Eastpoint Block A RTM Company Limited v Akehinde Olufunlola Otubaga

An RTM company which has acquired the right to manage does not thereby become a landlord. It therefore cannot apply under section 168(4) of the Commonhold and Leasehold Reform Act 2002 for a determination that a leaseholder has breached a covenant.

The right to manage transfers only the defined management functions and related rights and obligations. Although an RTM company may enforce untransferred tenant covenants under section 100(2), it may not exercise re-entry or forfeiture functions. A section 168(4) application is available only to a landlord and is part of the statutory scheme restricting forfeiture.

The appellant RTM company had acquired the right to manage a block containing the respondent's long-leased flat. It applied to the First-tier Tribunal for a determination under section 168(4) of the Commonhold and Leasehold Reform Act 2002 that the respondent had breached lease covenants by operating a business from the flat and permitting nuisance by a subtenant.

By a decision issued on 28 March 2022, the First-tier Tribunal struck out the application for want of jurisdiction. The RTM company appealed. The central issue was whether an RTM company is entitled to make a section 168(4) application.

1. Appeal dismissed. The First-tier Tribunal was right to strike out the application because the appellant was not entitled to make it and the tribunal had no jurisdiction to determine it.

2. Section 168(4) of the Commonhold and Leasehold Reform Act 2002 permits an application only by a landlord under a long lease. Read with the surrounding provisions on forfeiture, the section restricts the circumstances in which a landlord may serve a notice under section 146(1) of the Law of Property Act 1925. Only the person legally entitled to the reversion may forfeit.

3. An RTM company does not become the landlord when it acquires the right to manage. Chapter 1 of Part 2 transfers a limited set of management functions; it does not vest the reversion or other property rights in the company. The definition of landlord in section 112 does not extend to a person merely because it performs management functions.

4. Sections 96 and 100 confirm that limit. Management functions exclude re-entry and forfeiture. Although section 100(2) enables an RTM company to enforce untransferred tenant covenants, section 100(3) prohibits it from exercising re-entry or forfeiture functions. A section 168(4) application remains unavailable because the applicant must be a landlord, whether or not the application is characterised as enforcement.

5. The Tribunal accepted the point made in Kyriacou v Linden [2021] UKUT 288 (LC) and Bedford v Paragon Asra Housing Association Ltd [2021] UKUT 266 (LC) that the First-tier Tribunal determines breach, not whether forfeiture is available. That proposition does not enlarge the class of persons entitled to apply under section 168(4). An RTM company may seek an injunction or a declaration of breach where otherwise entitled, but not a section 168(4) determination.

• Upper Tribunal (Lands Chamber): dismissed the RTM company's appeal and upheld the strike-out.
• First-tier Tribunal (Property Chamber): on 28 March 2022 struck out the RTM company's section 168(4) application for want of jurisdiction.