Rule 3(4) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (the 2013 Rules) places a positive duty on parties to assist the First-tier Tribunal (FTT) in furthering the overriding objective. An implicit part of this duty involves parties co-operating with each other.
In Assethold Ltd v 63 Holmes Road (London) RTM Company Ltd [2020] UKUT 0232 (LC), the Upper Tribunal (Lands Chamber) (UT) has sent a clear message that right to manage (RTM) companies are not exempt from the duties imposed under rule 3(4) of the 2013 Rules.
Pursuant to section 79(6) of the Commonhold and Leasehold Reform Act 2002 (the Act), an RTM company must serve a claim notice on its landlord to signal its intention to acquire the right to manage the premises. If the claim is disputed, the landlord must serve a counter-notice under s.84 of the Act. The counter-notice must specify the reasons that the RTM company is not entitled to acquire the right to manage.
The appellant, Assethold Ltd, was the freehold owner of a block of eight leasehold flats in London. The respondent, 63 Holmes Road (London) RTM Company Ltd, was incorporated with the object of acquiring the right to manage the premises.
On 23 April 2019, the RTM company served notice of its claim on the freeholder. In order to assess the claim, the freeholder requested from the RTM company evidence of its membership, proof of service of the claim form and proof that the invitation to participate had been served on all qualifying tenants who were not members. Despite repeated requests by the freeholder, the RTM company failed to provide the information requested. To protect its position, the freeholder served a counter-notice putting the RTM company to proof that it was entitled to acquire the right to manage.
The RTM company applied to the FTT for a determination of whether it was entitled to acquire the right to manage. It also subsequently disclosed the information requested by the freeholder. In its statement of case, the RTM company explained that the reason it had not disclosed the information earlier was that it was “simply not in the RTM company’s interests to correspond with this particular [freeholder] in this way”. This was because, whatever evidence was provided, the freeholder would always serve a counter-notice opposing the claim. The freeholder applied to the FTT for permission to respond to the new documents disclosed, but the application was refused. The FTT was satisfied that the freeholder had the opportunity of putting its case in its counter-notice.
The FTT determined that the RTM company was entitled to acquire the right to manage the premises. On appeal, the freeholder argued that the FTT’s refusal of permission for it to respond to the documents disclosed was procedurally unfair. Further, its approach to the RTM company’s refusal to disclose the documents requested only served to encourage a lack of co-operation, which was inconsistent with its overriding objective of dealing with cases fairly and justly. The UT agreed.
The UT also strongly criticised the unco-operative approach adopted by the RTM company. It found that the RTM company had no “good reason for refusing to disclose, when requested, documents on which the company itself wished to rely to establish its entitlement”. Proper compliance with rule 3(4) of the 2013 Rules ought to have seen the requested information disclosed by the RTM company before the freeholder served its counter-notice.
Elizabeth Dwomoh is a barrister at Lamb Chambers
