In July 2017, the Upper Tribunal (Lands Chamber) considered the case of Assethold Limited v 110 Boulevard RTM Company Limited. A Right to Manage Company (“RTM Company”) is set up to take over the landlord’s management functions. The Act includes a number of procedures which must be followed before the RTM Company can gain the right to manage.
110 Boulevard RTM Company Limited, an RTM Company whose members were the five leaseholders of a block of flats in Hull, sent a claim notice to the landlord to invoke the right to manage. In response, the landlord challenged the procedure used by it and submitted that the claim was invalid. There was no dispute that the claim notice was given to the landlord. However, the landlord claimed that serving copies of the claim notice on the qualifying leaseholders (a requirement of the Act) by email was an invalid method of service and the claim should therefore fail.
The barrister representing the landlord made two arguments:
- The Act does not permit service by email: parallels should be drawn to a case (Cowthrope Road 1-1A Freehold Ltd v Wahedally (2017)) where service by email did not amount to writing for the purpose of the Leasehold Reform, Housing and Urban Development Act 1993.
- This failure to correctly serve a copy of the claim notice prejudiced the leaseholders and all subsequent steps were then automatically invalidated.
However, the Upper Tribunal found convincingly in the RTM Company’s favour and rejected the landlord’s arguments:
- There is no requirement in the Act to provide an original claim notice to all qualifying leaseholders. This means that there is no need for a signature and no provision that requires a hard copy for service. The Act clearly suggests that notice can be given other than by post and therefore emailing a copy of the claim notice is valid.
Although it was not necessary to then discuss the landlord’s second submission, the Upper Tribunal provided helpful guidance on the issue of prejudice. It held that even if the RTM Company had failed the requirements, this would not have invalidated all subsequent steps. The purpose of the Act is to protect the qualifying leaseholders and therefore the requirement to serve a copy of the claim notice on the qualifying leaseholders was “ancillary” in nature. In this case, the fact that each of the leaseholders in the flat were included and involved in the RTM Company furthered the likelihood that no leaseholders would be adversely prejudiced.
Points to Note:
- The service by email of a copy of claim notice by an RTM Company will not invalidate a claim under the right to manage provisions of the Act.
- The Upper Tribunal will look to protect the interests of leaseholders in circumstances when the purpose of the relevant legislation is to grant rights to those leaseholders.
- Leaseholders should still be aware of the formal requirements for a right to manage claim. As this decision shows, compliance is very much in the interests of the leaseholders.
This article was published by LEASE and can be found here.