CA-2024-002828 - [2025] EWCA Civ 1016

On the footing that Ms O’Connor was the qualifying tenant of Flat 17, the respondent RTM company was obliged by section 78(1) of the CLRA to give a participation notice to her before making a claim to acquire the right to manage the Property. The language of section 78(1) is framed in mandatory terms (“a RTM company must give notice to each person who at the time when the notice is given – (a) is the qualifying tenant of a flat contained in the premises …)”. Further, although section 79(7) contains a limited dispensation from invalidity of a participation notice occasioned “by any inaccuracy in any of the particulars required by or by virtue of this section”, there is no dispensing provision from the basic obligation under subsection (1) to give a participation notice to each qualifying tenant of a relevant flat who “ (b) neither is nor has agreed to become a member of the RTM company”. Ms O’Connor did not give her written consent to become a member of the respondent until 26 January 2022, five days after the date of service of the claim notice and 19 days after the last date for service on her by the respondent of a participation notice under section 79(2).

In view of the critical importance of section 79(2), I will repeat its clear and simple terms:

“(2)

The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.”

It is no longer disputed by the respondent that section 79(2) contains a statement by Parliament of the consequence of failure by the RTM company to give each participation notice required by section 78(1) before expiry of the 14-day deadline stipulated by section 79(2), namely that the claim notice “may not be given”. On the face of it, that is a clear and unqualified prohibition such that a failure to comply with it will have the effect that the claim notice is invalid, and it therefore cannot set in motion a valid claim to acquire the right to manage. It is simply something that the RTM company must get right as a pre-condition to making a valid claim; and if for any reason the condition is not satisfied, the clear implication in my view is that the RTM company will be obliged to start again. In the present case, that would presumably have meant a delay of less than a week until after Ms O’Connor had given her written consent to become a member of the respondent, because the obligation to give her a participation notice would then have lapsed by virtue of section 79(1)(b). But instead of taking that simple and obvious course, the respondent has persisted in arguing that the effect of section 79(2) was not to invalidate the claim notice, or at any rate not to do so on the facts of the present case.

That argument is in my judgment impossible to reconcile with the reasoning of the Supreme Court in A1 Properties, where the issue was whether a claim notice was invalidated by the failure of the RTM company to serve it on one of the three landlords upon whom it ought to have been served under section 79(6)(a) as a “landlord under a lease of the whole or any part of the premises”. The overlooked landlord in question was the intermediate landlord of the communal areas of the block; the other two landlords, upon whom the claim notice was duly served, were the freeholder of the block and a management company. Crucially, however, the issue arose in a context where the consequence of failure to comply with this procedural requirement was not expressly stated by Parliament. In those circumstances, the Supreme Court held that the correct approach was to apply the principles formulated by the House of Lords in R v Soneji [2006] 1 AC 340 and to ask “whether it was a purpose of the legislature that an act done in breach of [the relevant] provision should be invalid”: see [58], and [59] where the Supreme Court quoted the observation of Lord Steyn in Soneji at [14] that “A recurrent theme in the drafting of statutes is that Parliament casts its commands in imperative form without expressly spelling out the consequences of a failure to comply”. In that context, said the Supreme Court at [59]:

“The courts had evolved a distinction between mandatory requirements, breach of which would invalidate the procedure, and directory requirements, breach of which would not. But this distinction was conclusory rather than explanatory and did not provide helpful guidance.”

For present purposes, the key passage in A1 Properties is at [67] to [69] from which I quote the following (with my emphasis in italics):

“67.

… Where the right to manage is transferred to a RTM company, the effect is that an existing sophisticated contractual regime with multiple aspects and ramifications is subject to significant disruption (hence the complexity and comprehensiveness of the statutory regime, outlined above). The ordinary expectation must be that persons whose property or contractual rights are to be taken away or subject to significant qualification should have a fair opportunity in the course of the procedure to be followed before that occurs to raise any arguments of substance they may have to oppose that outcome …

68.

In our view the correct approach in a case where there is no express statement of the consequences of non-compliance with a statutory requirement is first to look carefully at the whole of the structure within which the requirement arises and ask what consequence of non-compliance best fits the structure as a whole. Here the provisions of sections 78 and 79 call for a two-stage process of notification of the RTM proposal to persons with an interest in the building to which the right to manage is (if validly exercised) to be applied.

69.

Section 78 requires the RTM company as promoter of the scheme to give a participation notice to all qualifying tenants who have not agreed already to become, or not actually become, members of the RTM company. Section 79(2) provides that until 14 days after that has been done, a claim notice may not be served at all. There will ordinarily be no difficulty in finding or identifying qualifying tenants. The absence of any saving or dispensing provisions of the type found in section 79(7) suggests that this was well understood by Parliament. Section 79(2) imposes a clear consequence of failure in good time to give participation notices: no valid claim notice can be given toanyone.”

The parts of the above passage which I have italicised show beyond doubt: (a) that the Supreme Court was confining its formulation of the correct approach to cases where the legislation contains no express statement of the consequences of non-compliance; (b) that it considered section 79(2) to be an example of such an express statement; and (c) that it understood the consequence of non-compliance laid down by Parliament to be that “a claim notice may not be served at all”. It follows, in my view, that if a claim notice may not be served at all, any claim notice purportedly served before the non-compliance is remedied must be invalid, or in other words a nullity.

