Right to manage – Commonhold and Leasehold Reform Act 2002 – Claim notice – Notice served by respondent RTM company claiming right to manage building held to be invalid by FTT – Respondent serving second claim notice before expiry of time for appealing against FTT’s decision – Whether second notice invalid under section 81(3) of 2002 Act on ground that first notice still in force at date of service – Whether first notice ceasing to have force by withdrawal or on determination of invalidity by FTT – Appeal allowed
The respondent RTM company served a notice on the appellant landlord claiming the right to manage a building on behalf of the tenants pursuant to Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. The appellant served a counternotice denying that claim and the respondent accordingly applied to the first-tier tribunal (FTT) for a determination of the matter. In August 2013, the FTT ruled in favour of the appellant, holding that the respondent was not entitled to acquire the right to manage pursuant to its March 2013 notice.
The respondent did not apply to appeal against the FTT’s decision. Instead, before the time limit for appealing had expired, it served a second notice of claim on the appellant. That second notice was preceded by a letter, sent to the appellant and its managing agent, in which the respondent indicated that the first claim notice was withdrawn.
The appellant served a counternotice asserting that the second claim notice was invalid by operation of section 81(3) of the 2002 Act because the first notice still continued in force at the time of service. That issue was determined in favour of the respondent on a further application to the FTT, which held that an invalid claim notice was not capable of being withdrawn but that the first claim notice nonetheless had no continuing force when the second notice was served, since it had been held to be invalid in a ruling which neither party contended was incorrect. The FTT held that the first notice had ceased to be “in force” for the purposes of section 81(3) at the date of the August 2013 ruling.
The appellant appealed. It contended that, under section 84(6) and (7), the first claim notice ceased to have effect only when the determination as to its invalidity became final, which did not occur until the period for bringing an appeal had expired.
Held: The appeal was allowed.
(1) The purpose of section 81(3) of the 2002 Act was to ensure that there were not two separate claim notices in respect of the same premises, or any premises containing or contained in such premises, “in force” at the same time. Under section 81(4), a claim notice would continue in force until the right to manage was acquired by the RTM company, unless it was withdrawn or ceased to have effect by reason of any other provision of Chapter 1. By section 84(6) and (7), a claim notice would cease to have effect if, on an application under section 84(3), it was “finally determined” that the RTM company was not on the relevant date entitled to acquire the right to manage the premises, with the determination becoming final for that purpose “at the end of the period for bringing an appeal”. On the proper application of those provisions, the respondent’s first claim notice had continued in force until the time for appealing against the FTT’s August 2013 determination expired. The first claim notice was therefore still in force when the respondent served the second claim notice, with the result that the respondent was not entitled to serve that second notice by virtue of section 81(3).
The FTT’s ruling that the first claim notice was invalid did not mean that the notice could no longer be described as a “claim notice” within the Act, permitting immediate service of a second claim notice. A claim notice remained a claim notice, and in force, as provided in section 81(4); the date at which it ceased to be “in force” was to be found in section 81(4) and section 84(6) to (8), unless it was withdrawn or deemed to be withdrawn. The existence of those express statutory provisions as to the period during which a claim notice continued in force, and the time when it ceased to have effect, indicated that a claim notice did not automatically cease to be in force as soon as the FTT issued a decision that the claim notice was invalid.
(2) Similarly, there was nothing in the Act to provide that a claim notice could only be withdrawn if, at the date of the withdrawal notice, the claim notice not the subject of a current finding of invalidity made by the latest tribunal or court to consider it. An invalid notice could remain in force and, under section 86, an RTM company could withdraw the claim notice by giving a notice of withdrawal at any time before it acquired the right to manage the premises. The FTT gad therefore erred in deciding that the first claim notice was not capable of being withdrawn. The case was therefore remitted to the FTT to determine whether the respondent’s letter constituted a valid notice of withdrawal under section 86.
The appeal was determined on the written representations of the parties.
Sally Dobson, barrister
