the supply of aluminium windows and doors) are then sent to the ten companies with a view to their tendering

(c) tenders are received ( in the example given five of the ten actually tendered) .The tenders are opened and there is then an evaluation report. Following that the Director recommends ( in the example given) two companies to be selected for the Bulk quotation arrangements for two years. This recommendation is put to the Chief Officers of LHC and in the example given was accepted

(d) In another example given in the same product area research was also carried out into the needs of the local authority members and the responses received from them and this was built into the questionnaire addressed to the companies ((a) above)

(e) once the companies have been approved then the arrangements stand for the stipulated period ( usually it appears two years with an option to extend for a third year).Member authorities (including of course the Council) are then able to obtain the products on LHC terms and at the agreed rates for any individual project that may have required them. Thereafter the actual contract is concluded by the authority with the contractor in the usual way but based on the LHC rates. As I see it this arrangement is best suited to projects which primarily depend on units costs.

(vii)The financial arrangements ( which are what is critical to issue 22) work, as I understand the evidence thus

(a) The running costs of LHC are the responsibility ( in equal shares) of all the member authorities to the extent that LHC’s income does not cover those costs

(b) When any contractor is asked to tender he is asked to include in his prices a stated percentage of levy. But as I understand Dr Kienwald’s evidence the price, if accepted ( including the built in levy) is accepted on the basis that it is a competitive price. It is important to note that the levy is not added to the price approved by LHC but forms part of it.

(c) The purpose of the levy is to provide an income to LHC to cover costs

(d) It is no part of LHC’s objects to generate surpluses for the benefit of member authorities.

(e) However in some years there are surpluses. If that happens they are distributed back to member authorities

(f) Dr Kienwald’s evidence ( which I accept) is that the only reason LHC is able to re-distribute surpluses is good and careful management of LHC’s finances.

(viii) It is useful to take an example of what happens in practice In Para 93 of his witness statement Mr. Reeve said “Every year the joint owners the full members meet to agree the formula and therefore the amount of the surpluses that is to be distributed to each of the full members of LHC. For the financial year 200/01 this came to over £480k of which Haringey received £48k” Dr Kienwald’s riposte to this ( in the email) was “ This is correct ( although the total distribution was actually £600k) but it should be looked at in the context of total LHC business of over £30m for that year from something like 250 different customers and that Haringey’s spend during that year was only £1m.” it does seem to me that in context it looks rather different from the point Mr. Reeve strove to make and it is not without significance that a member’s share of surplus is not necessarily linked to its “spend” indeed as I see it a member may still get some surplus back if it has spent little or nothing. Plainly also (a) above) if it a bad year not only is there no surplus but a member may have actually to pay up to make up a deficit. Mr. Reeve’s overall thrust certainly suggested to me at first reading that one of the objects of the exercise is regular profit making out of the contractors. I am wholly satisfied that this is not the nature of the operation at all.

44 On the basis of that factual analysis I come to answer the questions

First ;Question (i)(c) that I left for determination until I had examined the facts relating to LHC. Essentially it seems to me that the point is almost exactly the same as (i) (b) ( Term Tenders). Again the product of any tendering/estimating process is to produce the unit cost. The process through which LHC have gone produces two contractors with unit costs approved by LHC.( who act in effect as I see it as agents for the constituent authorities). Translating the unit costs into a particular project would appear simply to be a mathematical exercise based on the specification and rates. For the same essential reasons as I gave in respect of (i) (b) I hold that in the LHC cases two estimates were obtained. As in the case of term tenders ( and with Issue 10 in mind) if I am wrong about this it would arise because of the need for a stricter construction that the approach I have adopted.

Secondly Question 2 and Issue 22.

Mr. Ashfield’s submission is that LHC contractors ( or he says LHC itself) is not “wholly unconnected” with the landlord . He eschews rightly the idea (latent I think in the way Mr. Reeve approached the matter) that there is any sort of secret profit. What he says, broken down into its components is this

(a) The Council as a member of LHC has a potential financial liability as well as a potential income and therefore a financial interest

(b) That financial interest is in the levy that covers LHC overheads and then produces a surplus for division

(c) The prices are not netted down by the total amount of the levy or by the possible receipt of future surplus of LHC.

45.Mr. Brock’s riposte to this is

(a) LHC may be connected with the Council—even though ( I accept this on the evidence) it is a wholly independent and rigorous body).

(b) There is simply no connection between the LHC contractors and the LHC members. How, he asks rhetorically, is Euro Windows connected with the Council ?

I take the view that Mr. Brock is right but I think a rather fuller analysis is desirable to support his conclusion

(a) The question that has to be asked is whether the contractor is connected with the landlord. Normally speaking of course the point is an obvious one, either the landlord owns the contractor, or somebody close to the landlord owns it, or there is some financial arrangement that benefits the landlord—no doubt this list is not exhaustive but it serves to show the pattern of what the statute is aimed at.

(b) whether or not LHC is connected with the landlord is simply irrelevant. LHC is an organisation that examines and evaluates tenders and does so on behalf of its members. As I have indicated elsewhere I think the best analysis is probably an agency one. But essentially LHC is in the member authorities’ camp and not in the contractors’ camp. It is the authorities’ creature and the authorities control it. It deals on their behalf with the contractors.

(c) Effectively what I have said so far answers the first of Mr. Ashfield’s two propositions. Of course there is a financial interest in LHC and a clear connexion with it but LHC is not the contractor.

(d) it all has to turn on the levy. If the levy was a secret profit ( as appeared covertly to be suggested by Mr. Reeve) then there would be a clear and obvious connexion. But that is not the case and, rightly, Mr. Ashfield does not suggest it is. What on my analysis the levy is, is part of the contractual arrangements .It is built quite openly into the tender price which LHC approves and which is approved, as I understand Dr Kienwald’s evidence on the basis that the price offered ( including built in levy) is a competitive price.. Therefore what follows as I understand it is this (i) the contractor accepts that a portion of the price paid to it by the authority will go towards the costs of running LHC (ii) the ultimate source of the levy is the price paid by the authority to the contractor (iii) if there is a year end surplus the authorities get it back albeit in shares that may differ from those they originally paid to contractors (iv) somebody has to pay the cost of tender evaluation. If it was done “in house” the authority would be paying the cost itself, as it is the authority pays the cost, gets back any surplus but the contractor’s profit is in any event reduced below what it might have been.

(e)Trying to analyse this very simply what I see it as being is a standing arrangement whereby the total cost to the authority under the tender price, evaluated as a competitive price , includes a share of the LHC costs which are the cost of dealing with tenders ( a cost the authority would normally have to bear itself “in house”) which is something that may be partly refunded to the authority if in the relevant year there is a surplus. If there is no surplus then there is no refund. I cannot see for my part that this gives the Council a financial interest or connection with any particular contractor .Once it is realised that this is not a secret profit or “kick back” but that anything the authorities get back is simply a surplus on that year’s operating cost to my mind any real question of “connection” disappears.

Accordingly I find that the LHC contractors were not “connected” with the Council and that no other contractor was so connected. If I am wrong and they are connected ( again with issue 10 in mind) the connection is of the most technical kind and has nothing to do with the kind of mischief at which the appropriate provision of s. 20 is aimed.

46. Question (iii) was the notice accompanied by a copy of the estimates

It is common ground that it was not

47. Question (iv) alternatively were the estimates displayed at one or more places where they were likely to come to the notice of the tenants ?

The exact statutory requirement s 20(4) (b) is that the notices accompanied by the estimates shall be given to each tenants or shall be displayed at one or more places where it is likely to come to the notice of all those tenants .” (my emphasis)

On an absolutely strict construction one would have to have either a notice plus estimates served or a notice plus estimates displayed. Neither of course happened here. What the Council did ( as I have described) was to refer to the contractual documentation in the body of the notice and invite inspection at the Council offices by appointment with a named official. On the evidence the practical reason was this, the tender/contractual documentation was bulky and complex and it would have impractical and unsuitable either to copy it to each of the tenants or to pint it to a notice board on the relevant estate. The decision was taken, indeed on advice to take the step that was actually taken and so that the documents could be examined at leisure and in office surroundings.

My understanding of the evidence is that the documents made available were intended to include as appropriate the specifications and the different rates submitted by the tenderers. It is plain that in at least one case ( Project 7) Mr. Martin and Mr. Foster went to the Council offices but not only were there difficulties such as missed appointments and unavailability of staff about which Mr. Martin quite rightly makes complaint but when he saw the tender documentation the identity of the tenderers had been blacked out on the basis that they were confidential ( wrongly to my mind). It is probably not necessary to go into the detail of his sorry story further than that. Mr Ashfield described it as a farce and I would not disagree. The whole thing was thoroughly badly handled—a piece of oral evidence suggested and it may well be so that this arose because of a senior officer who had personal difficulties not being in the office when he was expected to be. This would have been little comfort to Mr. Martin and Mr. Foster. Mr. Ashfield made it plain in his submissions however that he was not suggesting that this represented any sort of deliberate policy of obstruction and I do not think it did

Two points immediately arise

(i) no separate submission was made to me on the basis that only one tender/estimate ( ie the successful one) was available for inspection—indeed Mr. Martins’ evidence points entirely the other way, he saw several. I proceed on the basis, as the evidence appears to suggest, that particulars of more than one tender were available for inspection

(ii) Do Mr. Martin’s and Mr. Foster’s difficulties go to the validity of the Project 7 notice? The question that one is dealing with is whether the notice as a notice was compliant, not what went wrong subsequently. Therefore it seems to me that the proper approach is this: (a) is the scheme applied by the notice a scheme that of its nature will work or not? And (b) although the answer to (a) would be yes nevertheless was the scheme so badly organised that the notice could not in fact work ? Anticipating what I shall say below my answer to (a) would be “yes”. As to (b) the evidence does not suggest a general obstructiveness that all persons inspecting would meet much less ( and of course not suggested) that there was a deliberate policy of obstruction which plainly there was not. In my judgement the system was a viable system and would usually work. It failed to work in this instance because, so far as one can tell, of particular factors that occurred at the time and the evidence does not suggest that this would have applied on all occasions. The factual point, which is rightly one of serious concern really goes I think to either Issue 6 ( observations) or Issue 10 ( dispensation) and I will re-visit it there.

48.Coming to the heart of the matter

(i) a point which was not taken at all but which looking again at the section perhaps might have been is what might be called an “all or nothing “ point. Either you display the notice in a suitable “ public place with estimates attached or you give individual notices with estimates attached. What has actually been done is a hybrid, individual notices with estimates in a “public” place, such place being identified in the notices. It is not what the section says. But I think this is one of those areas where one is entitled to adopt a broader and more purposive construction. What the section intends is that the tenants get notice of all the matters required by the subsection and are enabled to see the estimates for themselves. This can be done by one of two methods. But provided the object is achieved it would not seem to me to be critical to the attainment of that object to treat it as mandatory to achieve it all by one means or all by the other provided it was made plain to the tenants how it all worked and where the estimates were and that the totality of the exercise was achieved by one or other of the prescribed means . I am not wholly surprised the point was not argued. Had it been I would have been against it.

(ii) The point that was argued seriously and at some length was the much more practical one whether the provision of the contractual documents for inspection at the Council offices really amounted to display “ in one or more places where it is likely to come to the notice of all the tenants.” I turn to the arguments.

