A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd [2024] UKSC 27

An RTM company failed to serve a claim notice on an intermediate landlord as required under the Commonhold and Leasehold Reform Act 2002. The Supreme Court held that such failure does not automatically invalidate the right to manage acquisition, but renders the transfer voidable rather than void, depending on whether the affected party lost any substantive right to object.

Facts

The respondent, Tudor Studios RTM Company Ltd, sought to acquire the right to manage student accommodation premises under the Commonhold and Leasehold Reform Act 2002 (CLRA). It served a claim notice on the freeholder and management company but failed to serve the appellant, A1 Properties (Sunderland) Ltd, an intermediate landlord holding leases over communal areas. The appellant had no management functions but was entitled to receive a claim notice under section 79(6)(a) of the CLRA. The First-tier Tribunal and Upper Tribunal, following Elim Court, held the failure did not invalidate the claim.

Issues

Issue 1

Whether a failure to serve a claim notice on a landlord as required by section 79(6)(a) always invalidates the acquisition of the right to manage.

Issue 2

Whether the failure to serve the claim notice in this specific case invalidated the RTM company’s acquisition of the right to manage.

Judgment

The Supreme Court (Lord Briggs and Lord Sales, with whom Lord Hamblen, Lord Leggatt and Lord Stephens agreed) dismissed the appeal but qualified the reasoning in Elim Court. Applying the approach in R v Soneji, the Court held that non-compliance with section 79(6)(a) does not automatically invalidate the process. Instead, the Court must assess whether Parliament intended invalidity by examining the statutory scheme’s purpose and the consequences of non-compliance.

“The correct approach in a case where there is no express statement of the consequences of non-compliance with a statutory requirement is first to look carefully at the whole of the structure within which the requirement arises and ask what consequence of non-compliance best fits the structure as a whole.”

The Court held that failure to serve renders the transfer of the right to manage voidable at the instance of the unserved landlord, not void. The transfer becomes effective if the tribunal approves the scheme following a counter-notice from another party who was served, or via section 85 application.

“We consider that the simplest way to provide a legal formula to give effect to Parliament’s intention… is that the failure renders the transfer of the right to manage voidable, at the instance of the relevant landlord or other stakeholder who was entitled to, but not given, a claim notice, but not void.”

Critical Reasoning

The Court emphasised that where the tribunal has in fact scrutinised and approved the scheme, and the unserved party could not have raised any valid substantive objection unavailable to other parties, the failure to serve does not defeat the legislative purpose. The appellant was joined in proceedings and had opportunity to support objections. The statutory scheme’s purpose was to enable tenants to acquire management rights simply and cheaply while preventing obstructive landlords from frustrating claims on technical grounds.

Implications

This decision clarifies that procedural failures under the CLRA right to manage regime do not automatically invalidate the process. Courts must conduct a purposive analysis following Soneji, examining whether the affected party lost a significant opportunity to raise substantive objections. The decision provides flexibility to uphold transfers where no prejudice results, while preserving the right of genuinely affected parties to challenge transfers in the High Court. The judgment qualifies both Osman v Natt and Elim Court, rejecting rigid categorical approaches to procedural non-compliance.

Verdict: Appeal dismissed. The failure to serve the claim notice on the appellant did not invalidate the RTM company’s acquisition of the right to manage, as the tribunal had determined the claim following objections and the appellant had participated in proceedings without suffering any loss of substantive rights.

Source: A1 Properties (Sunderland) Ltd v Tudor Studios RTM Company Ltd [2024] UKSC 27