Case No. UKUT-27-(LC)-UTLC-Case-Numbers:-LC-2022-425

4.The appeal concerns a former factory in Leicester now converted into student accommodation, mostly in the form of “study studios”, together with some communal areas. The freehold is owned by Premier Ground Rents No 3 Limited, which purchased the property from the developer. The study studios are held by investor tenants on 250-year leases in tripartite form between the freeholder, the lessee and Tudor Studios Management Company Limited (“the management company”). Each study studio was then sub-let to A1 Alpha Properties (Leicester) Limited (“A1 Leicester”) for ten years at a fixed rent; the idea was that A1 Leicester would then sub-underlet to students on an annual basis for a market rent. A1 Leicester went into administration in February 2019 and has now been placed in creditors’ voluntary liquidation, so that the investor tenants are letting the study studios direct to students.5.None of the persons mentioned in the paragraph above is a party to the appeal.6.The appellant holds four 999-year leases of parts of the building – the common room, the laundry, the gym and the reception area. None of those areas are let either to investor tenants or to student tenants. The appellant has sub-let each of its four areas on 10-year leases to the management company; rent is payable to the appellant under those four leases in a total sum of £30,600 per annum.7.The management company, the developer of the building, the appellant and A1 Leicester were all originally owned by the same shareholders, but the investor tenants now own the shares in the management company. 8.So the investor tenants control the management of the building. Nevertheless they have exercised (or rather, pending the outcome of this appeal they have endeavoured to exercise) their statutory right to manage to manage the building under Part 2 of the Commonhold and Leasehold Reform Act 2002.9.The Commonhold and Leasehold Reform Act 2002 enabled lessees who hold long leases of flats in a self-contained building to acquire the right to manage the building on a no-fault basis; there is no need for the leaseholders to prove that there was anything wrong with the landlord’s management of the block. All the leaseholders have to do is to follow the correct procedure. It is not in dispute that the study studios are flats as defined in section 112(1) of the 2002 Act (Q Studios (Stoke) RTM Company Limited v Premier Ground Rents No 6 Limited [2020] UKUT 197 (LC)) and that the investor tenants are qualifying leaseholders.10.The right to manage is exercised for qualifying leaseholders by an “RTM company” formed in accordance with the provisions of the 2002 Act. Section 79 makes provision for the RTM company to give notice of its claim to be entitled to acquire the right to manage:“79(1) A claim to acquire the right to manage any premises is made by giving notice of the claim (referred to in this Chapter as a “claim notice” )…(6) The claim notice must be given to each person who on the relevant date is—(a) landlord under a lease of the whole or any part of the premises,(b) party to such a lease otherwise than as landlord or tenant, or(c) a manager appointed under Part 2 of the Landlord and Tenant Act 1987 (c. 31) …”11.The respondent gave the claim notice to the freeholder and to the management company, but not to the appellant. 12.The management company gave a counter-notice. Section 84 of the 2002 Act provides:“(1) A person who is given a claim notice by a RTM company under section 79(6) may give a notice (referred to in this Chapter as a “counter-notice” ) to the company no later than the date specified in the claim notice under section 80(6).(2) A counter-notice is a notice containing a statement either—(a) admitting that the RTM company was on the relevant date entitled to acquire the right to manage the premises specified in the claim notice, or(b) alleging that, by reason of a specified provision of this Chapter, the RTM company was on that date not so entitled.”13.The management company’s counter-notice stated that the respondent was not entitled to acquire the right to manage because it had not complied with a number of the provisions of the 2002 Act, including section 79(6) by virtue of its not having served the appellant. Section 84(3) of the 2002 Act enables the RTM company, when a counter-notice has been served, to apply to the FTT for a determination of whether it has on the relevant date acquired the right to manage; section 87 provides that if it does not make that application within a specified time the claim notice is deemed withdrawn. The respondent applied to the FTT, and the appellant was joined as an additional respondent alongside the freeholder and the management company.14.Those are the relevant statutory provisions and the facts in this case. We need now to look at the Court of Appeal’s decision in Elim Court, which forms another important aspect of the legal background to this appeal; the essence of the present appeal is whether the circumstances can be distinguished from Elim Court so as to justify a different outcome, and so I consider in some detail the reasoning of Lewison LJ in that case (with whom Proudman J and Arden LJ agreed) because it will be necessary to decide if there is a relevant distinction in the present facts.