The appeal concerns a point of statutory interpretation relating to the acquisition of the “right to manage” under the Commonhold and Leasehold Reform Act 2002: does a failure to serve a claim notice on an intermediate landlord with no management responsibilities – contrary to s.79(6)(a) of the 2002 Act – invalidate the tenants’ claim to acquire the right to manage?
In Elim Court RTM Co Ltd v Avon Freeholders Ltd [2017] EWCA Civ 89; [2018] QB 571, the Court of Appeal held that such a failure does not invalidate the claim. The Appellant contends that Elim Court was wrongly decided, and that non-compliance with s.79(6)(a) will always invalidate a claim. Alternatively, that Elim Court is confined to its own particular facts.
The point is significant as the acquisition of the right to manage transfers numerous rights held by a landlord under a lease to the tenant’s nominee company. Service of the claim notice is the mechanism which triggers a landlord’s right to object to the claim under the 2002 Act. In the present appeal, the Upper Tribunal held that the “almost inescapable” conclusion was that the Respondent’s failure to serve the Appellant was not inadvertent. However, the claim was not invalidated in light of Elim Court. The appeal to the Supreme Court will clarify whether non-compliance with s.79(6)(a) – whether intentional or otherwise – will invalidate a claim.
However, the appeal raises a broader point of public importance on statutory interpretation which extends beyond the 2002 Act: where a statute concerning the acquisition of rights relating to property and similar rights is silent as to the effects of procedural non-compliance, how should the consequences of such failure be determined by the court without it re-writing the statute?
As recognised by the Upper Tribunal in granting permission for a leapfrog appeal, that point is of “considerable importance” because of how often courts and tribunals are required to determine the effect of procedural non-compliance in the acquisition of a right relating to property when the relevant statute is silent as to the consequence of the non-compliance.
This is the second ever “leapfrog” to the Supreme Court from the Upper Tribunal (Lands Chamber). Members of Landmark Chambers acted for the successful appellant and the intervener in the first appeal, which also concerned the RTM regime: FirstPort Property Services Ltd v Settlers Court RTM Company Ltd & Ors [2022] UKSC 1.
Justin Bates and Harley Ronan act for the Appellant, instructed by Roger Hardwick and Emma Bush of Brethertons.
The judgment may be accessed here.