(a) Mr. Brock’s argument is short and simple—displayed in a council office with a clear indication of where that is and who to contact ( as was done in each case) ensures that the “estimates” are likely to come to the notice of the tenants .If anything he says that what the council has done is actually rather better than the statute requires , the notices are displayed in an office where there is an officer who can explain or answer questions .This he says must surely be an improvement on pinning it to a notice board.

(b) Mr. Ashfield pins his argument to the words “ all those tenants” in the subsection ( see my emphasis above|) .He says that “ display which is likely to come to the notice of all those tenants “ cannot be satisfied by making copies available at the Council office .He describes Mr. Brock’s submission as “ingenious” . Mr. Ashfield makes the further submission that if tenders were too long to attach to notices then the summary from each company setting out the name and the tender sum could have been sent. I expect it probably could have been done that way. The way chosen was, on the evidence believed to be better. But the issue I have to determine is whether the way that was chosen was compliant, not whether something else could have been done .

49.I confess to having difficulty with Mr. Ashfield’s submission. I think it is desirable to analyse the facts and circumstances a little more fully than either Counsel has done. As a preliminary I do observe that making available for inspection at a named office and by appointment is a not unfamiliar device in a variety of situations, two common ones are (i) planning matters where the applications plans are usually stated to be capable of inspection at the planners’ office and (ii) auctions where complicated plans of large properties are frequently stated in the catalogue to be capable of inspection at the auctioneer’s office. Neither is an exact parallel but it shows that in a variety of situations this can be regarded as an effective device.

Turning to the specific facts

(i) it is critical to remember that every tenant gets a notice and every notice says where the documents are and how to see them. So any tenant who bothers to read his notice knows where the documents are .

(ii) I would not myself regard “ displayed” as a term of art. A simple dictionary definition of the word ( which can have quite a number on inapposite meanings) is “ an exhibition of anything to the view”

(iii) The availability on request of the documents at the Council offices enables anyone who asks to have a view of the documents.

(iv) I think the difficulty may be caused by the situation primarily envisaged by the subsection being that notice plus documents will be on a notice board and the notice board is in a place where all tenants are likely to see the notice and the documents that accompany it ( which on this supposition would form one pack), so that once you see the notice you see the documents displayed with it. But that is not of course the factual position here.

(v) The answer as I see it is that it is the notice, given to all tenants which by its terms ensures that the display ( as I think myself it reasonably can be called) of the documents in the Council office comes to the notice of each tenant. If the notice was silent and the documents left to languish in the Council office without any notification of where they are then even if they were left on a table at all times , they would not be likely to come to the notice of all tenants ( probably not to the notice of anybody at all) .But once given that the notice says what it does the display of the documents on request at the Council office will come to everybody’s notice , whether they avail themselves of the opportunity to look is a different and in my judgement irrelevant matter.

Accordingly I accept ( for rather more lengthy reasons) Mr. Brock’s argument and would declare accordingly. Again, as elsewhere , for the purposes of Issue 10 I shall have to consider what the answer is if my conclusion is wrong.

50. Question (v) Did the notices describe the works to be carried out?

I make a few preliminary observations

(a) it must be remembered that there is no prescribed statutory form of notice and this is a notice that may very well be given by lay people, and in many cases by non-lawyer e.g. surveyors . It would I think be wrong to give any over restrictive meaning to the word “describe”

(b) the object of this part of the notice as I conceive it is that the tenants are to have a fair idea as to what the landlord intends to do. One has to look at he requirement fairly broadly with that object in mind.

Mr. Ashfield’s submission ( which necessarily varies in detail project by project) is that there must be a meaningful description so that the tenants can make observations within the time allowed , but in fact the descriptions were ( at least in some cases) so brief as to be inadequate. I would go at least this far with him, they were in most cases brief and in one or two cases difficult to follow on their own.

Mr. Brock’s riposte, nearly as brief as the submission is that the descriptions are plain and simple and they are explicable. He says further that the purpose of the statutory requirement is plainly to put the tenants on notice of the broad nature of the works so that they can if they wish investigate further.

51.I do not think there is actually too much difference between the various attempts to formulate a principle. The notice needs to tell the tenant what is intended and ( possibly also where it is not obvious) to distinguish whether it is a large job or a little job. But for that purpose a brief description, if clear is enough. Thus “ replace whole roof” and “ replace all windows and doors” hardly needs elaboration.

Most of the descriptions fall into that sort of category. There are one or two that may nonetheless cause difficulty.

Project 2 “ removal of existing asphalt roof coverings and replacement of flat roof coverings with cut to falls insulation system”. Here it is clear enough except for the reference to “ cut to falls|” which apparently means “ tapering”. But I would have thought that this expression – agreed to be not of obvious meaning on its own—was fairly evidently a detail and the main description gives a fair idea of what is involved.

Project 4 “ new insulation and roof covering”. This is so brief that it does not give the extent. But it is most obviously to be construed as meaning total replacement and the overall nature of the job is clear

Project 7 “ exterior decorations”. This is very brief. But the nature of the exterior decorations of an existing block is something clear on inspection of the block itself. And most naturally it would mean replacement of the whole. There is a similar point under Project 13.

Project 11. This is a “rag bag” set of repairs .It is described as “ Estate repairs including sealing of garage accommodation, improvements to pram shed doors, work to communal staircases.” This is the sort of thing that it is difficult to describe accurately without going into “clinical” detail. On the other hand the brief description gives I would have thought a fair and reasonably vivid impression of what was envisaged without necessarily defining each item. On the view I take of the statutory requirement it will just about do. Project 15 is not dissimilar

I come to the overall conclusion that though some are better than others and a number might have been improved on there is sufficient description in all the notices. But there is a further point that seems to me to be important. In each case the tenants are referred to the specifications or other contract documents which they can inspect. Those documents are in full detail and set out what the contractors are to do. It would be a very narrow way of looking at the notices with the purpose of the legislation in mind to say that although the referential documents would tell the whole story if looked at , the brevity of the description in the body of the notice would none the less cause the notice to fail. This additional reason fortifies my conclusion. The descriptions are in some cases scanty but it seems to me are the right side of the line.

52. Question (vi) did the notice invite observations etc…

There is no doubt about this question. The notices were full and clear in all cases.

53.Question (vii) was the date stated not earlier than one month after the date on which the notice was given or displayed?

It is rather odd that given the problems that the Council faced and their efforts to fit the factual situation to the inapposite requirements of s 20 that they should have experienced difficulties over this requirement which could have been completely avoided. However there is in the event a point of substance.

The scheme of each notice is clear from my brief earlier recital of the terms of the specimen notices. In each case the notice bore a date ( in some cases integrally typed and in others rubber stamped) and then the date for observations was expressed to be “one month from the date hereof”.

Now the date on the date on the notice ( absent any other evidence) must to my mind be inferred to be the date that the notice was prepared and issued. The evidence is that in all cases the notices were sent by recorded delivery. So one may conclude that it is more probable than not that the notices were posted by recorded delivery on the dates which they bore. Now the London post is not what it was in the days of Sherlock Holmes when a letter posted in the City in the morning would reach Baker St in the afternoon of the same day. Now it arrives the next day at very best.

What the statute requires is that (i) the notice states the date when observations are to be received and (ii( that the date shall be not earlier then one month after the date on which the notice is displayed or given.

54 Mr. Ashfield makes two points

(a) the statute requires an actual date, not a date ascertainable by means of a “one month after” formula. I do not accept this submission. In my judgement it is a case where ( to anglicise a now obsolete Latin maxim) something is certain when it can be ascertained. By using the formula you can ascertain the precise date. I do not think the statute is intended to be more pedantic than that.

(b) The date when notice is given has to be the day when it is ( or is deemed to be) received. There is no provision akin to the “posting rule” in contract. If, on my finding above, the notice is received at best on the day after it is dated and posted. So the date ascertained by the formula is least one day short. And that say Mr. Ashfield will not do. As he quite reasonably points out an arbitrary date could have been chosen that was really bound to be more than month after receipt of the notice. But this was not done.

Mr. Brock’s riposte to this is that it is simply de minimis and need not concern the Court.

Would that were so. It is of course a very short space of time and the point may well be a good one in the context of dispensation under 20(9)—Issue 10. But no amount of purposive construction can to my mind get round the fact that the section requires at least a month and that was not what the tenants got ( albeit not missed by much). I think it is inevitable that I find that the notices ( all of them I think) were defective in this respect. I just add one point. In the course of argument reference was made from time to time to “30 days” as the period given in the notices. Having read all the specimen notices again for the purposes of preparing this judgement they all as I read them ( see my summaries earlier) refer to “one month” . If they had said 30 days the position in respect of 31 day months would simply have been worse. A February notice however might have had a better chance.

55. It follows that in answer to Issues 4 & 5 I find that the notices were compliant in all respects except for the date required by 20(4)(d).

Issue 6 Did the Claimant have regard to any observations received as a result of the s 20 notices

Issue 7 If the Claimant failed to have regard to any observation received in what way and to what extent did the Claimant so fail?

56.This really encapsulates into Question 6 which is in not dissimilar terms and which I need not repeat.

Plainly the Council had, as the statute provided, a duty to consider and have regard to any observations received. In practical terms that must require them to consider each observation and to decide whether to do something as a result of it or not.

As a general comment observations may fall into many categories and be dealt with in different ways Thus

(a) Here the observations made by Windsor and Co included every time a detailed critique of the shortcomings of the current s 20 notice. Against a background that the Council were for much if not all of the time acting on legal advice in respect of their s 20 notices and believed they were doing the best they could, having regard to such observations could not reasonably be expected to be more than noting that they had been made once more, and there is no serious suggestion that the Council did worse than that.

(b) A common form of observation may be a reasoned ( or unreasoned) objection to a contractor. A landlord receiving that sort of observation will obviously have to consider his position especially if the observation looks as if it has some foundation

(c) Another observation may be the comment that there is an error in the figures. Unless it is obviously fanciful it needs to be examined.

(d) A further form is if the actual nature of the works is objected to—thus any landlord would have to take seriously a united front from the tenants who said they were quite happy with the roof as it was. But a single tenant who was happy with a leaking roof as it was would not be expected to carry much weight in the face of apparent acquiescence by the remainder.

But it must be remembered that all the statute requires is for the landlord to have regard to the observations not to follow any particular patterns in respect of them.

57.An important factor urged by Mr. Brock as affecting any view that is to be taken of what the Council did or did not do is what he called “ the silent majority”. There are in fact two different “ silent majorities” one is those who made no observations and the other those who paid up in response to the Council’s request., the number of the latter are debatable but not relevant to this part of the argument. It is clear that a very substantial number of lessees made no comment at all. The point made out of this by Mr. Brock is that it is highly relevant to the question whether the Council had regard to the relevant observations to know how many or what proportion of lessees made observations ( my example (d) above is an extreme version of this sort of question) He points out that the Council has a duty to all tenants whether lessees or secure tenants. Mr. Ashfield says that all that is being done is pointing to a lack of response to notices that either were non –compliant ( I have held that in one small but important respect they were not but otherwise they were) or were believed to be non compliant as showing a majority in favour of what was happening. I do not give much weight to this argument. It seems to me to attribute to the average leaseholder an intellectual refinement of view which is unlikely to be found in most people who are not lawyers. There is no evidence that many people said “I can see this is a non-compliant notice so I will take no action”. There were one or two people who in a rather silly and demonstrative way simply returned their notices but, for instance Windsor and Co’s clients while they took ( some might think at excessive length and frequency) all the technical points on the notices, did take other points as well. Mr. Norris on several occasions took carefully considered points on the figures. I would have thought that the right analysis is that, given that those who were making a fuss about the validity of the notices were making that fuss and given that they and others were taking other points as well the Council were entitled in considering the observations they received to take into account that a very substantial number of leaseholders were not taking an adverse position either on the technical points or on points of substance and to assume that they had nothing they wished to say in opposition or qualification to what was proposed. After all a primary object of s. 20 is this aspect, it gives the tenants the opportunity for their voice to be heard in an informed manner before anything is done. Landlords can only have regard to what actually happens, if a majority stay silent that is a major factor against which to consider the observations that are received.

