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

The UT reached a different conclusion on Issue 2, after conducting a valuable review of the case law preceding A1 Properties relating to procedural defects in the process of acquiring the right to manage at [74] to [91], and a detailed consideration of A1 Properties itself at [92] to [114]. At [95], the Judge set out paragraph [69] of A1 Properties in its entirety, including the final part after the words “no valid claim notice can be given to anyone” which reads as follows:

“For present purposes we leave aside the difficult question whether this has the further consequence that, if a document purporting to be a claim notice is nonetheless given to another stakeholder, such as a landlord, the landlord could rely on the failure to give a participation notice to a qualifying tenant in order to object to the validity of the purported transfer of the right to manage which followed, even though that tenant might not in fact have any objection to the scheme which is being promoted which they wish to maintain. We were referred to a decision of the Lands Tribunal in Sinclair Gardens Investments (Kensington) Ltd v Oak Investments RTM Co Ltd [2005] RVR 426 and a decision of the Upper Tribunal in Avon Freeholds Ltd v Regent Court RTM Co Ltd [2012] L & TR 23 which discussed the consequences of a breach of the procedural requirement in section 79(2) and held in each case that such a breach did not in the circumstances invalidate the transfer of the right to manage which followed, and it was not suggested that they should be overruled; but this was a peripheral part of the debate before us and we prefer to reserve our opinion on whether they were correctly decided.”

In contrast with the first part of paragraph [69], which I have already set out at [73] above, the second part is obviously obiter, but it will be noted that the “difficult question” to which the Supreme Court referred at the beginning of the obiter passage is in substance Issue 2 in the present case. Evidently with that in mind, the Judge said at [114] that “that is the difficult question I now have to resolve”.

The Judge then summarised the rival arguments presented to her by the parties in their written submissions on A1 Properties at [118] to [123]. The arguments of Mr Bates KC and Ms Gibson for Avon were essentially the arguments which I have already indicated seem to me to be part of the ratio of A1 Properties, depending on the sharp distinction to be drawn between cases where Parliament has expressly spelled out the consequences of non-compliance with a procedural requirement on the one hand, and the confinement of a two-stage Soneji analysis to cases where no such express consequence has been stated on the other hand. For his part, Mr Jacob for the respondent emphasised that Ms O’Connor had lost nothing of value, since she was now a member of the RTM company, and that it was not always an easy matter for an RTM company, having missed a qualifying tenant, to start again. Moreover, to allow Avon to rely on the procedural objection “would be yet another example of an obstructive landlord attempting [to] thwart the process in the way that the Supreme Court so clearly disapproved”.

In the section of the UT Decision headed “Discussion and conclusion about the second issue in the appeal”, from [124] to [144], the Judge clearly took the view, at [129], that the entirety of paragraph [69] of A1 Properties was obiter, and not just the second part of the paragraph after the words “no valid claim notice can be given to anyone”. As I have already said, I respectfully disagree and I consider that this court, like the UT, is bound by the reasoning in the first part of [69]; and even if that is wrong, I would in any event adopt that reasoning as correct: see [75] above. In my view, this error led the Judge to suppose that she had more room for manoeuvre than was the case, and encouraged her to adopt as her preferred solution to the “difficult question”one that cannot be reconciled with the reasoning of the Supreme Court in A1 Properties, namely that when the Supreme Court said “not valid” (or, more accurately, “no valid claim notice can be given”) it meant “that it is neither wholly valid nor wholly invalid, but voidable at the instance of the tenant”: see [139]. Further, the Judge regarded the (clearly obiter) second part of [69] as “an invitation to adopt this solution”, saying at [141]:

“It means that although no valid claim notice can be served if the qualifying tenants have not all been given the notice of invitation 14 days beforehand, the notice if served in spite of the requirement is not wholly invalid. Instead it is voidable. And the person entitled to have been served with the notice is the one who can have it declared void, and no-one else”.

The Judge went on to say in [142]:

“That this is an appropriate solution is indicated first by its consistency with the Supreme Court’s decision in [A1 Properties]. It is also indicated by the purposes of the statute in requiring notice to be given; the notice is overwhelmingly for the tenant’s benefit and the purposes of the statute in facilitating the acquisition of the right to manage will be frustrated if anyone else complains of the procedural failure. True, there may be an advantage for other tenants in ensuring that all entitled tenants are included, and perhaps too for the landlord in potentially increasing the number of tenants who will bear his costs under section 88 if an application to the FTT fails. But those are insignificant points in the face of the fact that the primary and predominant purpose of the requirement is to benefit a qualifying tenant.”

It seems to me, with the greatest respect to the Judge, that her reasoning might be persuasive and appropriate if the case were one where a two-stage Soneji analysis had to be undertaken, but her approach overlooks the fundamental point that this is a case where the consequence of non-compliance with the requirement to give a participation notice to Ms O’Connor is prescribed by section 79(2) of the CLRA, namely that “The claim notice may not be given”, or as the Supreme Court put it in A1 Properties at [69] “no valid claim notice can be given to anyone”. That simple language means what it says, and gives rise (objectively) to no absurdity, so it was the duty of the UT, as it is the duty of this court, to apply it accordingly.

For these reasons, I would allow Avon’s appeal and determine the second issue in favour of Avon. Because of the failure to give a participation notice to Ms O’Connor, the position remains (so far as I am aware) that no valid claim notice has yet been given to transfer the management of the Property to the respondent.