Francis v Phillips and The Secretary of State for Communities and Local Government [2014] EWCA Civ 1395

The Court of Appeal has handed down its long-awaited judgment in a decision which (amongst other things) clarifies how “qualifying works” is to be interpreted for the purposes of the Landlord and Tenant Act 1985 (“the 1985 Act”).  The Secretary of State was a party to the appeal, having intervened in the case due to the wider public importance of the decision to residential landlords and tenants alike.

The issue of “qualifying works” is of significant importance in a residential landlord and tenant context, as a failure to consult with tenants or to apply for dispensation in respect of qualifying works where the statutory cap of £250 per tenant is exceeded, can leave landlords with large amounts of irrecoverable costs.  It had previously been decided by the High Court, that there was no scope for separating “qualifying works” into sets of works and that all “qualifying works” needed to be added together in an aggregate approach when calculating the overall cost of those works in any one accounting year and before applying the statutory cap of £250 per tenant.

The Court of Appeal has however, allowed the  landlord’s appeal on the issue of “qualifying works” in deciding (a) that the aggregate approach is incorrect as it cannot have been what Parliament intended when the legislation was passed due to the “serious practical problems” it gives rise to and that (b) the incorporation of an annual limit is also wrong.  Instead, the focus should be a “sets” approach to “qualifying works”, meaning that section 20 of the 1985 Act should be applied with reference to individual sets of works for the purpose of identifying whether the relevant costs exceed the statutory cap and therefore if they require consultation.

 The Master of the Rolls commented that the following factors are likely to be relevant when determining the question of what constitutes a single set of works, though it is clear that this list is not intended to be exhaustive:

  • Where the items of work are to be carried out (whether they are contiguous to or physically far removed from each other);
  • Whether they are the subject of the same contract;
  • Whether they are to be done more or less at the same time or different times; and
  • Whether the items of work are different in character from, or have no connection with each other.  

The judgment marks a clear return to the generally accepted approach to the meaning of “qualifying works” prior to the start of this case and will no-doubt avoid the need for countless retrospective applications for dispensation by residential landlords.  It also emphasises the fact that the real protection for tenants still lies in section 19 of the 1985 Act which requires residential service charges to be reasonable and reasonably incurred.