58 I do not for my part think that “having regard” to observations requires the landlords to respond positively and formally ( or in writing) to each or any. Provided it is clear that the landlords have ( or must have) considered them that is enough. Of course if there is a considered response which deals with a letter raising observations that is first class evidence that regard has been had. Nor is there any provision that says that having regard to an observation requires landlords to agree with it or implement it. That may be important in the context here. There will of course be cases where the tenants having observed ( with a fair degree of proof) that the first of the proposed contractors has convictions for fraud and the second is facing a claim in respect of his last project which fell down ( let us say) and the landlords simply go ahead that it could be said with cogency that the landlords had no regard to the observations at all. But here the majority of the observations received fell into the categories of (i) legal objections to the notice (ii) requests for information (iii) observations on the figures (iv) protests that the costs were too high. These were received against the background of (i) the silent majority whose relevance I have set out above and (ii) the advice that the Council had received and was receiving about how to do the s. 20 notices. In my judgement in this context considering and where appropriate responding to the observations is enough to satisfy the statute and as will appear from my analysis of the individual projects below the Council save in two cases responded carefully and informatively after what had all the appearance of proper consideration. Certainly many hours must have been spent considering and responding to a substantial number of letters.

59. Mr. Brock addressed me in his final submissions ( and indeed as he had opened) on the basis that one needed to look at the matter project by project and he did this by reference to a detailed documentary chronology. At one stage in final submissions it looked as if one might be wandering into territory not covered by the test cases and which might affect my ability to determine this issue now. But it seems to me plain that (i) there is nothing very much on the pleadings raising issues about failures to deal with particular observations. (ii) in reality everything would be likely to be on the documents, there has been disclosure on a gigantic scale and I have been addressed on the documents and nobody suggests that they are incomplete. I think I can deal with this issue on what I have and I propose to do so.

60.I come therefore to Mr. Brock’s chronology and list of Projects and will work from that. I accept the general proposition that where there are no observations the point does not arise.

Project 1

There were no observations

Project 2

Again there were no observations

Project 3

A number of people made observations, thus Mr. Koutsoudes, Mr. Norris, Mrs Allsop ( really seeking information which she was then given) , Mrs Rolph ( seeking information which she was then given) ,Ms Sanchez. Each received a considered reply. There was also the first Windsor & Co letter which received a considered reply from the Borough Solicitor on the technical legal points and from the technical staff on questions arising about the works. I would find it impossible to say that the observations were not considered.

Project 4

There were no observations .

Project 5

Windsor and Co wrote .A number of the arguments on both sides were the same. Again there are detailed responses from the borough solicitor and the technical officer Mr. Byrne.( Mr. Byrne incidentally made what was probably the first reference to s. 20(9) and it would appear the only one in correspondence with Windsor & Co) There were no other observations recorded as received. I do not think it can be said that the observations were not considered.

Project 6

A memorandum of consultation with the tenants ( in fact pre the s 20 notice) revealed a majority of the affected tenants to be in favour of the scheme. Windsor and Co wrote twice, the second and more substantive letter taking both legal points and general points connected with the scheme, in particular over pricing .Mr Byrne replied in a detailed letter (though it may not have responded to all points taken) . No other observations are recorded. Even though Mr. Byrne did not deal with every point he had plainly read and considered the letter and responded to it on the points which appeared to him to be useful to respond to. I do no think it could be fairly said that the regard was not had to the observations .

62.Project 7

This is the project where Mr. Martin and Mr. Foster had their unsatisfactory visits to the Council offices. There were no Windsor & Co Letters and no observations from anyone other than Mr. Martin & Mr. Foster . Their position as shown on the documents needs to be set out in a little detail ( the same factual scenario will also arise under Issue 10)

(i) The first letter is from Mr. Foster returning his s 20 notice as it is invalid. He takes a number of legal points of a familiar kind ( he was not a Windsor & Co client, but it seems more than likely that Mr. Reeve was a source of advice).He describes in some detail the abortive meetings to date ( 7 01.97)

(ii) On 7^th January Mr. Hurn ( technical officer) wrote to Mr. Martin apologising for the wasted meeting and saying he had made arrangements to inspect the documentation.

(iii) The Borough Solicitor responded to Mr. Foster’s letter on 9^th January. He asserted that the notice was not invalid and returned a copy to Mr. Foster for his records .He told Mr. Foster that he understood the documentation was available.

(iv) Mr. Hurn wrote again to Mr. Martin on 17^th January. Apologising for what had gone wrong and extended time for inspection. He wrote in similar terms to Mr. Foster on the same day

(v) Mr. Martin & Mr. Foster attended on 4^th February and saw some of the documentation. The following day Mr. Foster wrote to Mr. Clark of the Council complaining that at the inspection he had not been allowed to see the names of the contractors linked to their percentage rates. He also took the point that he had been told that the schedule of rates was a public document and would therefore not be supplied. He contended the notice was invalid.

(vi) This letter was responded to by Mr. Hurn on 11^th February, he dealt with the public documentation point but not the other point which was much more substantial, as I think.

(vii) Mr. Foster responded on 14^th February, reiterating that he had not been able to see all the documents and raising a number of inquiries.

(viii) Mr. Clarke responded to Mr. Foster on 26^th February and dealt with some of his queries.

(ix) Mr. Foster wrote to Mr. Clarke on 11^th April .Again he pointed out that he had been allowed only to see limited documentation. He took one or two more detailed points.

(x) This letter was replied to by Mr. Hurn on 1^st May. This letter really just reiterated the Council’s position

(xi) On 24^th April Mr. Martin wrote—partly in respect of another matter—but he took the point on the documents that both he and Mr. Foster had persisted with

(xii) Mr. Hurn replied on 8^th May, reiterating the Council’s position

(xiii) On 10^th June Mr. Foster replied to (x) above .He reiterated his point on the document

(xiv) There was some final correspondence in early 1998 after the consultation period was long expired.

A number of points arise out of this

(a) There is no doubt that in the events leading up to the eventual inspection Mr. Martin & Mr. Foster were thoroughly messed about and deserved every apology that they got. But ultimately they did get to see such documents as the Council were prepared on advice to show them. So I do not think it can be said that the Council by its action as regards these events effectively prevented them from making observations ( and so, the argument would run, failed to have regard to the observations which could have been made but which they prevented being made)

(b) They did in the end make a number of observations and it is plain from the letters that the Council considered them

(c) There remains the question which was central to the fuss that Mr. Martin & Mr Foster went on making. On advice the Council had refused to give them such information as would link a particular tenderer to a particular tendered rate. I cannot for my part see why it was thought to be so sensitive. A complete picture which I think a leaseholder should have been able to see is who has tendered what. I think Mr. Martin and Mr. Foster should have seen this information. I would go further and say that in respect of any observations that might have been made on the basis of this information Mr. Martin & Mr. Foster were deprived of the opportunity to make them and at least on a purposive construction of the section ( which must go for both sides) the Council has to be taken as failing to consider any such observations ( whether there were in fact likely to be such observations is a matter I will return to under Issue 10)

Project 8

Here there are two letters from Windsor and Co both of which were properly dealt with. No issue arises.

Project 9

Mr. Norris made some observations they were careful and pertinent.| He was carefully and properly responded to. Windsor & Co wrote and were carefully responded to. I do not think there was any failure to have regard to these observations.

Project 10

There was a letter from Windsor and Co which was fully and properly replied to. There were no other observations. Again I do not think any criticism can be made.

63.Project 11

On 13^th February 1998 Windsor & Co wrote on behalf of Mrs Perlman. Most of the points were the familiar legal ones which went to the validity of the notices. They would not have called for any answer—by now Mr. Byrne of the Council and Mrs Janes would have been all too familiar with each other’s position. But the letter did raise some practical matters. And there is no trace of any reply to them. Mr. Byrne’s witness statement says that he is not aware of any observations and it looks as if the most obvious conclusion is that he overlooked this letter and did not consider it .There was a lot of correspondence with Windsor & Co around this period and the most obvious explanation is that this letter was overlooked. Nevertheless it would seem as if there was a failure to have regard to observations and therefore a breach of s 20. The question needs to be considered again under Issue 10.

Project 12.

The only observation was in response to initial consultation long before the s. 20 notice was given. It came from a Ms Peacock on 5^th February 1997 and the s. 20 notice was not given until 10^th December 1998. In my judgement the section plainly refers to observations received following the s. 20 notice. In the event there were none.

Project 13.

There was the usual, perfectly adequate ,exchange of letters between Windsor & Co and the Council.

Project 14.

Windsor & Co wrote a letter raising the usual legal issues but also raising other matters. The Council gave a considered and adequate response.

Project 15.

Here Windsor and Co wrote twice. There appear to have been also (i) a letter from Mr. Phillips and (ii) a visit from Mr. & Mrs Norris. In respect of both Mr. Clarke wrote appropriately having considered the points. In his witness statement Mr. Clarke states that Windsor and Co’s observations were considered but he does not say, nor is there any trace, that there were written responses. But all that the act requires is consideration and I have no reason to disbelieve Mr. Clarke. The response to the individuals were obviously compliant.

Project 16.

Ms Gill wrote three letters making some pertinent observations .As a result ( it took some time) she met Mr. Sagoo of the Council. He gave her some information orally at a meeting but advised her to take up certain points with the home ownership team This she did, writing to Mr. Clark. Mr. Thevanesan replied in a considered letter of 30^th October. I do not think there can be any doubt that Ms Gill’s observations were considered as required.

64.Conclusion

I find that all observations were properly considered with the following exceptions

(a) observations on Project 7 which Mr. Foster & Mr. Martin may have been prevented form raising by a failure to give full information

(b)observations in response to the letter written by Windsor & Co on behalf of Mr. & Mrs Perlman in respect of Project 11

In both these respects therefore the relevant claims do not comply with s. 20 and a point arises under Issue 10.

Issues 8 & 9

8. Were the works commenced before the date specified in the notices ?

9 If so what the works so commenced and when were they commenced ?

65.These issues were referred to in argument as the “jumping the gun” issues. The significance of the point, it may be recalled, is that it is a requirement of s 20 that work shall not be commenced before the end of the “consultation” period—though there is nothing to prevent it starting the following day.

In the event there were four projects in respect of which the arguments were raised

Project 2

The s. 20 notice was dated 4^th November with the usual “ within one month from the date hereof” provision. It would not have been received ( the critical date) until at least the 5^th. Work was started on or about 5^th December.

