Baron Estate Management Limited v Wick Hall (Hove) RTM Company Limited

Where an RTM company fails to serve a notice inviting participation on every qualifying tenant who is entitled to receive one, Commonhold and Leasehold Reform Act 2002, s 79(2) prevents service of the claim notice. The company therefore does not acquire the right to manage. This consequence is expressly prescribed by the statutory scheme and does not require a general assessment of whether the procedural defect was sufficiently serious.

A person who is both a qualifying tenant and a member of the RTM company must be named in the claim notice under s 80(3). The consequences of omitting such a name were left undecided because the appeal was determined on the notice-invitation defect.

Wick Hall (Hove) RTM Company Limited sought to acquire the right to manage a block of 168 flats. Before making its claim, it failed to serve notices inviting participation on the qualifying tenants of flats 30 and 154. A notice served at flat 121 was also addressed to only one of two joint tenants.

The First-tier Tribunal held that the defects were not sufficiently serious to invalidate the claim. The freeholder appealed. It also contended that the claim notice omitted the name of a person who was both a qualifying tenant and a member of the RTM company, contrary to s 80(3) of the Commonhold and Leasehold Reform Act 2002.

The central questions were whether the failures prevented acquisition of the right to manage and whether the omission from the claim notice invalidated the claim.

1. Appeal allowed on issues 1 and 2. The RTM company was not entitled to make the claim and did not acquire the right to manage.
2. Under ss 78(1) and 79(2) of the Commonhold and Leasehold Reform Act 2002, an RTM company must give a notice inviting participation to every qualifying tenant who is neither already a member nor agreed to become a member. A claim notice may not be given until every person required to receive that notice has received it at least 14 days beforehand.
3. The consequence of non-service is expressly prescribed by s 79(2). It is unnecessary to apply the broader approach of asking whether the defect was sufficiently serious, in the context of the entire claim, to invalidate it. The Tribunal followed the analysis in Avon Ground Rents Ltd v Canary Gateway (Block A) RTM Co Ltd [2020] UKUT 358 (LC), which had adopted the conclusion reached in Triplerose Ltd v Mill House RTM Co Ltd [2016] UKUT 80 (LC). That conclusion was consistent with the statutory-scheme approach explained by the Court of Appeal in Elim Court RTM Company Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89.
4. The FTT had correctly found that notices had not been served on the qualifying tenants of flats 30 and 154. That was sufficient to determine issue 1. The Tribunal declined to decide the separate effect of the notice served on only one joint tenant at flat 121.
5. The evidence established that the leaseholder of flat 87 was both a qualifying tenant and a member of the RTM company. The name should therefore have been included in the claim notice under s 80(3).
6. The Tribunal made no concluded decision on whether omission of a name required by s 80(3) invalidates the claim. That question was left for determination in a case where it affected the outcome.

• First-tier Tribunal (Property Chamber): On 10 August 2022, held that the failures to serve notices inviting participation and the alleged omissions from the claim notice were not sufficiently serious to prevent acquisition of the right to manage.
• Upper Tribunal (Lands Chamber): Allowed the appeal on issues 1 and 2. Held that the RTM company had not acquired the right to manage. Made no decision on whether the omission from the claim notice breached s 80(3) was independently fatal to the claim.