Right to manage – Claim notices – Counternotices sent by appellants’ authorised agents –Appellants disputing effectiveness of service of claim notices – Respondents accepting that contention but continuing application for right to manage – LVT finding no jurisdiction to determine claims in light of concession but refusing to award appellants’ costs – Sections 79(1) and 88(1) of Commonhold and Leasehold Reform Act 2002 – Whether appellants entitled to costs under section 88(1) – Whether entitlement depending upon claim notices being “given” in sense of section 79(1) – Whether respondents estopped from denying entitlement to costs – Appeal allowed
The appellants were two companies registered in Panama that owned the headlease and freehold of two blocks of flats. In July 2005, the respondent right-to-manage companies (RTM) sent notices to the appellants, under section 80 of the Commonhold and Leasehold Reform Act 2002, claiming the right to manage the premises. The notice to the first appellant was sent care of a management company in the UK and the second was sent to an address in Guernsey. The respondents received counternotices in response, signed by persons describing themselves as duly appointed agents of the appellants.
The respondents applied to the leasehold valuation tribunal (LVT) for determinations that they were entitled to acquire the right to manage the premises. The appellants contended that the respondents were not entitled to acquire the right to manage at the relevant date since they had failed to comply with the requirements of section 79(1) of the 2002 Act with regard to the giving of a claim notice, by failing to service the notices at the appellants’ registered addresses in Panama or at places of business within the jurisdiction in accordance with the meaning of CPR 6. The respondents admitted that the purported notices of claim had not been effectively served and indicated an intention to serve new notices. The LVT determined that it had no jurisdiction to consider the right to manage applications in the light of the respondents’ concession.
The appellants applied for their costs pursuant to section 88 of the 2002 Act; section 88(1) provided that an RTM company was liable for the reasonable costs of a landlord “in consequence of a claim notice given by the company”. Dismissing that claim, the LVT found that the effect of section 88(1) and (3) was that the landlord’s right to costs arose only where a claim notice was “given” and the RTM company’s application for the right to manage was dismissed. It held that since the respondents had never served a valid notice, the procedures under the 2002 Act had not been instigated and there could be no liability on the respondents to pay the appellants’ costs.
The appellants appealed. They contended that: (i) although the claim notices had not been properly served, as required by section 79(1) of the 2002 Act, and had not been “given” for the purposes of that section, or the word “given” in section 88 should be construed as meaning “received”; this would give effect to the legislative intention that landlords should not be left out of pocket in dealing with unmeritorious claims for the right to manage; and (ii) the respondents were estopped from denying their right to costs.
Decision: The appeal was allowed.
(1) The position of both parties was unmeritorious. Contrary to the respondents’ concession, the appellants had been given notice of the respondents’ claims for the purposes of section 79(1). There was no requirement that that notice had to be given in a manner that would constitute service for the purposes of the CPR; notice merely had to be “given”, and the 2002 Act was not prescriptive about the way in which this was to be achieved, other than that it had to be in writing. Notice had been given to the appellants where they had clearly received the notices and their duly authorised agents had given counternotices. The respondents had accepted the appellants’ contentions regarding the invalidity of the notices for purely tactical reasons.
Where the LVT had determined the respondents’ applications upon the basis that notice had not been “given” for the purposes of section 79(1), section 88(1) could not operate so as to entitle the landlords to costs. A claim notice could not be “given” for the purposes of section 88(1) if it had not been “given” for the purposes of section 79(1). It was not possible to have two different tests in different sections for what constituted the giving of a claim notice.
(2) However, the respondents were estopped from denying the appellants’ entitlement to costs. By maintaining their application to the LVT, they were asserting that the claim notices were valid and asking the LVT to determine that they had the right to manage. Only if the LVT were unable to determine in their favour had they sought to accept and rely upon the appellant’s contention as to invalid service; that acceptance was contingent upon the failure of their primary case.
Nathaniel Duckworth (instructed by H Gold Solicitors, of Guernsey) appeared for the appellants; Stanley Gallagher (instructed by Thackray Williams) appeared for the respondents.
Sally Dobson, barrister