S. 20 (4) (e) provides that work “shall not be begun earlier than the date specified in the notice”

On my construction the right approach is to exclude the first day and include the last day of the one month period ( Halsbury’s Laws Vol 45(2) para 228) Therefore the date specified in the notice is a month from 4^th November calculating time from midnight at the end of 4^th so that a period one month from the 4^th expires at midnight on 4^th December, it following from this that the day by which observations have to be received is 5^th December, but observations received on that date ( the day after the last day of the one month period) are too late. To offend the section work has to start before the date fixed in the notice, i.e. here before the 5^th. It did not.

On that very narrow construction the work did not offend. Of course if the notice had specified the period properly the work would have offended the s. 20 regime because the notice date should have been later. But the strict provision relates to work starting before the notice date which in my judgement has to be the actual notice date and not the date which it should have been. Of course when one comes under issue 10 to consider whether there should be a waiver in respect of the time provision the fact that had time been properly calculated there would have been a breach of 20(4)(e) must be a relevant consideration.

66. Project 4

The contract was a two phase contract . Phase I concerned one set of blocks and Phase 2 another. So far as I am aware nothing in the proceedings before me concerns an issue about phase 1 at all. What is before me as project 4 is phase 2 The date of the s 20 notice was 10^th January 1995. The notice date would be 11^th February.

The leaseholders’ case is that Phase 1 started on 10^th October 1q994, well before the notice ( but for reasons above that does not concern me) The say that and Phase II was unclear but may have been ( according to Claimant’s project list )14^th February 1995. That would in any event be after the notice date ( see my reasoning in respect of Project 2).However Mr. Byrne’s written evidence was of a start on or about 14^th February. There was cross examination on this He said “ I believe it would have been on or about that time. Scaffolding would have been erected first I don’t believe it would have been up by 20^th February. In re-examination he said “ I recall it being a Friday we started.”14^th February would have been a Tuesday.

In my judgement the probability on Mr. Byrne’s evidence which I accept is that they started after the 14^th and quite possibly as late as the 20^th. On any view they did not jump the gun.

67.Project 9

The date of the s 20 notice was 17^th December 1997 so that the “date by” would have been 18^th January 1998. The minutes of the pre-contract meeting record that the contractors were already on site by 6^th January. Being on site does not of course necessarily mean that work has begun though it may—it is to be noted that a pre-contract meeting suggests no contract yet. In his written evidence Mr. Byrne says that although the works were fixed to start on site on the 6^th in fact they did not. He says there that they did not start until the end of the “30 day” consultation period. In cross examination he put the delay as until 9/10 January. The project was too early by just over a week and therefore on any view s. 20 was not complied with and there is an issue to consider under Issue 10

Project 10

The project was in two phases according to Mr. Byrne Phase 1 was “Council owned properties only” i.e. as I read it secure tenants and not leaseholders. Phase 2 was deliberately in respect of leaseholders and understood from the start to be subject to s 20 consultation . Mr. Ashfield submits that work ( on phase 1) began even before the s 20 notices ( 22.12.97 to Mrs Edwards and 7.1.98 to the Rolphs.) “ unless appropriate to divide contract into 2 phases” as per Mr. Byrne’s evidence. The evidence is that Phase 2 began on or about 9^th March 1998.

So if Phase 2 is the only relevant work in the project it plainly complied with the time provision. I do not really understand why Mr. Ashfield suggests that it would not be right to consider Phase 2 as a separate project for our purposes. There is no challenge to this part of his evidence which therefore I ought to accept. It made obvious sense to divide up the scheme if one could so as to keep the consultation to one part of it and that I find is what they did. If phase 1 concerned tenants only then it was not a fit subject for a s 20 notice and the whole requirements of s. 20. In my judgement that is the end of the point.

Issue 23. Were notices properly given to Mr. Harris as executor for his mother ?

68 This issue was not in the original list of issues ordered to be tried, but it emerged from the evidence and it is clearly convenient to deal with it and I ought to consider it before getting to Issue 10.

Mr. Donald Harris’ mother bought 15 Whittingham, Northumberland Park under the RTB scheme . When she died in 1993/4 Mr. Harris became her sole executor and her sons retained the flat for a period before eventually selling it .They let it for a short period but the tenants were highly unsatisfactory and left with the contents. After that Mr. Harris’ brother moved in and stayed there until it was sold.

According to the Council they served or purported to serve s. 20 notices as follows

Project 2 4^th November 1994

Project 5 2^nd July 1996

Project 11 16^th January 1998

A s. 20 notice dated 23^rd March 1998 which does not appear to be one of the notices in this case .

Project 15 3^rd March 2000.

Mr. Harris accepts that he received the notice for Project 5 but says, affirmatively, that he does not believe he received any of the others. He was subjected to a searching but entirely proper cross examination by Mr. Brock. I thought he was a perfectly truthful witness. Two areas in particular were explored (i) whether the unsatisfactory tenants might have intercepted the notices—but they were only there for a short time and this seems unlikely (ii) whether his brother might have received them he thought not. He believed his brother would have told him.

68.As against this the Council’s position is that it served everything –always—by recorded delivery. Mr Reeve said the postal service was poor at the time

Mr. Brock submitted that the duty on the Council was to send the notices and no more than that. He invited me to make the following findings

(a) on the balance of probabilities all the notices were sent

(b) Whether or not they were received by Mr. Harris ( or any other leaseholder) is not relevant

(c) One might go on further and say that even if the notice ended up in the Council office, provided it had been sent properly that would be enough.

In my judgement

(i) Dealing first with the factual issue. It is a common problem in procedural matters in the civil courts that people who on the face of it were sent particular documents turn up, often some time after the event, and say they never got them. Proof of non receipt and on the other hand proof of actual receipt on the face of assertions of non receipt are both difficult evidential problems and the Court deal with them at least to an extent by procedural rules. Here I am faced with the fact that all notices at all times are asserting to have been sent by recorded delivery, that there is no evidence of notices being returned, and judging from what happened next they mostly seem to have arrived. I do not doubt Mr. Harris’ truthfulness at all but given that there would have been practical difficulties on occasions between the notice arriving and Mr. Harris actually getting it, I think it is more probable than not that the notices were actually received—it may simply either be that the wrong person took them in and failed to pass them on, or that their significance was not appreciated or a combination of both. I do note that one notice arrived for certain so that there cannot have been anything very wrong with the system,

(ii) the statute requires that (( (4)(b)) “ Notice… shall be given to each of the tenants”. There is no prescribed form as to how notice is given. Although ( see earlier findings as to time) time can only run from when the notice was or should have been received I do not think it follows that receipt needs to be proved which indeed for any large landlord resorting to the post as a means of communication would be an almost impossible task. I accept Mr. Brock’s proposition that the landlord’s duty is to give the notice and he gives it by sending it by a means which will ordinarily bring the notice to the attention of leaseholder. The remainder of Mr. Brock’s propositions follow from this finding and I accept them.

If I am wrong about all of this then it is a matter for consideration under Issue 10

Issue 10 If the Claimant failed to the extent that is ascertained in answer to issues 4-7 and [added by me] Issue 23 or commenced works before the dates specified in a notice or [added by me—Issue 22] LHC or any contractors on its list was or were a body “not totally unconnected” with the Claimant should the Court dispense with the relevant requirements on the grounds that the Claimant nevertheless acted reasonably pursuant to s 20 (9) ?

69.This is potentially the most important issue in the case. The Council was plainly advised from quite an early stage to the effect that because of the difficulties it faced in complying with s 20 to the letter it would possibly/probably have to rely on the Court’s dispensation under s.20(9), even though in the event, as Mr. Brock made clear in opening the Council’s primary case is that it complied . This advice was known ,as was plain from his cross examination, to Mr. Reeve. He says that he did not communicate it to his supporters and followers; having seen him give evidence I am unpersuaded of this, I think he almost certainly would have done but how far I cannot say . Unfortunately it appears never to have been communicated to Windsor and Co and their clients ( possibly I think on one occasion—see Issues 6 & 7, but nobody ever picked the point up again). The result is that everyone went on “banging the drum” about the technical failures to comply when it might have been better for everyone to focus on this, at least as major alternative issue.

As it happens I have found, really by means of purposive approach to the construction of s 20 that in all respects except (i) the time aspect (ii) two individual areas of consultation and (iii) Project 9 starting too soon, the section was complied with and that save as stated observations were properly considered. But I am conscious that it is only on that purposive approach that a number of important decisions fall in the Council’s favour. On a strict and technical approach there might be important and much larger areas of non-compliance. This is an issue upon which a higher court might take a different view to mine.

I shall inevitably, in considering the individual items under this issue have to repeat almost verbatim a number of matters which I considered earlier in the context of different issues. It seems to me that it is probably easier to repeat where necessary than try to deal with the matters in a more elegantly cross referenced way.

70 In those circumstances it seems to me to be only sensible that I approach Issue 10 in the following way ( having first considered reasonableness)

(i) I proceed on the basis of my findings to consider whether the failure in respect of the time provision is one where the Court would dispense with the strict requirement .If no, of course that is the end of it because it extends to all notices .

(ii) Then I consider whether the Court would dispense with the requirement to have regard to observations in those other cases where the Council fell short and the one occasion when the Council “jumped the gun”

(iii) Then ( especially if the answer to (i) is yes) I consider what I would do were I to be wrong on my various constructions and other findings so that that the failure to comply with s 20 were more widespread, bearing in mind that my finding in those circumstances might well be that there was failure to comply with the letter but not necessarily with the spirit.

Reasonableness.

71.I come back to Martin v Maryland to which I made reference earlier and which is so far as I know the only relevant authority. There is not too much to be got from the facts of that case ( the landlords gave no s 20 notice at all regarding the tenants as being uncooperative and obstructive and the judge below with whom the Court of Appeal agreed found this was not reasonable). The relevant parts of the finding can shortly be summarised thus

(a) the dispensing power is not a general dispensing power. It is part of a two stage process , the court must first find whether the landlords acted reasonably and the discretion only arises if the Court finds reasonableness.

(b) “acting reasonably” is acting reasonably in all the circumstances where s 20 is not being complied with. Mr. Ashfield submits, and I agree that it follows that the inquiry is not a general one and the Court should not be led into treating s. 20 as of secondary importance.

72 In the course of submissions I raised a question which led to some discussion, whether there was a difference between reasonableness in the system and what goes on in individual cases ( this rose particularly in the case of Mr. Martin and Mr. Foster ). Mr. Brock suggested the following approach

first decide

(a) is there compliance

(b) if not the extent of non –compliance/ extent of failure to have regard to observations

then ( coming to Issue 10 itself)

(i) was the manner in which they failed to comply so bad that nobody should have to pay ( i.e. does one translate a failure in an individual case as colouring the whole and making conduct generally unreasonable )

(ii) or, even if others have to pay do the persons closely affected ( e.g. Martin & Foster) have to pay.

By now, there was a danger of the discussion getting outside the question I thought I had raised .Mr Ashfield felt some concern that one was getting into a position where if you look at each individual at both stages of the subsection (9) analysis then it is no longer possible to proceed on the basis of test cases because the Defendants would be unable to deal with individual cases at the reasonableness stage

In riposte to this Mr. Brock pointed out that especially in relation to observations by individuals all of this in fact was in evidence and all in the chronology. There is he says no real danger that there are problems with individuals that are not presently before the Court and which might not be covered by the answers to the test cases.

