When, back in May 2012, leaseholders of a block of flats in Plymouth embarked on a right to manage claim (apparently their third attempt), it is unlikely that they would have expected it would take nearly five years to accomplish.
But they have now succeeded following the decision of the Court of Appeal (Elim Court RTM Company Ltd v Avon Freeholds [2017] EWCA Civ 89) that their Right to Manage (RTM) claim is valid, the court ruling effectively, that trivial defects in the procedures do not of themselves invalidate an RTM claim.
Introducing the RTM (a no-fault based right) was one of the centrepieces to the reforms to residential leasehold law made by Part 2 of the Commonhold and Leasehold Reform Act 2002. It was designed to provide a simple method for flat leaseholders to take over management and to serve as an alternative to an application to the First-tier Tribunal (Property Chamber) (FTT) for a manager to be appointed. There have, however, been a plethora of cases where the landlord has objected to the claim. These objections, it appears, are usually on the basis that the leaseholders failed to comply with the statutory procedures (rather than, for example, that the building does not qualify). Where these objections are sustained the general rule has been that the RTM claim fails.
When a claim is made, the landlord may give a counter-notice denying entitlement. If the claim is to proceed the RTM company must apply to the FTT for a determination
In the Elim Court case the landlord gave a counter-notice notice denying the right on various grounds. These were that pre-claim participation notices to non-member leaseholders were ineffective (in failing to inform leaseholders that the company’s constitution could be inspected at weekends); that the signature on the claim notice was invalid; and that copy of the claim notice should have been given to a landlord which held an intermediate lease (an omission which was admitted). The key issue in the appeal, though, was what are the consequences where the leaseholders fail to comply with the procedures?
On this issue, the court followed various decisions, including Natt v Osman [2014] EWCA Civ 1520 (on the validity of an enfranchisement notice): what did the legislature intend as the consequences of a claim being defective in some regard? One of the landlord’s challenges was admitted and the court found that one of remaining two had some validity. However, not every procedural defect invalidates the claim. While there was a defect in the participation notice this of itself did not invalidate the claim. The court rejected the landlord’s submission that the claim notice was not validly signed though it added that if it was wrong about this, it would have held that the defect did not invalidate the claim provided the notice was signed by someone who was authorised by the RTM company. Similarly, the non-service on an intermediate landlord, which had no management responsibilities, did not invalidate the claim.
The lessons? Those advising leaseholders must follow the statutory procedures carefully to avoid challenges. But where mistakes are made it is possible that a tribunal (or a court) may decide that if it is trivial it does not invalidate the claim. Perhaps Elim Court has injected a good dose of common sense into RTM disputes?
James Driscoll is a solicitor and a writer
