159-167 Prince of Wales Road RTM Co Ltd v Assethold Ltd

Landlord and tenant – Righty to manage – Costs – Appellant withdrawing application for right to manage property – Respondent freeholder applying for costs – First-tier Tribunal deciding appellant not liable for costs – Upper Tribunal allowing respondent’s appeal – Appellant appealing – Whether respondent estopped from denying it was “landlord” for purposes of section 88 of Commonhold and Leasehold Reform Act 2002 – Appeal allowed The appellant RTM company was formed by some of the leaseholders of flats at a property in North London with a view to taking over its management. In 2019, the respondent company had purchased both the freehold and a 999-year headlease from M. When the appellant served its claim notice under section 79 of the Commonhold and Leasehold Reform Act 2002, M was still the registered owner of the freehold and the headlease. The respondent subsequently became the registered owner of the freehold but not the head lease. The appellant addressed its claim notice to both the respondent and M. The appellant subsequently applied to the First-tier Tribunal seeking a determination that it had met the requirements of the legislation, but then withdrew the application which was dismissed by consent. The respondent submitted a costs application under section 88(4) of the 2002 Act. The appellant asserted that the respondent was not a “landlord” as section 88(1) required, because it had no legal interest in the property. The FTT accepted that argument and decided that the appellant was not liable for costs. The Upper Tribunal held that the appellant was estopped from disputing the respondent’s status as landlord as it had commenced proceedings naming the respondent as a landlord. The UT also held that there was either estoppel by representation or estoppel by convention: [2023] UKUT 220 (LC). The appellant appealed. Held: The appeal was allowed. (1) An equitable owner could not be a “landlord” for the purposes of sections 79(6) and 88 of the 2002 Act. In its ordinary and natural meaning, a “landlord under a lease” meant the landlord as a matter of law. Both the freehold and headlease interests were existing registered estates. Their legal owners at the relevant time were M, not the respondent, because the transfers did not operate at law unless and until they were completed by registration. Until the respondent became the registered owner, the legal estate remained vested in M. It could not therefore be said that the respondent was a landlord under any lease of the premises: Assethold Ltd v 7 Sunny Gardens Road RTM Co Ltd [2013] UKUT 509 (LC); [2013] PLSCS 259 considered. (2) Section 79(6) and the identical wording in section 88(1) referred to “(a) landlord under a lease of the whole or any part of any premises [or] (b) party to such a lease otherwise than as landlord or tenant…”. The implication was that a landlord or tenant was a party to a lease, and that paragraph (b) referred to other parties, such as a management company, that might also execute a lease. The requirements of the legislation were prescriptive. Section 79 required the claim notice to be served on a number of different persons which included each landlord. A failure to serve a claim notice, as required, made it voidable rather than void: but there remained a risk that those unwilling to acquiesce in a transfer of management would seek to obstruct the process with claims that not all relevant persons had been notified and their potential objections addressed: A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024] UKSC 27; [2024] EGLR 36 considered. (3) Since the respondent was not a “landlord” it was equally impossible to treat it as a landlord “jointly” with M within section 112(5) of the 2002 Act. In any event, section 112(5) clearly referred to co-ownership, where two or more persons were jointly entitled to the same interest, whether as joint tenants or tenants in common. It would neither be a natural use of language, nor consistent with well-understood principles of property law, to describe the different interests of a legal and equitable owner of property as a joint holding. Nor would such an approach allow either of them to be treated as a “landlord” individually rather than collectively. (4) The essence of an estoppel by representation was a clear representation or promise intended to induce the recipient to adopt a course of conduct which resulted in detriment or loss. There had to be a causal connection between a representation and the action that caused detriment. Action based on an independent belief would not suffice. The representation must have caused or at least influenced the relevant conduct: Steria Ltd v Hutchinson [2006] EWCA Civ 1551 applied. In the present case, it could not properly be concluded on the evidence that the inclusion of the respondent’s name on the appellant’s application to the FTT demonstrated an intention to induce the respondent to adopt any particular course of conduct, or that it was reasonably foreseeable that the respondent would rely on that fact in deciding to incur costs by engaging in the proceedings. There was also no evidence that the respondent so relied in fact.  The necessary causal connection between any representation by the appellant and the detriment of engaging in the proceedings and incurring costs was therefore absent.  (5) When asserting an estoppel by convention arising out of non-contractual dealings, the common assumption upon which the estoppel was based had to be expressly shared between the parties. The expression of the common assumption by the party alleged to be estopped had to be such that he might properly be said to have assumed some responsibility for it. The person alleging the estoppel must in fact have relied upon the common assumption to a sufficient extent in connection with some subsequent mutual dealings. Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for them to assert the true legal (or factual) position: Tinkler v Revenue and Customs Commissioners [2022] AC 886 applied. In this case, the chronology did not support any assumption of responsibility by the appellant or any reliance by the respondent on a common assumption. The respondent was in possession of the true facts.  Accordingly, the FTT reached the correct conclusion that the respondent was not entitled to recover costs under section 88 of the 2002 Act. Niranjan Venkatesan and Armando Neris (instructed by Mayer Brown International LLP) appeared for the appellant; Justin Bates KC and Sophie Gibson (instructed by Scott Cohen Solicitors Ltd) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of 159-167 Prince of Wales Road RTM Co Ltd v Assethold Ltd