[2024] UKUT 335 (LC)

In their written representations for the appellant, Mr Bates KC and Ms Gibson essentially reiterated their earlier argument. A1 (Sunderland) concerns a case where the consequences of non-compliance are not spelt out in the statute. But crucially paragraph 69 of the decision confirms that that is what section 79(2) does. The Supreme Court thereby approved, without citing them, Canary Gateway and also Triplerose (2016).

As Mr Jacob observed, counsel for the appellants thus engaged only with the first four sentences of paragraph 69 (up to an including the words I emboldened in the quotation at paragraph 95 above), and so have given me no assistance in terms of what I should make of the rest of the paragraph.

Mr Jacob in his written submissions began by acknowledging that in light of the first part of paragraph 69 of A1 (Sunderland) it is no longer possible to doubt that section 79(2) sets out the consequences of non-compliance with section 78. But he maintained that the outcome in Canary Gateway was wrong, and argued that the rest of paragraph 69 indicates that the Supreme Court did not endorse that outcome. This appeal presents, he said, precisely the difficult question that their lordships identified and left unsolved. Far from endorsing the outcome in Canary Gateway, Mr Jacob argued, their remarks re-open the possibility that Sinclair Gardens (2005) and Regent Court were correctly decided; and the Supreme Court’s analysis shows that the correct answer is that a landlord should not be able to rely on a failure to serve a notice of invitation to participate on a qualifying tenant to defeat the purpose of the statute in facilitating the acquisition of the right to manage. To allow them to do so would be yet another example of an obstructive landlord attempting the thwart the process in the way that the Supreme Court so clearly disapproved (at paragraphs 92 and 98, set out above); the tenant, on the other hand, could apply to the court for a declaration that the claim notice was invalid, just as a landlord who had not been served with a claim notice could challenge the validity of the scheme.

Mr Jacob pointed out that Ms O’Connor has lost nothing of value, since she is now a member of the RTM company. Moreover, it is not an easy matter for an RTM company, having missed a qualifying tenant, to start again. Exactly as the Supreme Court said at its paragraph 100, the RTM company may not have the resources to do so. Moreover to do so in the present case would be pointless because Ms O’Connor as a member of the RTM company is no longer entitled to a notice of invitation to participate.

Mr Jacob suggested that another way to look at the situation is to say that Ms O’Connor has now waived any right to challenge the respondent and therefore the failure to give her a notice of invitation should not be taken as a breach of section 78(1), and section 79(2) does not come into operation.

Mr Bates KC and Ms Gibson in response reiterated their position that section 79(2) sets out the consequences of non-compliance and that is the end of the matter. They regarded the respondent as having admitted that by conceding that it cannot argue against the Supreme Court’s construction in the fourth sentence of its paragraph 69. They made no comment on the discussion of the “difficult question” that followed, and did not explain why Mr Jacob’s proposed solutions might be wrong.