The Supreme Court has unanimously dismissed an appeal finding failure to serve a claim notice on a landlord did not invalidate the transfer of the right to take over management of a block of student flats.
Tenants sought to acquire the right to take over management of their block of converted flats through the formation of a right to manage company. The RTM company is required to serve a claim notice to acquire the right to manage the property on each person who is a landlord under a lease of the whole or any part of the premises.
The RTM company, Tudor Studios Management Company Limited, incorporated by the tenants, served the claim notice on the freeholder and the management company but not on A1 Properties, which was also a landlord, in an ‘inadvertent’ omission.
The First-tier Tribunal held that the Tudor’s failure to serve the claim notice on A1 did not invalidate its claim as A1 ‘has no management functions in respect of the Property under either the superior or immediate lease’. A1 appealed to the Supreme Court after its appeal in the Upper Tribunal was dismissed.
Lord Briggs and Lord Sales, with whom Lord Hamblen, Lord Leggatt and Lord Stephens agree, said: ‘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.’
In A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd, the judgment said the ‘simplest way to provide a legal formula to give effect to Parliament’s intention’ when a claim notice is not served on a visible landlord or stakeholder ‘is that the failure renders the transfer of the right to manage voidable…but not void’.
The ruling added: ‘It is voidable unless, or until, the tribunal approves the transfer scheme, as the outcome of the resolution of the dispute as to entitlement caused by a counter-notice by a person actually given a claim notice, or as the result of an application by the RTM company under section 85. If the scheme is disapproved by the tribunal, the RTM company will have to start again in any event.’
Lauren Fraser, senior associate at Charles Russell Speechlys, said the judgment followed a ‘commonsense’ approach. She added: ‘Following a series of cases which appeared to move away from the doctrine of strict adherence to statutory requirements in notices in property cases, the Supreme Court has today confirmed the direction of travel and provided some helpful signposts for approaching non-compliance with statutory procedure.
‘This is a “commonsense” approach and aligns with anticipated changes in the legal landscape.
‘The government has indicated that it intends to adopt the proposals of the 2020 Law Commission reports which recommend a much more simplified approach to the statutory procedure for the acquisition of statutory rights, which will have a huge impact on property notices and their effects.’
