First-tier Tribunal Grants Right to Manage Premises

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00BK/LRM/2021/0021 HMCTS : P: PAPER REMOTE Property : St James’ Court, 73-[ADDRESS], London W2 3 DH and [ADDRESS], 29/31 [ADDRESS] [POSTCODE] (including 17/18 [ADDRESS] [POSTCODE]) Applicant: [redacted]

St James’ & [ADDRESS] (London) [APPELLANT] : [NAME] Respondent : [redacted] : [RESPONDENT] (Roger Hardwick) Type of [NAME] : Right to manage Tribunal member :

Judge Robert Latham Mark Taylor MRICS

Date and Venue of Hearing

6 October 2021 at 10 [ADDRESS], [POSTCODE] Date of decision : 6 October 2021

DECISION

2 Covid-19 pandemic: description of hearing This has been a remote video hearing which has not been objected to by the parties. The form of remote hearing was P: PAPERREMOTE. A face-to-face hearing was not held because it was not practicable and all issues could be determined in a remote hearing. Neither party requested an oral hearing. The Applicant has provided a Bundle of Documents which extends to 111 pages. Decisions of the Tribunal (1) The Tribunal determines that the Applicant complied with the statutory requirement to serve Notices Inviting Participation as required by section 78 of the Commonhold and Leasehold Reform Act 2002. (2) The Tribunal determines that on 25 August 2021, the Applicant was entitled to acquire the right to manage the premises pursuant to section 84(5)(a) of the Act, and the Applicant will acquire such right within three months after this determination becomes final. The [NAME]

1. On 25 August 2020, the Applicant issued this [NAME] under section 84(3) of the Commonhold and Leasehold Reform Act 2002 ("the Act") for a decision that, on the relevant date, the [COMPANY] was entitled to acquire the Right to Manage in relation to premises known as St James’ Court, 73-[ADDRESS], London W2 3 DH and [ADDRESS], 29/31 [ADDRESS] [POSTCODE] (including 17/18 [ADDRESS] [POSTCODE]) (“the Premises”).

2. By a claim notice dated 19th April 2021, the Applicant gave notice that it intended to acquire the Right to Manage the Premises on 25th August 2021.

3. By a counter-notice dated 19th May 2021 the Respondent freeholder disputed the claim, alleging that the Applicant had failed to establish compliance with sections 72(1)(a), 72(2), 72(3), 72(6), 73(2)(b), 75, 78, 79(2), 79(3), 79(5), 79(6)(a), 79(8), 80(2) and 112(1) of the Act or with Paragraph 1 of the Sixth Schedule to the Act.

4. On 23 June 2021, the tribunal gave Directions. The Procedural Judge identified the issue to be decided, namely whether on the date on which the notice of claim was given, the Applicant was entitled to acquire the Right to Manage (“RTM”) of the premises. The Judge was satisfied that this matter could be determined on the papers. Neither party has requested an oral hearing. Pursuant to the Directions, the parties have filed the following:

3 (i) The Applicant’s Statement of Case (19.7.21) (ii) The Respondent’s Statement of Case (30.8.21) (iii) The Applicant’s Reply (9.9.21) (iv) The Respondent’s Response to the Applicant’s Reply (20.9.21) (v) A Bundle of Documents.

5. The Respondent now resists this right to manage [NAME] on the grounds that the Applicant has failed to comply with the invitation to participate requirements specified by section 78 of the Act. The Respondent contends that the [COMPANY] ought to have served a Notice of Invitation to participate on every person who, at the time when the notice was given, was a [NAME], and neither had become nor had agreed to become a member of the Applicant. The Applicant has provided copies of the Notice of Invitation to participate upon which it relies. These are dated 1 October 2020. At that date, the Applicant only had one member, [NAME]. The notice was only served on 8 [NAME]. There are a total of 28 flats at the Premises. The Law 6. The Act provides (emphasis added): 78 Notice inviting participation (1) [NAME] a claim to acquire the right to manage any premises, a [COMPANY] must give notice to each person who at the time when the notice is given— (a) is the [NAME] of a flat contained in the premises, but (b) neither is nor has agreed to become a member of the [COMPANY]. (2) A notice given under this section (referred to in this Chapter as a “notice of invitation to participate”) must— (a) state that the [COMPANY] intends to acquire the right to manage the premises, (b) state the names of the members of the [COMPANY], (c) invite the recipients of the notice to become members of the company, and (d) contain such other particulars (if any) as may be required to be contained in notices of invitation to participate by regulations made by the appropriate national authority.

