Right to manage – Procedural requirements – Chapter 1 of Part 2 of Commonhold and Leasehold Reform Act 2002 – Notice of invitation to participate – Whether failure of RTM company to serve such notice on tenants of one flat invalidating right-to-manage claim in respect of entire building – Notice of claim – Whether possible to served further notice of claim where first notice agreed to be invalid but not formally withdrawn – Right to manage held to be established – Appeal dismissed
The respondent was an RTM company formed for the purpose of acquiring the right to manage a block of flats in Plymouth on behalf of the tenants of those flats pursuant to Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. In January 2011, it served notices on qualifying tenants who were not already members of the company, pursuant to section 78 of the 202 Act, inviting them to participate in the right-to-manage claim. It then served the appellant landlord with notice of its claim. By a counternotice under section 84 of the 2002 Act, the appellant denied the respondent’s entitlement to acquire the right to manage on the ground that the claim notice was defective in terms of the date that it gave for the acquisition of the right.
The respondent then served a fresh claim notice, with a covering letter acknowledging the invalidity of the original notice due to the error over the date. The appellant served a further counternotice, again denying the right to manage on the grounds that: (i) the respondent’s notice of invitation to participate had not been served on certain qualifying tenants; and (ii) the second claim notice was invalid since an earlier claim notice remained in force.
On an application under section 84(3), the leasehold valuation tribunal (LVT) made a determination that the respondent was entitled to acquire the right to manage. As to the notice of invitation to participate, it found that the tenants of one flat had not been properly served, since the notice had been sent not to their flat in the block but to another address, but that the failure to serve such a notice on all qualifying tenants was not fatal to the right-to-manage claim. In that regard, it held that the requirement to serve such a notice was directory rather than mandatory and the claim could survive where no prejudice had been caused by the failure. As to the validity of the claim notices, it held that the first claim notice had been invalid and did not preclude the service of a second notice. The appellant appealed on both points.
Held: The appeal was dismissed.
(1) A failure to serve the notice of invitation to participate on all relevant tenants was not automatically fatal to the entire right-to-manage process. That conclusion did not depend on whether the applicable statutory provisions were categorised as directory rather than mandatory, although they were directory at least in part since they allowed some latitude in the giving of the notice. Instead, the right approach was to consider whether there had been substantial compliance with the statutory provisions and whether such prejudice as had been caused as to undermine the right-to-manage process as a whole. The tribunal was not confined to taking prejudice into account only where it was specifically referred to in a statutory requirement.
The practical purpose of the statutory provisions was to ensure that the interests of the tenants were protected. The relevant question was therefore whether the qualifying tenants had, in practice, had such awareness of the procedures as the statute intended them to have: Sinclair Gardens Investments (Kensington) Ltd v Oak investments RTM Co Ltd [2005] RVR 426 applied. When assessing prejudice to tenants, the number of tenants who had not had notice in accordance with the statutory provisions was relevant but was unlikely to be decisive. The proper course was to ascertain, so far as possible, the true effects of the failure to give notice in accordance with the statutory provisions on all those affected by that failure. The question was not whether a significant number of tenants had been prejudiced, but whether all or any of the tenants who did not receive notice had suffered such prejudice as to justify denying the RTM company the right to manage. It was necessary to look at the nature and extent of the prejudice to each of those tenants and each case would turn on its own particular facts.
Viewing the consequences of the respondent’s omission in the context of what the relevant provisions sought to achieve, the LVT could reasonably conclude that no substantial or lasting prejudice had been caused to the tenants of the omitted flat by the respondent’s failure to comply with the statutory requirements as to the giving of a notice of invitation to participate. There was no evidence that they were more likely to have received the notice had it been left at their flat in the block than they were at the address to which it was in fact sent. The statutory provisions embraced, in section 111(5), the concept of a deemed giving of notice, such that a qualifying tenant could be treated as having been validly given a notice of invitation to participate even when he had had no actual notice of it. It was therefore inherent in the statutory provisions that one or more of the qualifying tenants might not know that a right to manage process had begun. The prejudice to the tenants of the omitted flat was therefore no greater than was accepted in the statutory provisions themselves. Moreover, they had not lost their right to participate in the right to manage once and for all. A qualifying tenant was entitled to become a member of the RTM company at any time.
There was no relevant prejudice to the appellant as landlord. The statutory provisions for the giving of notices to tenants were not designed to protect landlords or aid them in opposing the right-to-manage process. In all the circumstances, there had been substantial compliance with the statutory requirements and the failure to serve the notice at one flat was not fatal to the right-to-manage process.
(2) The first claim notice had been invalid as agreed by the parties. It could not be said that, despite its invalidity, it had sufficient life to prevent a second notice from being served. It was true that, even where a notice was invalid and ineffective as a notice, its continuing existence as a matter of fact could not be denied and it could not be treated as never having been given. However, the first claim notice had no continuing force as a notice, in the sense of having a present impact on events or the potential to have such an impact. The first claim notice did not continue “in force” in the manner contemplated by section 81(3) as precluding the service of a second notice: Alleyn Court RTM Co Ltd v Abou-Hamdan [2012] UKUT 74 (LC); [2012] PLSCS 107 and Sinclar Gardens Investments (Kensington) Ltd v Poets Chase Freehold Co Ltd [2007] EWHC 1776 (Ch); [2007] 3 EGLR 29; [2007] 49 EG 104 applied; Plintal SA v 38-46A Edgewood Drive RTM Co Ltd [2008] PLSCS 75 distinguished.
Justin Bates (instructed by Conway & Co, of Henley on Thames) appeared for the appellant; Margarita Madjirska-Mossop (instructed by Mayfield Law Ltd) appeared for the respondent.
