The failure to serve a claim notice on a relevant landlord under section 79(6) of the Commonhold and Leasehold Reform Act 2002 rendered the acquisition of the right to manage voidable.
In A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd, the appellant, A1 Properties, was an intermediate landlord for the purposes of section 79(6) of the Commonhold and Leasehold Reform Act 2002. The respondent was a right-to-manage company created to acquire the right to manage a block of student accommodation in Leicester.
In March 2020, the respondent served notice on the freeholder and management company, signalling its intention to acquire the right to manage the building. It failed, however, to serve notice on the appellant. In May 2020, the management company objected to the claim and required the respondent to prove the claim notice had been served on the appellant. The respondent applied to the First-tier Tribunal for a determination, whereupon the appellant was joined to the proceedings.
Both the FTT and the Upper Tribunal (Lands Chamber) found that the failure to give a copy of the claim notice to the appellant, as required by section 79(6) did not invalidate the application process. Both the FTT and the UT felt bound by the decision of the Court of Appeal in Elim Court RTM Co Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89 in reaching its decision. It was held in Elim Court that in circumstances where there was a failure to serve a claim notice on an intermediate landlord who had no management powers did not invalidate the acquisition process.
Relying on R v Soneji [2005] UKHL 49, it was determined by the Supreme Court on a “leapfrog” appeal that the correct approach in cases where the statute was silent as to the consequences of non-compliance with a statutory requirement was to first look at the entirety of the framework within which the requirement arose and to ask what consequence of non-compliance would best fit that structure as a whole.
The failure to serve a claim notice on a relevant intermediate landlord, as required by section 79(6), was to render the acquisition process voidable, but not void. It could not have been the intention of parliament that the statutory process could be frustrated when the consequences of non service did not deprive an intermediate landlord of a significant opportunity to raise an objection to the process or where their objection had been dealt with in any event during the course of the same.
The Supreme Court found that Elim Court, in so far as it held that non-service of a claim notice would not invalidate the acquisition process when an intermediate landlord had no management powers, had to be treated with caution.
Elizabeth Dwomoh is a barrister at Lamb Chambers