73.The concern on both sides is entirely proper but in my judgement the answer ( and the way I propose to look at the problem) is this

(i) I am confident that we have before the court anything that bears on the issue of observations/having regard and this is exhaustively listed. I think the question of any other issue arising in this area is most unlikely. I have indeed, as appears above, dealt with the question of observations comprehensively and without regard to whether they involve the test case defendants or not.

(ii) All the other issues are really connected with the notices themselves and should not be a problem. The notices for each project were in the same form for each leaseholder.

(iii) That being so I think Mr. Ashfield’s proper concerns should be alleviated

(iv) I then propose to proceed in the way suggested by Mr. Brock ( so far as it necessary to do so).

Matters bearing upon reasonableness.

74.The following seems to me to be the relevant considerations ( they repast in many cases when one comes to the second question)

In favour of the Council

(a) it is obvious from the notices ( and the care that went into them) that the Council intended to comply with s. 20 so far as possible. All the notices purported to be s 20 notices and a substantial amount of the material which they contained was helpful and not controversial

(b) I am satisfied on the evidence that this Council ( and probably almost any other Council) was not in a position simply to produce estimates in the way a private landlord would. A tender system ( all three types) is a proper system for a Council to use and is likely to produce the best product and price. It is also as the standing orders make plain a defence against corrupt practices.

(c) Given that the Council had to proceed as in (b) it acted in the main on advice ( a good deal of it from Leading Counsel), sought to comply where it could and where there was doubt or difficulty produced something that was either arguably compliant or very close to it.

(d) If the method of inspection was not strictly compliant it was in a form familiar in many areas of consultation.

(e) The failure to make the time provision work properly was a piece of faulty drafting. It is reasonably apparent that the formula was one designed to meet the statute, it was plainly not considered with sufficient precision. However the amount by which the time fell short was one to two days at most.

(f) The one known failure to respond at all to an observation is small and probably to be regarded as accidental.

(g) The chronology shows a number of occasions where on a more broad basis the Council involved itself in consultation with the leaseholders and kept them informed of what was going on

(h) The Council was operating against a background of criticism and in some cases unreasoning opposition ( not least that in which Mr. Reeve was involved).

Against the Council

(a) Although it took advice and worked on the basis that there might have to be an application under 20(9) it never told anybody so the whole discussion with the leaseholders took place on the wrong footing and no explanations were given the public face of the Council was “ we are compliant”.

(b) The treatment of Mr. Foster and Mr. Martin was quite unacceptable and shows that the Council’s behaviour when people actually sought to make use of the consultation process was obstructive.

(c) In Project 5 the District Heating system was being replaced by a central heating boiler in each property. When responding to observations the Council offered an alternative , leaseholders could install their own system at their own expense provided it was to a satisfactory specification. Those opting out would also have to bear their share of the cost of decommissioning the old system and early termination of the former maintenance contract. No complaint is made about this as a proposal , the complaint is that the leaseholders were not given enough information to make an informed choice and it could not be calculated from the s 20 notice. In evidence Mr. Byrne accepted that it was not as clear as it might have been.

I pause to say that the case made by the Defendants was on the basis that the question of reasonableness was confined within the narrow requirements of s 20 (4). On the one authority of course that is and remains largely true but I do not think it can be exclusive. Furthermore the proposition itself requires careful analysis , is what is being said simply that you look at each apparent failure consider reasonableness only in respect of that failure and then go on to consider reasonableness in respect of each failure in turn. If that is what is being said I would think it is wrong; there is a much better case to be made for saying that ( as I think the Court of Appeal really was saying in Martin ) that you look at how the landlords dealt with the s 20 problems as a whole. To my mind it is necessary to take on board for that purpose the nature of the operation that was having to be carried out and the difficulties and accidents that might beset it. It is surely legitimate to look at the rather broader picture to see what the Council did as regards leaseholders generally in respect of the various projects :facts in the context of which the various steps were taken. Indeed if the Defendants are too narrow in their approach they cannot really rely on their own point (a) which is a matter of general conduct.

75 In my judgement ;

(a)Points (a) to (f) in favour of the Council are all strong, both as regards general reasonableness and as regards possible individual areas of failure .Point (g) –the more general point, is supportive but the other points stand well without it. Point (h) which Mr. Brock stressed seems to me on careful consideration not to be a strong point—it is not dissimilar to the position of the landlords in Martin v Maryland . Landlords may be justifiably annoyed and frustrated but must not be deflected from their proper path. At best it may show that where there is a barrage of criticism an occasional failure to respond to an observation may not be unreasonable.

(b) The treatment of Mr. Foster and Mr. Martin as I have explained left a lot to be desired. But in the end it is difficult to characterise it with the sort of label that makes the Council’s conduct unreasonable. There is no reason whatever to suppose that the system put in place was intended to operate other than reasonably and informatively, there was some incorrect advice on the day and some thoroughly poor administration. But that is all. It does not suggest ( see my exchanges with Counsel referred to earlier) that there was a wholesale unreasonableness to be deduced from this. It is not in my judgement a factor to be taken very strongly in saying that the Council did not behave reasonably.

(c) I think it is a great pity that the Council did not make Mrs Janes free of the information that it was approaching the case on the basis that if there were failure it had been advised to rely strongly on 20(9). It might have saved a good deal of time and trouble by helping to focus on the real issues and avoid repetitive comments about a failure to produce two estimates. It might be prayed on aid in support of saying that their failure to do this weakens their ability to say that failures to deal with consultation should be excused—but this is a minimal point because there was only one ( Martin & Foster apart). It might play a part in an argument on costs. But in my judgement it is really rather peripheral to the question of how reasonable overall the Council were in respect of the scheme they were following. It was after all concerned with “after the event” discussion after each notice was served and therefore really only relevant to “having regard”.

(d) I do not think that the point (c) above taken by the leaseholders really impacts in the test. First the “opt out” proposal arose from consultations following the notice and not from the notice itself, so it is irrelevant to any question whether there was reasonableness in non-compliance in any other context than the treatment of representations. Secondly the question of reasonableness in dealing with representations does not involve any particular formula about how much information has to be given ( unlike the s.20 notice itself). Taking it in stages, the “opt out” was a reasonable proposal for the Council to make. The principle was clear enough. If a leaseholder was interested in principle there was nothing to stop him going further and asking what it would cost him. There is no reason to suppose the Council would have refused that information. I t might have been better to give the information at once, but failing to do so does make the process unreasonable.

In my judgement the factors in favour of the Council very heavily outweigh the factors against. Despite some failures here and there ( not surprising in big projects like this) their overall conduct was I conclude clearly reasonable, having regard to the legal basis that I have found.

Relief against failures in the notices and/or procedures.

76 Factors (a) to (f) in favour of the Council and factors (a) & (b) against come into play again here where they fit. So also I think does Mr. Brock’s often repeated reliance on the “silent majority”. It is I think right to look at all of this against the backdrop of a substantial number of leaseholders who made no complaint and took no action. While I accept that this cannot mean that one takes them as consenting, I think one has to look at them as not objecting or not seeing anything so wrong as to make an issue of it. The authorities do not at present give much guidance as to the basis on which relief should be given. I have approached the matter on fairly broad principles having regard to on the one hand the purpose which the section is intended to achieve and on the other, the significance of the breach and, where known, how it came about.

77.I turn to the individual matters in respect of which relief may be sought

(a) failure to have a sufficiently long time provision to comply with s. 20.

As I have found there is no doubt about this. I have set out above how it looks to have come about. The failure in terms of days is minimal. It would be wholly disproportionate for the Council’s claim to be allowed to founder on so narrow a point as this especially when there is no reason on the evidence to suppose that anybody was incommoded by it. The important thing is that people have time to make the responses they want to make and are not shut out

(b) failure to respond to one observation by Windsor and Co ( on behalf of Mr. & Mrs. Perlman). In the context of this case this is fairly minimal. Windsor and Co ( who are very astute in these matters ) did not even bother to chase it up. I think it is a minimal matter and there should be relief. ( one does not really need in the context of this event to give consideration to the leaseholders’ point (a), there is no suggestion that the failure was due to frustration, it just appears to have been overlooked.

(c) Mr. Martin & Mr. Foster. I have largely said what I need say about this in the preceding section. It was a poor piece of work. But in the end Mr. Martin & Mr Foster were able to make some useful observations. The only remaining question is whether they were effectively shut out from raising other points which they might have raised. It is difficult to be sure either way but I think the likelihood is that although they should have been able to link names to figures there would have been no further pertinent observation as a result—certain none occurs to me I would give relief.

(d) “jumping the gun” in respect of Project 9. There is no doubt that this happened and there is no apparent explanation for it. The object of the statutory provision is of course that the consultation process should not be frustrated by the landlords going ahead with the job until the time for observations has passed. There will be, no doubt there have been, cases where landlords have made a mockery of consultation by simply forging ahead. In many cases no doubt this is deliberate. If there had been any strength in an allegation that it was deliberate here I would almost certainly have refused relief. But the evidence does not suggest this. Nor does any pertinent observation appear to have been shut out. The period involved ( a week or so) is not trivial but given the factor I have identified I consider that relief should be given

(e) Failure to obtain two estimates. This supposes my conclusion on construction is wrong. If it is wrong then the non compliance is with a technical requirement that could not be complied with given the other constraints upon the Council. I find it impossible to say that a requirement that the Council goes out to tender ( in whichever form) is not as great a protection for tenants ( if not a greater) than the obtaining of two competing estimates. It is doing essentially the same job in a more professional way. I would give relief

(f) Failure to give notice of the estimates properly. Again the failure if ,contrary to my view there is one, is of serious technicality. Once given that one is dealing with tenders not estimates the Council took the most obvious course. Mr. Ashfield suggested that an epitome of each tender could have been annexed to each notice. So it could. But dangers arising if one tries to edit down important and technical documents. To my mind it is much better to make as much of the material as possible available and I can see no improvement either in Mr. Ashfield’s suggestion or of there being several hundred pages of tender pinned to a notice board over what was done. I would give relief.

(g) Failure to have one estimate from a contractor wholly unconnected with the Council. This is the LHC /Issue 22 point. If I am wrong on what I said it becomes a matter of the utmost technicality for the reason I have already given. In any realistic and commercial sense the LHC contractors are wholly independent. I would give relief.

(h) Failure to describe the project. I accept that some of the descriptions were on the scanty side. If I am wrong about having found that nevertheless they are sufficient then it seems to me that given that there was a full description in the technical documents anybody who wanted to could see exactly what was intended. There was no failure of substance and I would give relief

(i) Failure to serve on Mr. Harris ( were that to be the proper view) . The Council took the reasonable step of serving everything by recorded delivery. The letter was not returned. In a large matter such as this such an event is the sort of accident that can happen. Although it is an unfortunate matter for the tenant I think relief would be appropriate.

Issues 11 and 12 . To what extent was the expenditure incurred in respect of the relevant works (a) [question 11] within the scope of Clause 2(2) of the lease in the case of Rolph (b)[question 12] within the scope of the lease in the cases other than Rolph.