Sally Dobson, barrister
Avon Freeholds Ltd v Regent Court RTM Co Ltd
Right to manage – Procedural requirements – Chapter 1 of Part 2 of Commonhold and Leasehold Reform Act 2002 – Notice of invitation to participate – Whether failure of RTM company to serve such notice on tenants of one flat invalidating right-to-manage claim in respect of entire building – Notice of claim – Whether possible to served further notice of claim where first notice agreed to be invalid but not formally withdrawn – Right to manage held to be established – Appeal dismissedThe respondent was an RTM company formed for the purpose of acquiring the right to manage a block of flats in Plymouth on behalf of the tenants of those flats pursuant to Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. In January 2011, it served notices on qualifying tenants who were not already members of the company, pursuant to section 78 of the 202 Act, inviting them to participate in the right-to-manage claim. It then served the appellant landlord with notice of its claim. By a counternotice under section 84 of the 2002 Act, the appellant denied the respondent’s entitlement to acquire the right to manage on the ground that the claim notice was defective in terms of the date that it gave for the acquisition of the right.The respondent then served a fresh claim notice, with a covering letter acknowledging the invalidity of the original notice due to the error over the date. The appellant served a further counternotice, again denying the right to manage on the grounds that: (i) the respondent’s notice of invitation to participate had not been served on certain qualifying tenants; and (ii) the second claim notice was invalid since an earlier claim notice remained in force.On an application under section 84(3), the leasehold valuation tribunal (LVT) made a determination that the respondent was entitled to acquire the right to manage. As to the notice of invitation to participate, it found that the tenants of one flat had not been properly served, since the notice had been sent not to their flat in the block but to another address, but that the failure to serve such a notice on all qualifying tenants was not fatal to the right-to-manage claim. In that regard, it held that the requirement to serve such a notice was directory rather than mandatory and the claim could survive where no prejudice had been caused by the failure. As to the validity of the claim notices, it held that the first claim notice had been invalid and did not preclude the service of a second notice. The appellant appealed on both points.Held: The appeal was dismissed. (1) A failure to serve the notice of invitation to participate on all relevant tenants was not automatically fatal to the entire right-to-manage process. That conclusion did not depend on whether the applicable statutory provisions were categorised as directory rather than mandatory, although they were directory at least in part since they allowed some latitude in the giving of the notice. Instead, the right approach was to consider whether there had been substantial compliance with the statutory provisions and whether such prejudice as had been caused as to undermine the right-to-manage process as a whole. The tribunal was not confined to taking prejudice into account only where it was specifically referred to in a statutory requirement. The practical purpose of the statutory provisions was to ensure that the interests of the tenants were protected. The relevant question was therefore whether the qualifying tenants had, in practice, had such awareness of the procedures as the statute intended them to have: Sinclair Gardens Investments (Kensington) Ltd v Oak investments RTM Co Ltd [2005] RVR 426 applied. When assessing prejudice to tenants, the number of tenants who had not had notice in accordance with the statutory provisions was relevant but was unlikely to be decisive. The proper course was to ascertain, so far as possible, the true effects of the failure to give notice in accordance with the statutory provisions on all those affected by that failure. The question was not whether a significant number of tenants had been prejudiced, but whether all or any of the tenants who did not receive notice had suffered such prejudice as to justify denying the RTM company the right to manage. It was necessary to look at the nature and extent of the prejudice to each of those tenants and each case would turn on its own particular facts.Viewing the consequences of the respondent’s omission in the context of what the relevant provisions sought to achieve, the LVT could reasonably conclude that no substantial or lasting prejudice had been caused to the tenants of the omitted flat by the respondent’s failure to comply with the statutory requirements as to the giving of a notice of invitation to participate. There was no evidence that they were more likely to have received the notice had it been left at their flat in the block than they were at the address to which it was in fact sent. The statutory provisions embraced, in section 111(5), the concept of a deemed giving of notice, such that a qualifying tenant could be treated as having been validly given a notice of invitation to participate even when he had had no actual notice of it. It was therefore inherent in the statutory provisions that one or more of the qualifying tenants might not know that a right to manage process had begun. The prejudice to the tenants of the omitted flat was therefore no greater than was accepted in the statutory provisions themselves. Moreover, they had not lost their right to participate in the right to manage once and for all. A qualifying tenant was entitled to become a member of the RTM company at any time.There was no relevant prejudice to the appellant as landlord. The statutory provisions for the giving of notices to tenants were not designed to protect landlords or aid them in opposing the right-to-manage process. In all the circumstances, there had been substantial compliance with the statutory requirements and the failure to serve the notice at one flat was not fatal to the right-to-manage process. (2) The first claim notice had been invalid as agreed by the parties. It could not be said that, despite its invalidity, it had sufficient life to prevent a second notice from being served. It was true that, even where a notice was invalid and ineffective as a notice, its continuing existence as a matter of fact could not be denied and it could not be treated as never having been given. However, the first claim notice had no continuing force as a notice, in the sense of having a present impact on events or the potential to have such an impact. The first claim notice did not continue “in force” in the manner contemplated by section 81(3) as precluding the service of a second notice: Alleyn Court RTM Co Ltd v Abou-Hamdan [2012] UKUT 74 (LC); [2012] PLSCS 107 and Sinclar Gardens Investments (Kensington) Ltd v Poets Chase Freehold Co Ltd [2007] EWHC 1776 (Ch); [2007] 3 EGLR 29; [2007] 49 EG 104 applied; Plintal SA v 38-46A Edgewood Drive RTM Co Ltd [2008] PLSCS 75 distinguished.Justin Bates (instructed by Conway & Co, of Henley on Thames) appeared for the appellant; Margarita Madjirska-Mossop (instructed by Mayfield Law Ltd) appeared for the respondent.Sally Dobson, barrister
