Dispute Resolution

What constitutes a dispute?

The term dispute in the leasehold sector would usually be considered a disagreement of a more serious nature that has not been resolved at an early stage.

Which disputes are common in leasehold property?

As there is a landlord and tenant relationship there may be disagreements with the organisation responsible for the management of the building, which might apply even if there is a resident management company or right to manage company. Examples of these are:

Financial – leaseholders may be unhappy with the level of service charges or administration charges demanded.
The lease – the lease may be silent or open to interpretation on some issues.
Standards – leaseholders may consider that some aspects of the management do not reach the standards they are expecting.
Consultation – leaseholders may disagree about the level of consultation provided which may not meet their expectations.
Scope of services – although largely dependent upon the lease, leaseholders may disagree with a particular provision or with the level of service.
Pets – most leases allow pets at the discretion of the landlord and some residents or visitors may object to pets.
Neighbour noise and nuisance - flat owners live in relatively close proximity to each other and this may occasionally lead to disputes about noise and nuisance.

Leaseholders could make a complaint about these types of issues to the landlord or the manager but noise and nuisance are usually most effectively dealt with by dispute resolution as it enables the parties to discuss and resolve any problems themselves.

What is dispute resolution?

Dispute resolution is the umbrella term for the different methods of resolving a dispute between parties, which include mediation, conciliation, arbitration and facilitation. It is sometimes referred to as Alternative Dispute Resolution (ADR) as all of the above are viable alternatives to using a court or tribunal to reach a decision.

Dispute resolution is an independent, impartial and neutral process. Although a mediator or facilitator can make suggestions in order to try to help resolve disputes they should not influence either party or try to impose a solution or outcome.

Although it is not a legal requirement, mediators or facilitators should have relevant experience, training and may be accredited by a recognised body. If they are dealing with complex leasehold matters they may be solicitors or housing professionals but technical knowledge is not the only skill required. They need to be excellent listeners and have empathy and insight to consider the interests and needs of both parties in the dispute.

What are the advantages of dispute resolution?

It is a voluntary process, which gives the parties control of resolving the dispute rather than relying upon the judgment of a court or tribunal.
It is effective and has a relatively high success rate.
Either party can end or suspend the mediation process at any time and would retain the right to refer the matter to a court or tribunal.
It can take a considerable time to complete the legal process. Both parties would usually incur substantial costs and the relationship between the parties is likely to deteriorate.
It is confidential and therefore the details of the case and the outcome are not available to the public; this may be a particularly important consideration for the landlord and manager.
It enables parties to discuss the matters away from the stricter procedures of the court or tribunal and allows an independent, impartial third party to help the parties reach an outcome they might both accept.
It tries to help maintain or even improve the relationship between the parties and looks to the future rather than just concentrating on liability and remedy.
It allows discussion and often agreement on a wide range of issues, which may not be within the remit of the court or tribunal proceedings.

Are there any disadvantages to dispute resolution?

If it becomes apparent that a dispute needs to be resolved by a court or tribunal decision then it can delay an already lengthy legal process.
If a dispute is financial, one party may accept an offer that is less favourable than they may have achieved by another form of ADR or from a court or tribunal.
It may introduce less important issues into the process that would probably be rejected by the court or tribunal.

Are there occasions when dispute resolution is not appropriate?

It may not be appropriate where there are criminal allegations or where one party is hoping for a legal precedent to be set.

Would the leaseholder need professional representation for dispute resolution?

An important aspect of dispute resolution is to avoid the formality of the court or tribunal and there should be no need for either party to employ solicitors.

The Leaseholder Association (LA) would strongly recommend the leaseholder to seek advice in advance of any dispute resolution meeting and in most cases the LA can provide this for its members. However, there are circumstances where the leaseholder might benefit from a consultation with a surveyor or other professional service where technical matters are involved.

What takes place at a dispute resolution meeting?

As dispute resolution is a voluntary process, a meeting cannot take place unless both parties agree. Although it is not as formal as a court or tribunal it is helpful for an agenda of the issues to be discussed to be drafted and agreed in advance.

The meeting begins by the mediator or facilitator explaining the dispute resolution procedure and the rules that apply to the meeting. The mediator or facilitator meets each party first and gives them an opportunity to summarise the issues from their own perspective to enable the mediator or facilitator to fully understand their concerns.

Unless it is agreed that the parties remain separate, the parties then meet to present their views of the dispute, without interruptions from the other party. The mediator or facilitator makes notes and when discussion is completed the issues are summarised. The mediator or facilitator then allows both sides to suggest one or more mutually acceptable solutions.

Where agreement is reached verbally, the mediator or facilitator helps the parties to draft a written agreement, which is be signed by everyone present.

If agreement has not been possible, either or both parties can pursue the matter at a court or tribunal but neither party can expect or require the mediator or facilitator to assist them further or to give evidence.

What are the consequences for refusing dispute resolution?

The LA would not advise any leaseholder taking court or tribunal action to refuse dispute resolution. The LA considers it to be best practice to use dispute resolution, preferably at an early stage and it should be noted that the rules of the court and tribunal say that when considering costs, the conduct of the parties would be taken into account. This means the court or tribunal may decide that a party that refused to enter into dispute resolution may have to pay the reasonable costs of both parties.

Who recommends dispute resolution?