78.This raises the question whether works were improvements and therefore, in some cases, their costs were irrecoverable. It is necessary to consider both questions because this is where the old form of Lease ( Rolph) and the new form of Lease ( the others) had slightly but importantly different provisions.

In Clause 2 (2) of the old lease the relevant words were

“a proportionate part of the reasonable expenses …incurred…. In the repair maintenance renewal and insurance …of the Building and the Estate”

In Clause 4 (2) of the New Lease the relevant words were

“a proportionate part of the reasonable expenses……incurred…. In the improvement repair maintenance renewal and insurance ..”

The essential difference is that the New Lease includes improvements and the old lease does not.

The areas of dispute were identified by means of the voluntary particulars served on behalf of the Defendants .They are the only areas of dispute before me.

The test case of Mr. & Mrs Rolph ( old lease) identifies specific projects ( or parts of projects), as being outwith the covenant. They are

Project 2—roof replacement

Project 10—security doors

The argument is that (i) the replacement of the roof is without 2(2) as it is of a totally different design type and construction and was therefore an improvement. (ii) a very similar argument that the security doors installed were different and therefore improvement rather than repair/renewal etc.

Mr. Brock’s response to this is that difference in design, type or construction does not ( of itself anyway) lead to a conclusion that the work is an improvement. The argument is really the same in relation to both projects. In support of this proposition he cited two High Court authorities Elite Investments v TI Bainbridge ( 1986) 280 EG 1001-1012 and ( a later decision in which Elite was cited) New England Properties v Portsmouth etc 1993 23 EG 130. The point made by both is that renewing or replacing is not confined to producing a replica of the original c.f. improvement which is adding to what is already there.

In my judgement these two authorities which are binding on me are plain authority for Mr. Brock’s proposition. There is nothing on the facts before me to show that the roof and the security doors went beyond that fairly broad test. I hold that both came within “ repair “ or “ renewal” in the old Lease and are therefore not dependent upon being improvements in order to be recoverable.

79.There remains a related point ( in effect under Issue 12) which concerns the demolition of ramps ( Project 12) which is alleged to be outwith both the old lease and the new. The argument against its inclusion is that it is neither a repair maintenance nor renewal but is rather partial demolition of an existing structure, which one can fairly readily see it is not on an ordinary reading one of the heads of recovery.

Mr. Brock’s argument in answer to this is to go to the Paragraph 1 of the Third Schedule ( which in this respect is identical in both leases.) which obviously has to be read together with the covenant. Part 1 of the schedule starts with a preamble which goes into great ( if not exhaustive) detail of the sort of things already covered in 2(2) and 4( 2) respectively and goes on to say that without prejudice to the [considerable] generality of what has already been said “ all costs charges and expenses in respect of the following” and then sets these matters out in among other places paragraph 1 . The relevant words are

“ the expenses of maintaining repairing redecorating and renewing amending cleaning repointing painting graining varnishing whitening and colouring the building and all parts thereof……”

Mr. Brock points his argument to the word “ amending”. A conventional dictionary definition of “ amend” is to alter for the better. Altering for the better can include improvements. Plainly I would have thought that “ amending” in the context of a whole lot of fairly detailed matters ( including items such as graining) cannot be meant to be anything as broad as that . On the basis of knowing the word by its neighbours it is placed at the end of a group of words all of which have a common impression of various aspects of repair and renewal, I would treat “ amending “ in that context as having a meaning akin to types of non radical alteration which cannot be quite covered by the other words including such things as removing something that is out of date and replacing it by something rather more modern and suitable. I think it is difficult to draw any very sensible line between this sort of thing and the removal of ramps as was done here. Although it may be fairly near the edge of the definition I would think Mr. Brock is right.

Issue 13-16 inclusive.

80.These issues, which raise questions under s. 19 are not for determination by me now.

Issue 17 Were the sums demanded a proportionate part within the meaning of Clause 2(2) or Clause 4(2) of the lease (as the case may be )?

81.This issue was largely disposed of by the evidence of Mr. Thevanesan. The Fourth Schedule to the lease sets out a rateable value formula. The final accounts set out the calculation of the formula using the total block cost, the rateable value of the block and the flat’s rateable value in accordance with the provisions of para (e) of the Schedule. Mr. Thevanesan’s evidence establishes that this is indeed what has been done and I do not understand the leaseholders now to argue anything to the contrary. The short answer to the question is therefore “yes”.

Mr. Ashfield raised another issue .Put shortly where a project involves more than one building the cost to each building must be calculated from the total before the rateable value formula is applied to the building cost. The evidence was that the building cost was provided to Mr. Thevenasan or his team by the supervisor of the project,, nut there is no further evidence on this point. Mr. Ashfield flagged up that dearth of evidence in his oral closing submissions. Mr. Brock did not really address it. It seems to me that I must go on what I have. There may be concern that other evidence might show a different result but nobody has produced it and plainly if there was such evidence the point would be arguable. Absent such evidence I cannot speculate and all I can do is accept that on the face of it Mr. Thevanesan was given the right material. I do not think it can affect my conclusion.

Issue 18 Were the requirements of the Fourth Schedule of each lease complied with ?

82.This relates to the scheme imposed by the Schedule for recovery of service charges, which follows what is a fairly common procedure in many leases in the private sector.

The procedure is set out in the Fourth Schedule thus

Para (a) The amount [of the charge] shall be ascertained and certified by a certificate ( hereinafter called the certificate) signed by [a designated officer] annually and so soon after the end of the Corporation’s financial year as may be practicable and shall relate to such year in manner hereinafter mentioned

Para (b) [financial year is defined as 1^st April to 31^st March subject to the Council determining some other period either for the Building or generally]

Para (c) [a copy of the certificate ]for each such financial year shall be supplied by the Corporation to the Tenant on written request and without charge to the Tenant

Para (d) the Certificate shall contain a summary [of the specified expenses and outgoings ] during the Corporation’s financial year to which it relates together with a summary of the relevant details and figures forming the basis of the Service Charge and the Certificate [certified by the person giving it] [shall be conclusive evidence]

Para (h) sets out how payment arises. In summary

(i) as soon a practicable after the certificate the Council gives the Tenant an account for the charge payable for the year in question ( subject to deductions for interim payments)

(ii) on the furnishing of the account the tenant is to pay.

Mr. Brock accepted that physical production of the certificate and the account by Council to Leaseholder are likely to be conditions precedent to the liability to pay. In my judgement this concession is well made and I agree also with Mr. Brock that it does not matter in which order they are produced ( in some cases the certificate was produced after the account). As I read the Schedule the liability to pay simply does not arise until both these steps are followed through. This then lets in Mr. Ashfield’s argument.

83.Mr. Ashfield’s argument proceeds thus. He accepts that factually Certificates and accounts have been furnished and, as I understand it, that they are in proper form. But he complains that they were not in accordance with the Fourth Schedule. The complaints fall into these groups

(a) Sums paid in the service charge year must appear in the certificate for that year and it is not open to the Claimant to wait several years before including expenditure in a subsequent certificate. A necessary prerequisite to this argument must be that when the Schedule refers to a certificate it means there can only be one certificate for the year.

(b) Alternatively (on the footing that the Claimant is allowed to wait until a project reaches practical completion before including expenditure when the project reaches that point the expenditure must appear in the certificate and account for that service charge year.

(c) It is put forward in effect that the alternative appears to be that the Claimant can include expenditure in any subsequent certificate of their choosing and can issue as late as they like, which cannot be right.

(d) Further or alternatively there is a “time argument” .The schedule requires both certificate and account to be produced on an “as soon as practicable” basis. Therefore the argument follows there is a time stipulated for production, in effect a reasonable time for which it is suggested that three months is appropriate .

(e) In support of this attention is drawn to a number of practical considerations

(i) as a matter of fact (in Mr. & Mrs Ball’s case) there is four years between the expenditure and the certificate and ( in Mrs Edwards’ case ) 6 years .There are other examples.

(ii) If the Claimant is correct is there any maximum period for production

(iii) What happens when a long lease is sold ? On change of ownership nobody will know where they stand.

(iv) How does it affect the limitation period? If limitation runs from the certificate and subsequent account the Claimant has complete control over when time runs.

84.Mr. Brock’s case is this

(a) as a matter of construction ” a certificate” simply means “a” certificate,” just that. What it does not mean is that each financial year has one certificate and one certificate only, so that for instance the ordinary day to day service charges as and the “major projects” charges must be included at all times in the same certificate. That is not that the schedule says. The use of “a” as a matter of general principal does not connote singularity ( see Martin v David Wilson Homes 2004 EWCA Civ 1027, per Buxton LJ). I find this argument compelling. There is nothing in the context of the schedule that compels the construction to be anything else.

(b) The leaseholders’ argument on time requires necessarily that time is of the essence –mere delay as a matter of trite contractual law does not bar a legal right ( c.f. equitable remedies which are not in point here). For time to be of the essence there must be something in the contract that leads to that conclusion, otherwise it is not—see generally United Scientific v Burnley BC 1978 AC 904.

(c) Dealing with detailed submissions of Mr. Ashfield’s he said

(i) There is no maximum period

(ii) There is, properly examined, no real problem on the sale of a lease. The purchaser’s solicitor if he knows his job will make appropriate inquiries about possible outstanding service liabilities ( it was indeed just this sort of consideration that would have led to the advice Mr. & Mrs Rolph told me they were given that their flat could not be sold) and will be concerned to see if there is a s. 20B notice ( of which more below). The result may in some cases be a harsh one but the problem is not without a solution.

(iii) It must be remembered in respect of the Limitation Act point that while time may be put off from running what is actually put off is time starting to run at all, i.e. any liability to pay. So if the money is spent in year 1 and no certificate/account produced until year 7 the leaseholder has had six years in which he cannot be made to pay.

(iv) There is also this point, that s. 20B which I will consider below under Issue 21 moderates to an extent the possibility of a demand being made in the remote future in respect of past major expenditure, at least without a degree of warning being given which will necessarily be known.

85.I have already dealt with Mr. Brock’s point (a) I come to the others. On any view the system is not a perfect one ( something Mr. Brock accepted as he was really bound to do). There may well be something to be said for having an inbuilt time provision or a clear means of making time of the essence by notice ( it is arguable that the leaseholders might have been able to do that here but none did and giving a notice to bring the day of one’s liability nearer is not always the most obvious course) . It is not the most clearly practical and fair of arrangements viewed from either perspective. On the one hand there is the problem, made very real for Mr. & Mrs Rolph, that you may not be able to sell until everything has been clarified on the other an interpretation that requires the Council to charge at the earliest possible moment and ( even more so if it can only give one certificate to include all charges for the year) may not be very practical or fair either. I do not really think that these sort of arguments on either side get to the heart of the problem and I must simply answer what at the end of the day is a question of construction.

In my judgement if one limits the approach in that way as I think one should there is really only one answer. There is nothing whatever that could make time of the essence, in my judgement Mr. Brock is entirely right about that and that is really the end of the point.

I would just add this in deference to Mr. Ashfield’s point as to putting off time running indefinitely. As a general principle of contract a contractual right to payment may be so framed as to arise a long time in the future and at a time which it may be difficult to predict. Absent anything in the Limitation Act or the Rule against Perpetuities, a right based on demand or a notice may arise a long time in the future and limitation ( which is a bar to a remedy not to a right) only becomes relevant when the right arises and becomes enforceable. This may not always be a desirable state of affairs but it may be the inevitable result of the contract that the parties have made.

