The RTM company had failed to serve a notice of invitation to participate on a long leaseholder whose lease had not yet been registered at the Land Registry. As such, she was merely an equitable tenant during the registration gap between her application and the resulting registration. The Appellant landlord argued that an RTM company was required to serve a notice of invitation to participate even on an equitable tenant and that, following the Upper Tribunal’s decision in Avon Ground Rents Ltd v Canary Gateway (Block A) RTM Co. Ltd [2020] UKUT 358 (LC), the failure to serve even a single tenant invalidated the right to manage claim. The landlord argued this despite the relevant tenant supporting the right to manage claim.
The RTM company argued that only a legal tenant was a “qualifying tenant” within the meaning of s. 75(2) of the Commonhold and Leasehold Reform Act 2002. As such, it was not required to serve a notice on her. Alternatively, it argued that, following the Supreme Court’s decision in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co. Ltd [2024] 3 WLR 601, a failure to serve the notice on a qualifying tenant did not invalidate the right to manage claim and Avon Ground Rents Ltd v Canary Gateway was wrongly decided.
The Upper Tribunal held that an equitable tenant could constitute a qualifying tenant for the purposes of s. 75(2). However, this was only where the context permitted it (s. 112(2)). In circumstances where there was both an equitable tenant and a legal tenant of the same flat (for instance, if the tenant had assigned the lease but the new tenant had not yet been registered as such) the context did not permit the equitable tenant to be the qualifying tenant, as there can only be one qualifying tenant in respect of one flat (s. 75(5)). However, where, as here, there was no existing legal tenant, the equitable tenant was a qualifying tenant who should have been served a notice of invitation to participate.
Nevertheless, the Upper Tribunal concluded that the failure to serve the notice did not invalidate the RTM claim. It held that if an RTM company failed to serve a notice on a tenant, the failure rendered the subsequent claim notice voidable at the instance of the relevant tenant. Such a tenant could seek a declaration from the High Court that the RTM claim notice was invalid. Alternatively, she could seek to be joined as a party to any tribunal proceedings concerning the acquisition of the right to manage, or seek judicial review of any tribunal determination that the right to manage had been acquired. However, only the relevant tenant directly affected by the procedural failure could take such action. A landlord could not seek to take advantage of a failure to serve a tenant.
As the relevant tenant had waived the RTM company’s failure and supported the right to manage claim, the failure to serve notice on her did not invalidate the claim.
This decision, along with the Supreme Court’s decision in A1 (Sunderland), marks a significant shift in the approach of the courts/tribunal to procedural non-compliance. Subject to any successful appeal of the Upper Tribunal’s decision, it is now likely to prove extremely difficult for obstructive landlords to oppose RTM claims merely for procedural failures.
Written by Winston Jacob.