The courts, tribunal and professional organisations such as the Law Society, the Association of Residential Managing Agents (ARMA), the Royal Institution of Chartered Surveyors (RICS), The Federation of Private Residents Associations (FPRA) and the Association of Retirement Housing Managers (ARHM) encourage the early use of dispute resolution.

Obtaining help from the LA

The LA provides independent and impartial support and advice to its members to help with their enquiries, disputes or complaints in a number of ways:

Access to detailed information sheets, such as this one.
Specific complaints advice in more complex cases.
Correspondence with landlord or managers where this might be appropriate.
Independent Conflict Resolution utilising Conflict Resolution Committees (CRCs) and Service Charge Panels (SCPs).
A conciliation meeting, in exceptional circumstances, at the discretion of the LA if the matter cannot be resolved by any of the above.

The service offered by the LA is unique in suggesting the type of resolution most appropriate to each case with an emphasis on early intervention and keeping costs for both parties to a minimum. For more information on obtaining help from the LA please see the LA Information Sheet 126 The LA Conflict, Conciliation and Resolution Service.

What is arbitration and how can it help?

The arbitration process is more formal than other types of dispute resolution and there are rules for disclosure and a need for expert evidence and documents. However, unlike court or tribunal proceedings, the outcome of arbitration is confidential.

If the dispute related to complex service charge or repair issues, the arbitrator would need to have detailed knowledge of the legislation and good practice. With only relatively few exceptions, the decision of an arbitrator is final and binding on both parties.

The terms of the lease may specify that disputes relating to service charges should be dealt with by arbitration or that arbitration must be tried before any other action is taken. A term of this type should not prevent other methods of dealing with the dispute taking place, such as reference to the LA, prior to any arbitration.

Using the landlord or manager’s complaint procedure

If the landlord or manager is a registered housing provider, often known as housing associations, or a member of a trade body such as ARMA, RICS or ARHM they are required to have a complaint procedure. The complaint procedure may have several stages which means that if it is not upheld at the first stage it can then be considered by a more senior member of the management organisation. Alternatively some complaint procedures now only have one stage where the complaint is considered thoroughly by a senior staff member which reduces the length of a time in the complaint being dealt with. Leaseholders should, on request, be able to obtain a copy of the landlord or manager’s complaint procedure, which should set out in detail how the complaint should be handled.

The LA advises that the complaint procedure is intended to deal with more serious or long-running disputes and many leaseholders who are unhappy about an issue may wish to make enquiries to begin with and to seek impartial advice from the LA before deciding whether a formal complaint might need to be made.

Approaching a trade body or professional organisation

If a leaseholder has completed the complaint procedure and the dispute remains unresolved it may be possible to approach the trade body if the matter is covered by an alleged breach of their government approved code of practice. Although it may be easier to make this type of complaint if the landlord or manager is a member of the trade body, the content of the codes can be used in evidence at FTT. This means that most leaseholders could benefit from the additional good practice set out in these codes.

What is an Ombudsman and can they help?

Ombudsman is a term for an individual or organisation, usually appointed by government, but given significant independence, that has the authority to investigate and address complaints of maladministration.

If the leaseholder’s property is owned or managed by a registered housing provider or private manager who have voluntarily opted in to the Ombudsman scheme it may be possible to refer the complaint to an Ombudsman. However, in all cases the leaseholder must have completed the complaint procedure and the complaint needs to relate to maladministration, which means there are many complaints or even aspects of a wide ranging complaint that the Ombudsman is unable to deal with. Since the introduction of the Localism Act there are further barriers to reaching the Ombudsman as in most cases the leaseholder would need to have referred the complaint to a ‘designated person’ such as a Member of Parliament, a local councillor or a tenants’ panel before it can reach the Ombudsman.

The leaseholder may wish to consider that although the Ombudsman may decide that there has been maladministration and direct the landlord or manager to make changes to their procedures it would not result in any significant financial compensation. An example is that the Ombudsman cannot deal with the issue of whether service charges are reasonable.

Can the local authority help?

Under landlord and tenant legislation the local authority has a power but not a duty to help leaseholders where they allege that a landlord has failed to comply with leasehold legislation where this would be a criminal offence. However, even where the leaseholder has strong evidence prosecution is rare and in the majority of cases the local authority would not even investigate on the grounds that they cannot justify the costs in the public interest.

Should leaseholders apply to a First-tier Tribunal?

The LA would only advise this as a last resort when all other options have been tried and have proved unsuccessful. (Please see the LA Information Sheet 115 Applying to a First-tier Tribunal).

Please see the LA information sheet 101 Glossary for a precise explanation of the terms used in this information sheet. The LA would advise its members to contact us before proceeding with any complaint as we can provide detailed advice at an early stage. There may be a number of options and the LA may be able to help by suggesting which might be the most appropriate. Due to the complexity of the processes, the need for evidence and the costs, leaseholders should obtain advice before making an application to a FTT or the courts.

Disclaimer: This is a very general explanation of the subject. Where issues are not governed by statute the information is our opinion or best practice. You are advised to seek professional advice before acting on the guidance contained herein. Whereas The Leaseholder Association endeavours to ensure that published information is correct, it does not warrant its completeness or accuracy. The Leaseholder Association assumes no responsibility or liability for any injury, loss or damage incurred as a result of any use or reliance upon the information and material contained herein.