[2024] UKUT 113 (LC)

Part 2, Chapter 1 of the Commonhold and Leasehold Reform Act 2002 provides for the acquisition of the right to manage leasehold premises on a no-fault basis; the right is acquired if procedural steps are correctly taken, without the need to show that there was anything wrong with the management carried out to date by the landlord. The right is acquired by a nominee company owned by qualifying leaseholders. The process of acquisition of the right to manage is supposed to be straightforward. But the procedure does have to be followed correctly, and errors may send the RTM company back to square one.

The crucial starting point for the acquisition of the right to manage is the claim notice, which has to be given to various people including the landlord. The 2002 Act makes provision for the landlord to respond with a counter-notice denying the RTM company’s entitlement to acquire the right to manage if it considers that the procedure has not been followed properly.

In the present case a claim notice dated 8 August 2022 was served on the appellant on 10 August 2022. The appellant served a counternotice on 14 September 2022, setting out why it contended that the right to manage had not been acquired.

The Right to Manage (Prescribed Particulars and Forms) (England) Rules 2010/825 prescribe a form for counter-notices, and set out the information to be contained in a counter-notice. One of the requirements of the prescribed form in Schedule 3 is:

“[give the address to which future communications relating to the subject matter of the notice shall be sent]”

In its counter-notice the appellant complied with that requirement by stating:

“Scott Cohen Solicitors Limited, Suite One, Dorchester House, 7 Fairview Estate, Henley on Thames, Oxfordshire, RG91HE.

Being the address to which future communications relating to the subject matter of the notice shall be sent.”

On receipt of the counternotice the RTM company commenced proceedings in the FTT for a determination as to whether it was entitled to acquire the right to manage, and on 24 April the FTT decided that it was not.

An RTM company which has given a claim notice is permitted to withdraw it at any time before it acquires the right to manage, by giving a notice to that effect to the landlord and others (section 86(1) of the 2002 Act). Although its claim to acquire the right to manage had just been rejected by the FTT, on 26 April 2023 the RTM company sent a second claim notice to the appellant and said in its covering letter:

“By virtue of this correspondence, our Claim Notice dated 8th August 2022 is withdrawn and is no longer of any effect. Please find enclosed a new Claim Notice pursuant to s79 of the Commonhold and Leasehold Reform Act 2002, together with the Articles of Association for the RTM Company.”

The letter was addressed to the appellant at its registered office, being the address given in the latest service charge demand dated 6 March 2023 (in compliance with section 47 of the Landlord and Tenant Act 1987, which requires that any written demand given to a tenant must contain the name and address of the landlord) and not to Scott Cohen at the address given in the counter-notice (paragraph 5 above).

In order for that second claim notice to be effective to initiate a new claim, it was essential that the first notice should no longer continue in force, because section 81(3) of the 2002 Act provides:

“(3)

Where any premises have been specified in a claim notice, no subsequent claim notice which specifies—

(a)

the premises, or

(b)

any premises containing or contained in the premises,

 may be given so long as the earlier claim notice continues in force.”

It was therefore crucial for the RTM company that its withdrawal of the first claim notice, in its covering letter, should have taken effect before the second claim notice was given to the appellant.

The appellant served a counter-notice to the second claim notice, challenging the RTM company’s entitlement to acquire the right to manage on three grounds:

The RTM company then commenced a second application to the FTT for a determination that it had acquired the right to manage based on the second claim notice.

The FTT found in favour of the RTM company on points 1 to 3 above, and the appellant sought permission to appeal on the grounds that it was wrong about those three points.

As to point 1), the appellant’s argument was that despite the service of a notice of withdrawal, the first claim notice remained live until time had expired for any application for permission to appeal (relying upon section 84(6) of the 2002 Act). The FTT found that the service of a withdrawal notice did indeed mean that the first claim notice was no longer in force; there was no longer any possibility of an appeal from the FTT’s determination because the withdrawal of the notice meant that there could be no further argument about the validity of the first claim notice. Both the FTT and this Tribunal have refused permission to appeal on this point.

The FTT also found in favour of the RTM company on point 2) above, and the appellant appeals that determination with permission from this Tribunal.

As to point 3), the FTT found in favour of the RTM company, and the FTT refused permission to appeal. In granting permission to appeal on point 3) this Tribunal said:

“If an appeal on ground 2 is successful, then ground 3 may be academic. The service of a notice of withdrawal in an envelope which also contained a new claim notice would be understood by any reasonable recipient with knowledge of the statutory scheme as being intended to take effect in such sequence as would make them effective for their obvious purpose. There is no reason to treat them as ambiguous. But if the notice of withdrawal could only validly be served at the address nominated in the counternotice then the withdrawal would be ineffective, and the new claim notice would be premature.”

I therefore have to decide the appeal on ground 2), about the address for service of the withdrawal notice. If that ground succeeds then so does ground 3) because the withdrawal notice will not have been served before the second claim notice was received by the appellant; the first claim notice would therefore have continued in effect at the time the second claim notice was received by the appellant, so the second notice would therefore be ineffective.