By Professor James Driscoll
At last, some common sense in right to manage claims?
Yesterday the Court of Appeal handed down a significant decision in a case called Elim Court RTM Company Ltd v Avon Freeholds ([2016] EWCA Civ 89).
It concerns a group of leaseholders living in a block of flats in Plymouth who want to acquire the Right to Manage.
Their claim (apparently their third attempt) started in 2012 so it has taken nearly five years to establish something that most people would regard as a simple question: is this group of leaseholders entitled to take over management under the RTM?
If a landlord objects the leaseholders must apply to the First-tier Tribunal for a determination if they want to carry on. There may be cases where there is a substantive objection: does the building actually qualify? (For example, where there is non-residential use which exceeds 25% of the internal floor space), or has sufficient number of leaseholders joined the claim?
But it has become apparent that some landlords and their advisors will pore over the documents that make up the claim, such as the pre-claim participation notices, or the claim notice itself, (to take two examples) to see if there is some error, however trivial, to which they can object.
Until the Elim Court case tribunals and the courts usually took the position that defects in the procedures invalidate the claim. So, the leaseholders will have to start all over again to take over the management of their block.
What has puzzled many people is that any procedural defects, such as they are, may not directly affect the landlord.
After all, the RTM has no effect on the landlord’s property rights, such as ground rents, new lease claims and so on.
What does it matter to the landlord if there is some defect in the participation notice?
If one of the leaseholders did not receive such a notice, how is the landlord adversely affected?
If there is a small error in the claim notice can this be excused or is the landlord entitled to a ruling that the whole claim is invalidated?
In the Elim Court case the leaseholders were met with a counter-notice from the landlord making certain objections to the elements of the procedure in that claim.
They applied to First-tier Tribunal seeking a determination that they had acquired the RTM.
They were to be disappointed as the tribunal concluded that as certain mistakes had occurred the claim was invalid.
But the leaseholders carried on only to find that their appeal to the Upper Tribunal also failed.
Undaunted, they managed to appeal to the Court of Appeal, which has ruled that trivial defects do not of themselves invalidate an RTM claim.
Many will be delighted for them that their quest to take over management of the building containing there homes has at last succeeded.
But looking longer-term isn’t it time for Government to review the procedures that have so many traps for the unwary?
The simpler they are made the less likely it is that claims fail and time-consuming and lengthy litigation where some groups of leaseholders may struggle against a well-resourced landlord who has the benefit of top legal advice.
Why not give the tribunals the power to excuse mistakes where it is just to do so?
Professor James Driscoll is a solicitor and a writer
http://www.jamesdriscoll.co.uk/
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That another company is appointed to maintain a development should be of no concern to a freeholder. After all, whoever manages the development the covenants of the lease have to be complied with.
My suggestion which would really simplify matters would be a process in which A RTM company serves notice on the freeholder.
The freeholder can either accept or if they have objections, they must put those objections in writing to the RTM company..
The RTM company has the opportunity to re-present their RTM application having addressed any issues raised by the freeholder..
If there is still a dispute, then either the freeholder or the RTM company can apply to the Upper Tribunal for a ruling on the differences.
If the Upper Tribunal finds in favour of the RTM Company, the RTM goes ahead.
If the Upper Tribunal has issues with certain aspects of the RTM documentation,and the RTM company can comply with any findings of the Upper Tribunal, the RTM goes ahead.
If the tribunal believes any action by the freeholder to be either vexatious or merely to be a delaying tactic, the freeholder should be held liable for the costs of the RTM company.
For example challenging a right to manage because a couple of words are left out of a document are the RTM company doesn’t have the words Right to Manage’ in the name should be seen as vexatious.