Supreme Court confirms procedural error does not invalidate Right to Manage claim
The Supreme Court’s decision in Avon Freeholds Ltd v Cresta Court E RTM Company Ltd [2026] UKSC 31 provides welcome clarification on the consequences of procedural errors in right to manage (“RTM”) claims.
The RTM regime under the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) allows qualifying residential leaseholders to take over the management of their building without having to establish fault on the part of the landlord.
As part of the statutory procedure, an RTM company must serve notices on the qualifying tenants in the building to invite them to participate in the claim. In accordance with section 79(2) of the 2002 Act, the RTM claim notice may not be given unless the participation notices have been served at least 14 days beforehand.
The dispute in Avon Freeholds arose because one qualifying tenant had inadvertently been missed.
Background
The property, Cresta Court, comprised 20 flats. The leaseholders established Cresta Court E RTM Company Ltd to acquire the right to manage from the landlord, Avon Freeholds Ltd. One leaseholder, Ms O’Connor, had been granted a new lease of Flat 17, but registration of that lease remained pending at the Land Registry and there was no other lease registered against Flat 17. When notices inviting participation were sent to the qualifying tenants of Cresta Court in November 2021, Ms O’Connor did not receive one.
The RTM company subsequently served its claim notice in January 2022. Avon disputed the claim, arguing that the failure to serve Ms O’Connor meant that the statutory procedure had not been followed and the claim was therefore invalid.
Qualifying tenants and the registration gap
The Court of Appeal upheld the Upper Tribunal’s conclusion that, where there is both a legal and an equitable long lease, the legal lessee is the qualifying tenant. By contrast, where a flat is held under an equitable lease (as here, because it has not yet been registered) and there is no legal lease, the equitable lessee is the qualifying tenant.
The Supreme Court refused permission to appeal this aspect of the decision and therefore the Court of Appeal’s decision stands.
Does a procedural error invalidate a Right to Manage claim?
Given that it had been determined that Ms O’Connor was a qualifying tenant, the principal question for the Supreme Court was whether the failure to serve her with a notice inviting her to participate meant that the subsequent RTM claim was invalid.
The landlord’s argument was straightforward. Section 78(1) of the 2002 Act required a participation notice to be given to each qualifying tenant, and section 79(2) of the 2002 Act provides that the claim notice could not be given until the necessary participation notices had been served.
The Supreme Court nevertheless concluded that the failure did not invalidate the RTM claim.
Lord Briggs, giving the unanimous judgment, considered the principles of statutory interpretation. Where legislation imposes a requirement but does not expressly provide the consequence of non-compliance, the court must consider the purpose of that requirement in the context of the statutory scheme as a whole and the prejudice that could be caused by the non-compliance.
Lord Briggs considered the following points:
- Procedural non-compliance of this nature was not something upon which a landlord was entitled to rely in its counter-notice to defeat an RTM claim.
- The 2002 Act contained a separate mechanism for dealing with failures to comply with statutory requirements, under section 107.
- The requirement to serve a notice inviting participation was intended to protect the qualifying tenant who should have received it, rather than the landlord. Its purpose was to give that tenant the opportunity to participate in the RTM company.
- There had been no conceivable prejudice to the landlord as a result of the omission.
The Supreme Court consequently determined that Parliament could not have intended a procedural error of this nature would automatically invalidate an RTM claim.
Conclusion
For RTM claims, the immediate effect is reassuring. An inadvertent failure to serve a notice inviting participation on a qualifying tenant does not necessarily bring the entire claim to an end.
That does not remove the obligation to comply with the 2002 Act. RTM companies should continue to identify qualifying tenants carefully and serve all required notices.