4 (3) A notice of invitation to participate must also comply with such requirements (if any) about the form of notices of invitation to participate as may be prescribed by regulations so made. (4) A notice of invitation to participate must either— (a) be accompanied by a copy of the articles of association of the [COMPANY], or (b) include a statement about inspection and copying of the articles of association of the [COMPANY]. (5) A statement under subsection (4)(b) must— (a) specify a place (in England or Wales) at which the articles of association may be inspected, (b) specify as the times at which they may be inspected periods of at least two hours on each of at least three days (including a Saturday or Sunday or both) within the seven days beginning with the day following that on which the notice is given, (c) specify a place (in England or Wales) at which, at any time within those seven days, a copy of the articles of association may be ordered, and (d) specify a fee for the provision of an ordered copy, not exceeding the reasonable cost of providing it. Commonhold and Leasehold Reform Act 2002 Page 55 (6) Where a notice given to a person includes a statement under subsection (4)(b), the notice is to be treated as not having been given to him if he is not allowed to undertake an inspection, or is not provided with a copy, in accordance with the statement. (7) A notice of invitation to participate is not invalidated by any inaccuracy in any of the particulars required by or by virtue of this section. 79 Notice of claim to acquire right (1) A claim to acquire the right to manage any premises is made by giving notice of the claim (referred to in this Chapter as a “claim notice”); and in this Chapter the “relevant date”, in relation to any claim to acquire the right to manage, means the date on which notice of the claim is given. (2) The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before. (3) The claim notice must be given by a [COMPANY] which complies with subsection (4) or (5).

5 (4) If on the relevant date there are only two [NAME] of flats contained in the premises, both must be members of the [COMPANY]. (5) In any other case, the membership of the [COMPANY] must on the relevant date include a number of [NAME] of flats contained in the premises which is not less than one-half of the total number of flats so contained. (6) The claim notice must be given to each person who on the relevant date is— (a) landlord under a lease of the whole or any part of the premises, (b) party to such a lease otherwise than as landlord or tenant, or (c) a manager appointed under Part 2 of the Landlord and Tenant Act 1987 (c. 31) (referred to in this Part as “the 1987 Act”) to act in relation to the premises, or any premises containing or contained in the premises. (7) Subsection (6) does not require the claim notice to be given to a person who cannot be found or whose identity cannot be ascertained; but if this subsection means that the claim notice is not required to be given to anyone at all, section 85 applies. (8) A copy of the claim notice must be given to each person who on the relevant date is the [NAME] of a flat contained in the premises. (9) Where a manager has been appointed under Part 2 of the 1987 Act to act in relation to the premises, or any premises containing or contained in the premises, a copy of the claim notice must also be given to the tribunal or court by which he was appointed. The Background 7. On 25 August 2020, the [COMPANY] was incorporated (p.9). The sole shareholder and director was [NAME]. The Company Secretary was [NAME] ([COMPANY] which trades as [NAME]. Mr [NAME] is the leaseholder of [ADDRESS].

8. On 1 October 2020, [NAME] gave Notices of Invitation to Participate in Right t0 Management pursuant to section 78 of the Act to eight of the [NAME] (at p.66-107). At that time, Mr [NAME] remained the sole shareholder and director.

9. The Applicant has not explained why it only served the Notices of Invitation on 8 leaseholders. The Respondent refer to an email from [COUNSEL], the Applicant’s representative, dated 19 August 2021, in

6 which he confirmed that (i) the only Notices of Invitation to Participate were those relating to these eight flats and (ii) the individuals who applied to become members of the [COMPANY] after 1 October 2020 had not agreed to become members at a date earlier than their applications. Whilst they may not have agreed to become members of the [COMPANY], it seems probable that they supported the proposal to exercise the statutory RTM.

10. Between 5 October 2020 and 15 January 2021, 17 additional leaseholders became members of the [COMPANY] (see p.108—110).

11. On 19 April 2021 (at p.30-35), the Applicant served its Claim Notice. On this date, there were 18 leaseholders who were both [NAME] for the purposes of the Act and members of the [COMPANY]. Thus, at this date, all the [NAME] fell into two categories: either (i) they were members of the [COMPANY]; or (ii) they had been served with a Notice of Invitation on 1 October 2020. The Tribunal’s Determination 12. The Respondent resists this right to manage [NAME] on the grounds that the Applicant failed to comply with the invitation to participate requirements specified by section 78 of the Act. The Respondent contends that the [COMPANY] ought to have served a notice of invitation to participate on every person who, at the time when the notice was given, was a [NAME], and neither had become nor had agreed to become a member of the Applicant. Thus, it should also have been served on the 17 leaseholders who subsequently became members of the [COMPANY].

