A1 Properties (Sunderland) Limited v Tudor Studios RTM Company Limited
[2023] UKUT 27 (LC)
Avon Freeholds Limited v Cresta Court E RTM Company Ltd
28 October 2024
[2024] UKUT 335 (LC)
Upper Tribunal
A group of flat owners wanted to manage their building. One owner had a lease but it wasn't officially registered yet. The court decided that even unregistered leaseholders count, but a failure to properly notify them doesn't automatically stop the management takeover unless the unregistered leaseholder objects.
Key Facts
- •Avon Freeholds Limited (appellant) appealed a First-Tier Tribunal (Property Chamber) decision.
- •Cresta Court E RTM Company Ltd (respondent) sought the right to manage premises.
- •A lease for flat 17 (Ms O'Connor) was granted but not yet registered at the time of the claim notice.
- •The RTM company did not serve Ms O'Connor with a notice of invitation to participate.
- •The FTT found Ms O'Connor was a qualifying tenant and that the failure to serve her did not invalidate the claim notice.
- •The appeal questioned whether an equitable leaseholder is a qualifying tenant and whether failing to serve them invalidates the claim notice.
Legal Principles
Construction of section 79(2) of the Commonhold and Leasehold Reform Act 2002 regarding the effect of procedural failings.
Commonhold and Leasehold Reform Act 2002
Definition of 'qualifying tenant' and 'long lease' under the Commonhold and Leasehold Reform Act 2002.
Commonhold and Leasehold Reform Act 2002
Effect of unregistered leases; equitable vs. legal leases.
Land Registration Act 2002
The approach to procedural defects in statutory processes, balancing the purpose of the requirement and the specific facts (R v Soneji).
R v Soneji [2006] 1 AC 340
Whether substantial compliance is sufficient for procedural requirements, particularly in acquiring property rights (Natt v Osman).
Natt v Osman [2014] EWCA Civ 1520
Consequences of procedural defects in acquiring the right to manage, focusing on the impact on the directly affected party (A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd).
A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd [2024] UKSC 27
An agreement for a lease is an equitable lease (Walsh v Lonsdale).
Walsh v Lonsdale (1882) LR 21 Ch D 9
Outcomes
Ms O'Connor was a qualifying tenant.
An equitable leaseholder is a qualifying tenant where there's no legal lease. Section 112(2) includes 'agreement for a lease,' which encompasses equitable leases. While the context doesn't allow for equitable lessees to be qualifying tenants when a legal lease coexists, it doesn't preclude them when only an equitable lease exists. The court rejected the argument that this would make the process unworkable.
Failure to serve Ms O'Connor with a notice of invitation to participate did not invalidate the claim notice.
Following A1 (Sunderland), the claim notice, while not fully compliant with Section 79(2) because of the failure to serve Ms O'Connor, was not wholly invalid. It was voidable only at Ms O’Connor's instance. Since she did not object and is now a member, the claim stands.
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