Eastpoint Block A RTM Company Limited v Akehinde Olufunlola Otubaga

An RTM company may apply to the First-tier Tribunal under section 168(4) of the Commonhold and Leasehold Reform Act 2002 for a determination that a tenant has breached an untransferred lease covenant. Section 100(2) permits the company to enforce such covenants in the same manner as the landlord. That extends to the available tribunal forum as well as to remedies.

The prohibition in section 100(3) is confined to exercising a function of re-entry or forfeiture. A section 168(4) application is a separate determination of breach. It may assist later forfeiture proceedings, but it can also support other remedies and cannot itself result in forfeiture.

An RTM company alleged that a long leaseholder had permitted business use of a flat and nuisance by a sub-tenant. It applied to the First-tier Tribunal under section 168(4) of the Commonhold and Leasehold Reform Act 2002 for a determination of breach.

The First-tier Tribunal struck out the application. The Upper Tribunal, in [2022] UKUT 319 (LC), upheld that decision. It held that the RTM company was not the landlord and that a section 168(4) application lay on the forfeiture side of the statutory division.

The RTM company appealed. The central issue was whether section 100(2), which permits enforcement of untransferred tenant covenants in the same manner as the landlord, entitled it to make the section 168(4) application despite the prohibition on exercising functions of re-entry or forfeiture.

1. Appeal allowed. An RTM company does not become the landlord when it acquires the right to manage. Nevertheless, section 100(2) of the Commonhold and Leasehold Reform Act 2002 gives it an additional right to enforce untransferred tenant covenants in the same manner as the landlord. That language covers an application to the First-tier Tribunal under section 168(4) for a determination that a breach has occurred.

2. The phrase “in the same manner” is not confined to substantive remedies. It includes the forum in which the issue of breach is determined. A contrary construction would produce an unexplained difference between an enforcement claim brought by a landlord and the same claim brought by an RTM company, including in the court’s statutory power to transfer tribunal questions under section 176A.

3. Section 100(3) did not prevent the application. The contrast between section 96(6), concerning functions relating to forfeiture, and section 100(3), concerning the actual function of forfeiture, supported a narrow reading of the latter. A section 168(4) determination is a discrete finding that a breach has occurred. It may precede a landlord’s notice under section 146(1) of the Law of Property Act 1925, but it neither effects forfeiture nor gives the tribunal jurisdiction over possession, relief from forfeiture, waiver, or remedying the breach.

4. The alternative submission that enforcement of every tenant covenant was transferred as “management” under section 96 failed. The general word “management” was insufficient to deprive a landlord of its ability to enforce covenants in which it retained a substantial interest.

5. No costs order was made against the unrepresented leaseholder. The jurisdictional point had been raised by the tribunal, the leaseholder had not resisted the appeal, and CPR rule 52.19 permitted the court to limit costs on an appeal from a no-costs jurisdiction.

• Court of Appeal (Civil Division): Allowed the RTM company’s appeal and held that it could apply under section 168(4) of the Commonhold and Leasehold Reform Act 2002.
• Upper Tribunal (Lands Chamber): In [2022] UKUT 319 (LC), upheld the First-tier Tribunal’s strike-out on jurisdictional grounds.
• First-tier Tribunal: Struck out the RTM company’s section 168(4) application.