There was some debate before us whether the passage which I have set out formed part of the ratiodecidendi of A1 Properties, or was merely obiter. If it matters, I consider that the passage forms part of the ratio of the case, because it was an integral and necessary part of the court’s very full and careful reasoning which ultimately led it to conclude that the failure to serve the intermediate landlord, in circumstances where Parliament had not laid down the consequences of non-compliance, was not to invalidate the claim notice, but rather to render it “voidable at the instance of the relevant landlord or other stakeholder who was entitled to, but not given, a claim notice, but not void”: see [87] and R (Youngsam) v Parole Board [2019] EWCA Civ 229, [2020] QB 387 at [21-22] (Nicola Davies LJ) and [40-59] (Leggatt LJ). I would only add that, even if the passage is properly to be classified as obiter, I would have no hesitation in following it as constituting, in my respectful opinion, a correct statement of the law in this area.

The importance of the key principle that there is no room for a Soneji analysis where Parliament has expressly stipulated the consequences of non-compliance is a theme to which the Supreme Court returned in A1 Properties when considering some subsidiary arguments advanced by Mr Bates KC for the intermediate landlord at [101] to [104]: see in particular [103] (“Parliament has not expressly stipulated what the consequence of non-compliance with those obligations should be, so the Soneji analysis is applicable”); and [104] where the court said:

“The same analysis applies. These are simply examples of provisions where Parliament has stated in terms what the outcome of a failure of compliance with certain of the procedural rules should be, thereby making it unnecessary and inappropriate to conduct a Soneji analysis. But where Parliament has not so stipulated, an analysis according to the approach in Soneji is required.”

At the risk of stating the obvious, it is worth spelling out why the distinction drawn in A1 Properties must in my judgment be correct. When construing a statutory scheme, the task of the court or tribunal is to seek the meaning of the words used by Parliament in accordance with the principles of interpretation laid down in the case law. Those principles were authoritatively restated by the Supreme Court in R (O) v Secretary of State for the Home Department [2022] UKSC 3, [2023] AC 255 at [29] to [31] per Lord Hodge (with whom Lord Briggs, Lord Stephens, Lady Rose JJSC and Lady Arden agreed). That guidance emphasises that “the words which Parliament has chosen to enact as an expression of the purpose of the legislation” are “the primary source by which meaning is ascertained” ([29]), and although external aids to interpretation play a secondary role, “none of these external aids displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity” [30]. Further, the “intention of Parliament” is an objective concept, not subjective, and “is a shorthand reference to the intention which the court reasonably imputes to Parliament in respect of the language used” ([31], citing the speech of Lord Nicholls in the Spath Holme case [2001] 2 AC 349, 396). It follows that where the language used by Parliament to state the consequence of non-compliance with a procedural requirement is clear, unambiguous and does not produce absurdity, it is the duty of the court or tribunal to interpret and apply that language accordingly. That is what the rule of law requires, and the court or tribunal would be overstepping its constitutional boundaries if it attempted to substitute for the language of Parliament an interpretation which in its view would produce a more reasonable result on the facts of the individual case before it.

By the same token, it is only where Parliament has not expressly stated the consequences of non-compliance that there can be any room for a Soneji analysis designed to determine objectively what intention should be imputed to Parliament to fill the gap left by its silence on the point.

As I have already said, I consider the language used by Parliament in section 79(2) to be clear and unambiguous, and the Supreme Court was evidently of the same opinion when it said in A1 Properties at [69], quoted above, that section 79(2) “imposes a clear consequence of failure in good time to give participation notices: no valid claim notice can be given to anyone.” It is equally clear to me that this construction does not, objectively, produce any absurdity, however widely the concept of absurdity should be interpreted. In my judgment there is nothing remotely absurd about a rule which in effect requires strict compliance with the procedural requirements for service of participation notices before a valid claim notice may be given. It is relevant here to have in mind the very significant disruption of complex private contractual arrangements that a successful claim under the RTM legislation entails; the early stage in the procedure at which the failure to comply with the relevant requirements occurs; and the comparative ease and speed with which the position can in principle be rectified by the RTM company. It is also relevant that the Supreme Court could not have said what they did in [69] if they thought that the consequence stipulated by Parliament led to an absurd or unjust outcome. To the contrary, the Supreme Court expressly recognised in [62] that:

“Examination of the purpose served by a particular procedural rule may indicate that Parliament intended that it should operate strictly as a bright line rule, so that any failure to comply with it invalidates the procedure which follows.”

In reaching this conclusion, I have not overlooked the reasons given by the Supreme Court at [97] to [100] for rejecting a submission by Mr Bates KC that the ease with which an RTM company may serve a new claim notice shows that “Parliament intended that there should be strict compliance with the procedural requirements in the statutory regime”. The first reason given for rejecting this submission was that one of the objectives of the statutory scheme, as explained in the Consultation Paper, was that “opportunities for obstructive landlords to thwart the transfer of the right to manage should be kept to a minimum” ([98]). The second reason was that there is “no guarantee that a RTM company will be in funds to make multiple applications” and the company “might be formed by just two tenants, or a small group of tenants, with limited resources” ([100]).

While I accept that there may at first sight appear to be an element of tension between the reasoning of the Supreme Court in these paragraphs and some of the other passages in their judgment upon which I have relied, I do not consider that these paragraphs can or should be read as casting any doubt on the central proposition endorsed by the Supreme Court that there can be no room for a Soneji analysis where Parliament has stipulated what the outcome of a failure to comply with a procedural rule should be, especially as the Supreme Court went on to reiterate that principle at [102] to [104]: see [76] above. It therefore seems to me that the reasons given by the Supreme Court for rejecting Mr Bates’ submission should be confined to cases where a Soneji analysis is required, and should be read as having no application in cases where Parliament has expressly stated what the consequence of non-compliance is to be. I also note that, in [98], the Supreme Court said only that opportunities for obstructive landlords to thwart the operation of the scheme should be “kept to a minimum”, not that they can or should be eliminated.