Background
Cresta Court E RTM Company Ltd sought to acquire the right to manage a 20-flat building under the Commonhold and Leasehold Reform Act 2002. Before serving its claim notice on 21 January 2022, it sent notices of invitation to participate (NIPs) to the qualifying tenants it had identified, but not to Ms O’Connor, the qualifying tenant of Flat 17.
Ms O’Connor became a member of the RTM company five days after the claim notice and supported the claim. Avon Freeholds Ltd, the freeholder, objected on the basis that the failure to give her a NIP meant the claim notice was invalid. The First-tier Tribunal and Upper Tribunal rejected that objection, but the Court of Appeal held the failure fatal.
The Court’s Holding
The Supreme Court allowed the RTM company’s appeal and restored the Upper Tribunal’s decision. Failure to give an eligible qualifying tenant a NIP, or to wait 14 days after the last NIP before serving a claim notice, does not make the claim notice invalid and cannot be relied on by a landlord in a counter-notice as a dispute about the RTM company’s entitlement.
Sections 78(1) and 79(2) impose procedural requirements, not substantive entitlement conditions. The statutory counter-notice procedure permits objections to whether the RTM company is entitled to acquire the right to manage, not every procedural default in pursuing that entitlement. The appropriate remedy for non-compliance is the First-tier Tribunal’s discretionary enforcement power under section 107 of the 2002 Act.
Key Takeaways
- A landlord cannot defeat an RTM claim merely because an eligible qualifying tenant was not given a NIP or the 14-day interval was not observed.
- NIP requirements protect qualifying tenants; they do not give an unaffected landlord a windfall objection.
- The Court held that contrary comments in A1 Properties about the validity of claim notices were not part of that decision’s binding ratio.
Why It Matters
The decision limits procedural challenges that can be used to obstruct an otherwise substantively valid RTM claim. It confirms that courts should not treat every defect in the statutory process as invalidating the acquisition of management rights.
Qualifying tenants may still seek a discretionary enforcement order under section 107 where NIP obligations have been breached, but the remedy will turn on the circumstances, including prejudice and the nature of the default.