Issue 19 To what extent do the provisions of Part III of Schedule 6 to the Housing Act 1985 apply to any of the Claimant’s claims ?

86.It is now thought that this point does not arise on the facts. However I have been invited to pronounce upon it to avoid the point being taken in the future in circumstances where it might not arise.

It relates really to s. 125 of the 1985 Act to which I made brief reference earlier.

How it works is that the Council is required as part of the acquisition process to serve notices on prospective RTB lessees containing provisions enabling the landlords to recover service charges and/or improvement contributions .There is a consequent liability in the Council to comply with the information requirements of s 125A and 125B by providing relevant information for the period up to five years and six months ( this compresses a rather complex time provision) following the issue of the s 125 notice.

I would assume that it was considered by the parties’ advisers that there was a possibility that some of the works in question might have taken place within the reference period and therefore the limit on charges in schedule 6 of the Act would apply. In the event it is something of a non point. Mr. Ashfield does not seek now to say that any of the works on any of the projects that I have had to consider took place within any of the reference periods. The facts are common ground but I am invited to rule upon it really in order to avoid the point being taken later. I am satisfied that the facts as the parties tell me they are and that the issue therefore does not arise.

Issue 20 To what extent (if any) are the claims brought by the Claimant barred by a period of limitation ?

87.As the service charge is ( as is common) reserved as rent it is common ground that the period is the shorter period of 6 years ( rent) as opposed to the longer period of 12 years ( speciality debt) ( see Limitation Act 1980 s. 19).

I have already considered above the Fourth Schedule of the Leases. In my judgement ( following what I have already said) the provisions of certificate and account is a condition precedent to liability. Accordingly in the ordinary way no claim can arise until both are supplied and time runs from that point.

However Mr. Ashfield raises an alternative proposition., True it might be in the ordinary cases where things were done as they should have been that time runs in hat way, but he would suggest where it actually runs from is the ate when the certificate and account should have been produced. He referred me to the well known case of Alghussein v Eton 1988 1WLR 587 for the proposition that a party to a contract could not be permitted to take advantage of his own wrong against the other party and that such proposition applied as much to a party who sought to obtain a benefit under a continuing contract on account of his breach as it did to a party who relied on his own breach to avoid the contract.

Therefore, the argument would run, the Council cannot rely on their breach of their obligation to given the certificate and account as soon as practicable in order to allow the liability to arise later and therefore the limitation period to expire later than would have been the case if they had kept their obligation. I see the argument clearly enough but as is apparent from my quotation from the authority the whole thing turns on breach. But here as I have held, inevitably as I see it, that time is not of the essence, there is no relevant breach and that I think is the end of the argument.

On the facts all the test cases except Gill were issued on or before 17^th May 2002, so that any cause of action accruing after 17^th May 1996 is not statute barred, ( any earlier would be). The earliest financial year in which any project costs were incurred was 1994/5 ( windows and roof) and the certificate was issued in July 1996.So none of those is statute barred.

In the case of Gill proceedings were issued on 28^th April 2003 , the project having only been in 2001 the first interim invoice bearing date 18^th September 2002 and the certificate dated 30^th September 2002. No limitation point` therefore arises.

It is convenient at this point ( since it also relates to the limitation period and would be of significance had I come to the conclusion that some of the earlier cases would otherwise have been statute barred—which of course I have not) to consider Issue 24 which was not one of the original issues directed to be tried but which arose by way of amendment during the trial.

Issue 24 ; are any of the leaseholders ( and if so who) estoppel from asserting that time started to run for Limitation act purposes prior to 14^th March 1997.

88.The point does not now directly call for decision because of what I have said about limitation but as it might become relevant should this case go further I will set out my conclusions nonetheless.

It is necessary to go back a little in time. It may be remembered that in the earlier period there was uncertainty and concern whether the costs of EA funded projects would or should be recouped under the service charge. It was an issue in which in particular Windsor and Co on behalf of some of the Northumberland Park leaseholders especially the Northumberland Park Leaseholders Association ( NPLA) took a prominent part on the leaseholders’ side.

I take the statement of fact that follows largely from the Council’s amended pleading which in my judgement is well supported both by the documents and the witness statement of Mrs Rolph who was the Treasurer of NPLA from its foundation and who was present at the critical meeting.

In very short summary

(a) DOE published draft guidelines in about October 1994. In the period from then until may 1995 a number of letters were written by the Council to leaseholders saying that they were checking out the guidelines but ( February 1995) that it could not forgo collecting contributions from the leaseholders. In about June 1995 DOE issued further draft guidelines which advised authorities that they might wish to act reasonably towards leaseholders.

(b) On 1^st May 1995 while all this was going on Windsor and Co purporting to act for 60 leaseholders wrote to the then chair of housing Cllr Meehan with a view to exploring a resolution of the situation without litigation and in particular whether it might be possible to reduce bills in accordance with the DOE guidelines.

(c) On 12^th June the Council responded in a conciliatory manner while pointing out that it had to be sure it was acting in accordance with the law and its duties.

(d) Following this the critical meeting was held on 9^th August It was attended by two of the contracts managers for the Council ( Ms Roberts and Mr. Steve Clarke) and Mrs Janes of Windsor & Co., Mrs Rolph and several other leaseholders for the leaseholders. Both the minute of the meeting ( written by Mrs Janes) and Mrs Rolph’s witness statement are clear as to the following; that Mrs Janes requested and obtained from Ms Roberts an assurance to Lessees that the Council would not issue bills to leaseholders until the question of whether or not the Council could and should collect service charges from the leaseholders for major works carried out with the assistance of EA funds was resolved.

(e) There followed a period when the Council ,Windsor and Co with the support of the local MPs made representations to central government directed to a clarification that would enable the Council; to waive claims. The detail does not I think matter save to say that attempts were made by the Council to keep those involved informed of progress.

(f) All this was brought to an end by the promulgation of the 1997 regulations on 4^th February 1997, which as I have already said were of little assistance to the majority of leaseholders. Thereafter, after consultation with the leaseholders the Council implemented the regulations as it had to . By a letter of 14^th March 1997 Mrs Janes advised leaseholders of the position under the regulations and whatever the arrangement between the leaseholders and the Council may have amounted to came to an end.

89.Mr. Brock’s submission is that by reason of these facts anybody represented by Windsor and Co at the relevant time ( the August meeting) was estopped by convention from asserting that time started to run for limitation purposes before the arrangement effectively came to an end on or about 14^th March 1997 ( there is some possible argument on the facts whether the promulgation of the regulation in February is the effective date but that was not developed before me and it seems to me that Mrs Janes advice to her clients of 14^th March is really the clearer date).

90.Estoppel by convention ( at least in its present form) emerged from a number of cases in the early 1980s notably the Amalgamated Property Case 1982 QB 84. The case which Mr. Brock particularly cited was the decision of the Court of Appeal in Troop v Gibson (1985) 277EG 1134-1144. The case is particularly helpful in that it shows the doctrine operating in a landlord and tenant context ( most other examples are commercial contracts) . At p 3 K. ff of the judgement Sir John Arnold P drew attention to the important differences between estoppel by representation and estoppel by convention, the essential nature of an estoppel by convention being a convention agreed by the parties upon which they then base a course of dealing. It differs particularly from estoppel by representation because issues such as the clear and unequivocal nature of the representation do not arise—the convention is whatever the court interprets it as meaning (3L). Purchas LJ at p. 5M quoted from Lord Denning MR. and Eveleigh LJ in the Amalgamated Property case ( pp 122 and 126B) for the basic propositions that (i) where the parties to a transaction proceed on the basis of an underlying assumption on which they have conducted the dealings between them, neither will be allowed to go back on that assumption when it would be unfair or unjust to allow them to do so. And (ii) the estoppel does not go beyond the transaction in which it arose.

Mr. Ashfield submitted the following to the contrary

(a) On the facts there must be uncertainty as to who would be estopped, at most he said a small number only were represented by Windsor & Co and that lessees who had not instructed Windsor & Co could not properly be criticised ( as the pleading sough to do) for failure to challenge the assumption The point is a perfectly fair one in principle. One cannot, I think, simply say that all the leaseholders were estopped. But in my judgement the right analysis is that Windsor & Co were there on behalf of people who had instructed them and who whose authority they must be accepted to have had and that anybody within the ambit of those instructions would ( all other things being equal) be estopped. If need be there would have to be an inquiry as to who were instructing Windsor & Co at that time.

(b) But, says Mr. Ashfield, this cannot be the end of the matter .The Council dealt with all leaseholders as a group making no distinction. You cannot he says have a situation where some leaseholders were estopped and others not. I see the force of this But I cannot for my part see why, if the facts are that a group of leaseholders sought and obtained an assurance upon which plainly they and the Council would act they should not be estopped from going behind the assurance that they sought and obtained to say that the Council should have acted earlier. To my mind this ought to apply whether or not any other leaseholders are in the same boat.

(c) The amended pleading alleged that the leaseholders and their representatives “encouraged or persuaded” the Council not to enforce their contractual entitlements. Mr. Ashfield’s concern about this is that all the evidence was documentary ( apart from the evidence of Mrs Rolph—his own client—and that there was no real possibility of exploring it satisfactorily in cross examination . If it all turned on “encouraging or persuading” then I would have some sympathy with Mr. Ashfield .It is the sort of issue on which oral evidence is much more satisfactory. However in my judgement the alternative plea ( 3(c) of the amendment) is better based as it was ( and as Mr. Brock’s submissions really were) on a mutual understanding and assumption which is something that to my mind did come out very clearly from the documents.

(d) Ms Roberts was doing no more than stating Council policy .This is not something upon which an estoppel can be based ( i.e. I think he is saying that everybody knew this anyway and the policy was indeed a policy in place). I can see the force of this in the context of estoppel by representation ( for this reason I quoted the passage from Sir John Arnold P that I did) but an estoppel by convention is quite different. What happened here was an assurance was requested and given that this policy would continue and that is the basis of the convention.

I come therefore to the conclusion that an estoppel does arise albeit only in respect of a limited group of leaseholders.

Issue 21 To what extent (if any) are the claims brought by the Claimant barred by s 20B of the Landlord and Tenant Act 1985 ?

91.The s 20 regime has its own special Limitation period imposed by s. 20B. S. 20B in turn incorporates a mechanism for extending the period. The real question is whether that mechanism has been effectively operated

S 20B (1) says that “if any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment…is served…” then the tenant “shall not be liable to pay so much of the service charge as reflects the costs so incurred.” This is subject to subsection (2)

Subsection (2) disapplies subsection (1) if within the 18 month period ( starting with when the costs are incurred) “ the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by payment of a service charge”. ( It is an odd feature of this provision that it simply stops time running completely , not that it starts it running again). Mr. Brock suggests that the date when the costs are incurred is the date shown in the FMS records. I do not think that there is any controversy about this and I agree with the proposition.