13. The Respondent relies on [APPELLANT] v [NAME]) [COMPANY] [2020] UKUT 358 (LC) in which Fancourt J, the Chamber President, held that a purported claim was invalidated by section 79(2) of the Act where notices of invitation to participate had not been served on each person required to be given one. This was not a trivial error that would be saved by [NAME] of the decision in [ADDRESS] Co [COMPANY] v [COMPANY] [2017] EWCA Civ 89.

14. The Respondent further argues that the purpose of a Notice of Invitation is not only to invite non-members to become members. It is also to provide them with important information about the claim. The importance of this was emphasised by [NAME], the Deputy President, in [COMPANY] v [NAME] Co [COMPANY] [2016] UKUT 80 (LC) at [44]: “It is apparent from reading the notes to the prescribed form of notice of invitation to participate that they are intended to

7 inform the [NAME] of the notice of the basic structure of the statutory scheme. Many of the notes provide an explanation or further elaboration of information contained in the body of the notice itself. For example, the notice of invitation to participate informs the [NAME] (at paragraph 10) that if the [COMPANY] gives a claim notice any person who is or has been a member of the company will be liable for costs incurred by the landlord and others in consequence of that notice. The [NAME] is then referred to note 6 which explains that if a claim notice is withdrawn each member is liable for reasonable costs incurred in consequence of the claim notice by three specified categories of [NAME] (landlords, parties to leases of the whole or part of the premises other 15 than landlords or tenants, and tribunal- appointed managers). The note also explains the circumstances in which a former member will cease to be liable. All of that is important information which might influence the mind of a person considering whether to become a member of an [COMPANY]. Without the notes a reader of the notice would have an incomplete understanding of the statutory scheme and, more importantly, would be less well informed when deciding whether to become a member than [NAME] intended they should be.” 15. The Applicant disagrees with this submission. It argues that the purpose of serving the Notices of Invitation is to ensure that no [NAME] is disenfranchised from the process and that all [NAME] are afforded the opportunity to join the [COMPANY].

16. The Applicant disputes that there can only be one occasion for the giving of the relevant notices. Each notice given to each [NAME] is an independent entity, and must be treated as such. [NAME] can be given Notices of Invitation at different times. The only requirement of the Act is that at the time of giving the Claim Notice the [COMPANY] has given all non-member [NAME] a Notice of Invitation.

17. Thus, the giving of the Notices of Intention on the 1 Oct 2020, did not preclude the [COMPANY] from giving notices later to further [NAME] if the need arose. Neither did it preclude [NAME] from later becoming members of the [COMPANY], upon [NAME] the appropriate [NAME] for membership.

18. The Applicant contends that the Upper Tribunal decision in [APPELLANT] v [NAME]) [RESPONDENT] provides no support for the Respondent’s position as it deals with an entirely separate issue, namely correct identification of the [NAME] for a flat. No such issue arises here. All the [NAME] have been correctly identified and served where required. Those that were not

8 served, were members of the [COMPANY] at the time of service of the Claim Notice.

19. The Tribunal agrees with the Applicant. We reject the Respondent’s suggestion that the Applicant must establish the date on which the Section 78(1) conditions have been met. There may be several dates on which a [COMPANY] gives its Notices of Invitation. Whilst section 79(2) provides that “the claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before”, there is no reason why some [NAME] should not have been given more than 14 days’ notice.

20. In the case before us, the Applicant gave its Claim Notice on 19 April 2021. The critical requirement was that any person required to be given a Notice of Invitation to Participate should have been given it no later than 5 April 2021. On 19 April 2021, there was no requirement for those [NAME] who had become members of the [COMPANY], to have been given a Notice of Invitation (see section 78 (1)(b)).

21. The Tribunal does not consider that the Upper Tribunal decision in [RESPONDENT] v [NAME] [RESPONDENT] assists the Respondent. There is no suggestion in the current case that the Notices of Intention which have been served in this case omitted any of the information required by statute. It is only those [NAME] who may be in two minds as to whether or not to become a member of the [COMPANY] who need the requisite information to enable them to make an informed decision. Conclusion 22. The Tribunal determines that the Applicant was on the relevant date entitled to acquire the right to manage the premises pursuant to section 84(5)(a) of the Act.

23. In accordance with section 90(4), within three months after this determination becomes final the Applicant will acquire the right to manage these premises. According to section 84(7): “(7) A determination on an [NAME] under subsection (3) becomes final— (a) if not appealed against, at the end of the period for bringing an appeal, or (b) if appealed against, at the time when the appeal (or any further appeal) is disposed of.”

9 Judge Robert Latham 6 October 2021

Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written [NAME] for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28 day time limit, such [NAME] must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber).