The Upper Tribunal (Lands Chambers) Decision (‘UTT’) in Mr Markus Lehner v Lant Street Management Company Limited [2024] UKUT 0135 (LC), 2024 WL 02279298 is one of the decisions now filtering through in relation to the impact of the Building Safety Act 2022 (the ‘Act’) on the payment of service charges.
This case is interesting as not only does the Judgment provide a step-by-step checklist of questions that should be considered when determining liability for service charges for building safety defects pursuant to Schedule 8 of the Act, but also provides guidance on the meaning of ‘Cladding System’ in relation to cladding remediation works.
Mr Lehner, the long leasehold owner of Flat 44, 4 Sanctuary Street, London, SE1 appealed a decision of the First Tier Tribunal regarding payment of service charges for works carried out in relation to cladding remediation works.
The works consisted of ‘removing and replacing combustible insulation and installing additional fire stopping in the cavities between the interior and exterior of the walls of certain parts of the building’, with Mr Lehner’s contribution being £1,244.85.
The Appeal was heard on 25 March 2024 and centred around the protections afforded to leaseholders pursuant to Schedule 8 of the Act, which relates to remediation costs under qualifying leases.
The UTT identified that the service charge was not payable as the demand provided to Mr Lehner on 8 February 2021 was defective in that it failed to comply with Section 47 of the Landlord and Tenant Act 1987 by failing to identify Mr Lehner’s landlord. However, this issue could be rectified by service of a service charge demand compliant with Section 47 of the 1987 Act.
The UTT therefore went on to consider in detail ‘cladding remediation’ as referred to in Paragraph 8 of Schedule 8 of the Act which provides that no qualifying leaseholder is liable to pay service charges for works carried out in respect of cladding remediation works. Cladding remediation is defined by the Act as ‘the removal or replacement of any part of a cladding system that forms the outer wall system and is unsafe’.
The FTT took the view that ‘the removal of the external cladding panels, the stripping out of the original insulation, its replacement with new insulation, the installation of fire barriers where these were missing and the reinstatement of the original cladding panels’ was not ‘cladding remediation’. However, the UTT in its decision, noted that there is no definition of ‘Cladding System’ in the Act. It therefore considered the works in detail and concluded that the FTT’s scope of interpretation was narrow and wrong and considered that ‘cladding remediation comprises the removal or replacement of any part of a cladding system’. The UTT went on to consider various references to cladding systems, including RICS guidance and the Prospectus for the Building Safety Fund published in May 2021.
It was held that Mr Lehner was not liable to pay the sum of £1,244.85 in relation to the cladding remediation works.
Whilst the Act is complex with various qualifying factors, the government introduced the Act to make high-rise buildings safer following the Grenfell Tower tragedy in June 2017. As a result of this, a number of high-rise buildings will be deemed unsafe with remediation works required, leading, we expect, to further challenges regarding the payment of service charges.
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