92.The issue before me was what was the minimum required for an effective s. 20B notice. There is one reported authority ( transcript only) which is Westminster v Hammond ( 23^rd October 1995) a judgement of HH Judge Reynolds sitting at this Court. The case was primarily concerned with the question of when costs are incurred for the purposes of the legislation ( for which it is I am told frequently cited) .However the Judge went on to consider the question of what would be a compliant notice under 20B(2). It looks as if the point was argued by one side but simply “ not accepted” by the other and it may well be that the judge did not have the benefit of full argument on this point. His conclusion ( foot of p 9 of the transcript and ff) is this

“ I consider that the notice in writing should be equivalent to the demand save that it does not seek immediate payment, so that it should identify those matters which would need to be in a demand –the fact that the relevant costs have been incurred; the nature of the works and the reasons for the expenditure ;the amount of the costs incurred and the proportion attributable to the individual tenant; and an indication that such amount will be demanded in the future “

A matter which weighed with the judge was that “ if a general warning were sufficient the tenant would simply have no idea of the magnitude of the service charge which he would have to meet at some unspecified time in the future nor could he know the nature of the works to which it related so that he could begin to assess whether the sum to be claimed was reasonable or unreasonable.”

93.Mr. Ashfield relies of course heavily on this authority. Pointing to the specimen letters which featured in the argument ( 20^th February 1996 to Mr. Martin and 30^th July 1998 also to Mr. Martin) .Although the notices contain quite a lot of the material that it was considered in Hammond that they should contain

(i) the 1996 notice only briefly refers to the nature of the works

(ii) the 1996 notice does not give the reason for the expenditure

(iii) the figures are not expressed as exact but on a “ not expected to exceed” basis

(iv) Criticisms (1) and (ii) would also apply to the 1998 notice. In addition it does not give the overall cost and only a “Not expected to exceed” figure for the tenant’s share.

Mr. Brock points out first of all that both notices are expressed to be notices under s 20B.The notices in Hammond were not so expressed ( and an argument could well have arisen that first of all the tenants would have to puzzle out what the notice was to do with). He criticises the decision in Hammond as being obiter and as going too far.

94.My particular concern about the decision in Hammond is that it is tightly prescriptive in a case where the statute does not call for any particular form or content .I have in mind also that (i) this group of sections ( which nowhere give a statutory form of notice) are plainly meant to be used not by equity draftsmen but by people such as managing agents in their day to day work,(ii) that the plain object is that the tenants are to be told that the costs have been incurred and that they will be asked to pay later ,(iii) that the section actually says nothing about the amount of the costs (iv) that the tenants will already have had ( absent dispensation under s 20(9)) a s. 20 notice , so that detailed identification of the works is not really necessary. Furthermore in practical terms there will be cases where the figures have not yet been finalised ( at its most crude and obvious there may be litigation with the contractor) so a requirement to put in the exact figure which may be inevitable would completely bar recovery.

95.Although for reasons I have already given I do not think the decision was strictly speaking obiter nonetheless it seems likely that the point was not very fully argued and that almost certainly nobody drew to the judge’s attention the sort of considerations which I have referred to above, because he would almost certainly have referred to them whether they persuaded him or not. I am not bound to follow the decision which is made by a judge of the same rank as myself and I respectfully decline to do so. In my judgement any notice claimed to be under s. 20B must be examined on the basis of the question whether it does or does not ( in its factual content) fairly notify the tenant of the matters of which s 20B requires him to be notified. It must always of course be a good thing ( though not essential) that the notice does in fact say ( as these notices do) that it is a notice under the section.

Having regard to what these notices do say , and in fact subject to the comments I have made, they are quite full ( not least containing the useful information as to the likely “outside edge” of the tenant’s liability) in my judgement they fairly fulfil the purpose of the subsection.

Individuals—Mr. Reeve

96.Mr. Reeve was severely and critically cross examined by Mr. Brock. Following that cross examination Mr. Brock in his closing submissions spoke critically of Mr. Reeve and invited me to make critical findings. I accept that invitation with a degree of caution. It is not for a Court however strong a view it takes of an individual’s conduct to indulge in gratuitous criticism of that individual unless it is relevant to something the court has to decide. In my judgement Mr. Reeve’s conduct was relevant both to explaining the difficulties under which the Council worked, to some of the ways in which this expensive dispute was allowed to develop , to the assistance that I might have derived from Mr. Reeve’s evidence and as to possible third party orders for costs ( though it may be observed that Mr. Reeve is on social security). I will keep my comments reasonably brief, some things I have said already.

(i) Mr. Reeve was for a considerable number of years ( 1994-2002 indeed until in recent times he moved out of the Borough) an active member of what was for most or all of the time the majority group on the Council and in later times the chair of housing and later still lead member ( effectively the political head of the department) 1998-2001.

(ii) He took it upon himself to espouse vocally and publicly the cause as he saw it of the leaseholders who were being faced with service charges. He very much made the cause his own. One might, depending on what allusion one prefers describe him as a self appointed tribune of the people or a village Hampden.

(iii) There is nothing wrong in that .It is an essential part of freedom of action in a free and democratic society. Nor do I doubt Mr. Reeve’s sincerity and commitment to helping others as he saw it. But that freedom may have to be cautiously exercised if you are also a member of the majority group and especially if you are the political head where loyalties are owed both to colleagues and to officials. If you find yourself at odds with your own administration there are many sound historical precedents, you resign from government and criticise your party from the back benches.

(iv) Mr. Reeve did not hesitate when in power both to display disloyalty to his officials ( there was a striking example among the documents letter to Ms Richardson 2^nd July 1998, copied to outsiders before the official had given her views ) and to advise constituents how to avoid liability to the Council of which he was or recently had been a lead member ( letter to Mr. Pateman 22.10.01.). In his oral evidence there was more than a trace of blaming shortcomings on the officials

(v) There was a newspaper cutting ( 1^st November 2000) upon which Mr. Brock closely cross examined both Mr. Martin and Mr. Reeve. It did not get quite as far as Mr. Brock may have hoped but left the flavour behind that (i) Mr. Martin was advocating publicly that the failure to provide two estimates was fatal to the Council’s claim ( there was no reason of course why he should not, he was a free agent) and that Mr. Reeve was being quoted by the press in a way which looked as if he supported Mr. Martin ( this may not have been the intention but the overall impression of the article was otherwise). Yet Mr. Reeve not only disclaimed in evidence that he had anything to do with it--which plainly he had—but plainly never did anything to correct this sort of impression or to realise how dangerous it could be.

(vi) As he came to accept in the course of cross examination Mr. Reeve was fully aware of the professional advice the Council had received in taking the steps that it felt compelled to take. His consistent conduct, down to and including a vociferous witness statement, was to ignore these matters, to which he had been made privy, in any way.

(vii) Finally I have already referred to his ill informed criticism of LHC and they way they worked. It was intended I feel sure to show LHC in the worst possible light. It did not survive Dr Kienwald’s evidence.

(viii) That is perhaps enough by way of criticism. I would just end by saying this. Mr. Reeve was one of the leaseholders’ witnesses. The need for him was not obvious. He was not of course a leaseholder himself. But he did not hesitate to make the sort of statement that he did. Having heard him in cross examination I am bound to say that I did not find him a particularly reliable or helpful witness. I have of course indicated earlier in this judgement my particular areas of concern.

Evidence

97. I wish to say a short word about the way some of the evidence for the leaseholders was presented ( I have already commented during argument). In doing so I am not seeking to be personally critical of the solicitors. What happened here happens frequently in other cases as well. The abolition of the rule against hearsay and the almost universal adoption of the witness statement as the means of giving evidence in chief in civil cases were both useful reforms—the former in clearing away unnecessarily technicality from the search for truth, the latter in considerable savings of time, among other things. But these things can come at a price. Witness statements need to be statements of the relevant facts ( including factual hearsay) in, so far as possible the words and expressions that the witness him/herself would normally use. They should not be vehicles for unsupported gossip, generalised allegation or the making of submissions best left to those paid to make them. It must be remembered that it is the Judge’s duty to read every word because he must not take the risk of failing to notice something that might be important. But not only does it increase judicial reading time (sympathy for judges may perhaps be limited) but it increases the risk of burying good points amongst irrelevant matter and thereby prejudicing the prospects of a good case. In this case these principles were offended against in a substantial number of instances, most notably in the witness statements of Mr. Reeve and Mr. Martin, where time and again the witnesses ( one of them not even a party) took it upon themselves to “urge” the Court to take a particular course. I hope for my part that this practice will decrease rather than increase.

Conclusion—the way forward

97. At the conclusion of oral argument I indicated that I would consider my judgement and the following regime was debated and in broad terms agreed. Thus

(i) In the usual way the judgement would be communicated to Counsel in draft form under an embargo on further communication or publication.

(ii) the object of (i) would be not only the usual one of inviting comments on errors of fact or textual corrections but also to ensure that all points that Counsel had wanted me to cover had in fact been covered and if not then what additional matters arising out of the trial and Counsels’ submissions I ought to consider covering. As a result of that it might or might not become necessary to send a further draft to Counsel.

(iii) What then usually happens is that the substance of the judgement is communicated to solicitors and, shortly before the hearing where the judgement is handed down and made public the result is communicated to the lay clients. Fixing such a final hearing in a case like this where there is likely to be lengthy consideration both of what is to be done on the basis of the result and, here ( where we are concerned only with preliminary points) what the next stage is to be, can sometimes take several weeks to organise to ensure that everybody who needs to attend can do so . Here because of the large numbers of lay people involved it would not be practical to allow the judgement or the gist of it to be communicated confidentially prior to the hearing to those involved beyond the lawyers, human nature and commonsense generally suggest that a confidence shared with several people soon ceases to be a confidence . In any event it would be unfair to impose such a duty on lay parties

(iv) Therefore as soon as the final consideration of the draft with Counsel was complete (a) the solicitors should be told the substance of the decision but also (b) the case should immediately be listed for the sole purpose of the judgement being handed down and made public so that everybody concerned and others with an interest such as the press and ( so I am told) other local authorities who have been watching this case with interest should know the result at the earlier possible moment, without having to wait to organise a full hearing. At this first hearing which would be short and formal I should (i) hand the judgement down (ii) make an order adjourning all matters arising from the judgement—including applications for permission to appeal—if any—and costs to a date which had already been agreed so could be immediately fixed. Also time for appeal would be extended until a suitable date after that further hearing.

(v) A full hearing would then be fixed for such later date convenient to everyone and at a stage when those concerned will have had the opportunity to consider the judgement fully and given and take instructions as to how to proceed next. At that later hearing all matters arising from the judgement will be dealt with.

(vi) It seems to me that among the matters to be dealt with are the precise terms of the declarations in answer to each of the issues which I invite Counsel to consider prior to the full hearing and indeed to agree so far as possible

98. In the event it has provide possible to follow this regime ( subject to any permission I may be or have been asked to give as to limited disclosure prior to the first—formal—hearing)

Accordingly

1. This written judgement stands as the transcript of my judgement and I will direct that no further transcript is necessary.

2. The written judgement is now a public document and may be freely commented upon or published by anybody, provided it is borne in mind that no orders have yet been made, so to that extent the press should notice that the matter still remains sub judice.

3. An order will now be made in a form considered and agreed by Counsel adjourning the hearing to the agreed date with appropriate consequential directions of the kind indicated above. That order is also of course a public document

It remains for me to express my sincere thanks to all Counsel and solicitors for their assistance both in assembling this great mass of material into comprehensible and usable form and for the most helpful and detailed submissions that have been made.

Judge Roger Cooke

Central London

6^th December 2004.