UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2014] UKUT 0541 (LC)

UTLC Case Numbers: LRX/9/2014 & LRX/12/2014

                             TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE

 

LEASEHOLD VALUATION TRIBUNAL FOR WALES

 

LANDLORD AND TENANT – RIGHT TO MANAGE – whether counter-notice invalid –whether parts of building self-contained – shared water tanks, pumps and pipes – s. 72(3)(c) and s.84(2),  Commonhold and Leasehold Reform Act 2002 - Right to Manage (Prescribed Particulars and Forms) (Wales) Regulations 2011- jurisdiction of LVT where no valid counter-notice served – appeals allowed

 

BETWEEN:

                 ST STEPHENS MANSIONS RTM COMPANY LIMITED            Appellant

                                                                           and

(1) FAIRHOLD NW LIMITED

                   (2) OM PROPERTY MANAGEMENT LIMITED                 Respondents

                                                       

AND BETWEEN:

(1) FAIRHOLD NW LIMITED

                     (2) OM PROPERTY MANAGEMENT LIMITED                 Appellants

and

         ST JAMES MANSIONS RTM COMPANY LIMITED                   Respondent

 

Re: St James Mansions and St Stevens Mansions

Mount Stuart Square, Cardiff

 

Before: Martin Rodger QC, Deputy President

Sitting at: Cardiff Combined Court Centre

11 November 2014

 

 

 

Christian J Howells, instructed by Rees, Wood & Terry, solicitors for the appellant in LRX/9/2014 and for the respondent in LRX/12/2014

Justin Bates, instructed by Misbah Khan, solicitor, Peverel Property Management, for the respondents in LRX/9/2014 and for the appellants in LRX/12/2014

 

© CROWN COPYRIGHT 2014

The following cases are referred to in this decision:

Assethold Ltd v 15 Yonge Park RTM Company Ltd [2011] UKUT 379 (LC)

Assethold Ltd v 14 Stansfield Road RTM Company Ltd [2012] UKUT 262 (LC)

Assethold Ltd v 13-14 Romside Place RTM Company Ltd [2013] UKUT 0603 (LC)

Carradine Properties Ltd v Aslam [1976] 1 WLR 442

Elim Court RTM Company Ltd v Avon Freeholds Ltd [2014] UKUT 397 (LC)

Fairhold (Yorkshire) Ltd v Trinity Wharf (SE16) RTM Co Ltd [2013] UKUT 0502 (LC)

Mannai Investment Co Limited v Eagle Star Life Assurance Co Ltd [1997] AC 749

Oakwood Court (Holland Park) Ltd v Daejan Properties Ltd [2007] 1 EGLR 121

Seven Strathray Gardens v Pointstar Shipping & Finance Ltd [2004] EWCA Civ 1669

 

 

DECISION

1.        At the north-west corner of Mount Stuart Square in Cardiff stand two modern apartment buildings, known as St Stephens Mansions and St James Mansions.  For the purpose of these proceedings the two blocks have been treated as parts of a single building although it might be more appropriate to regard the structures as comprising two buildings.

2.        These appeals concern claims by two RTM companies set up by the tenants of the buildings to acquire the right to manage under Part 2 of the Commonhold and Leasehold Reform Act 2002 (the 2002 Act).  By a decision made on 7 October 2013 the Leasehold Valuation Tribunal (Wales) determined that the claim by St James Mansions RTM Co Limited succeeded and that it was entitled to acquire the right to manage St James Mansions.  By a second decision made on 13 November 2013 the same tribunal dismissed the claim by St Stephens Mansions RTM Co Ltd.  The St James Mansions appeal is brought by Fairhold NW Limited, which owns the freehold of both buildings and Om Property Management Limited, which, in its capacity as a management company, is party to the leases of each of the flats in both buildings.  The St Stephens Mansions appeal is by the unsuccessful RTM company.

3.        The issue in the St James Mansions appeal is whether counter-notices given by the landlord and the management company in response to the RTM companies’ notices claiming the right to manage satisfied the requirements of section 84(2) of the 2002 Act.  In the St Stephens Mansions appeal the issue is whether the building comprises a self-contained part of a building satisfying the description in section 72(3) of the 2002 Act making it eligible for the acquisition of the right to manage.  Permission for both appeals was granted by the Tribunal, having been refused by the LVT.

4.        At the hearing of the appeal the RTM companies were represented by Christian J Howells of counsel, and the landlord and management company by Justin Bates of counsel.

The facts

5.        From the decisions of the LVT and the documents which were before it,  and from a helpful statement of facts agreed between the parties, I take the following as the basis of my consideration of these appeals.

The buildings

6.        St Stephens Mansions was constructed along the north side of Mount Stuart Square in about 2002 and comprises 68 flats on five levels.  In about 2004 St Stephens Mansions, containing a further 27 flats on four levels, was constructed along the west side of the Square.  The buildings abut each other along the west flank wall of St James Mansions to form an inverted L-shape.  The two buildings are separated by a movement joint and it was common ground before the LVT that they are capable of vertical division.

7.        There is a car park at the rear to which access is obtained from Mount Stuart Square through two archways, one passing through each building.

8.        In one corner of the car park stands a self-contained pump house.  A single mains water supply pipe runs underground to the pump house from the highway at Mount Stuart Square.  The pipe passes beneath the vehicle entrance archway at St James Mansions, continues below the surface of the car park and emerges above ground within the pump house.  The pipe then divides to supply two holding tanks from which water is pumped by a pump set comprising three separate pumps used in rotation.  The pumps send pressurised water into a single outflow pipe which divides into two branches before returning underground and exiting the pump house.  It is assumed that one branch of the pipe serves St James Mansions while the other leads to St Stephens Mansions. 

9.        The water supplied to the two buildings is metered by a single supply meter located in the pump house.  The water bill is apportioned by the management company using an arithmetical formula based on the number of flats in the buildings rather than by any more precise measurement of individual consumption.

Notices and counter-notices

10.    St James Mansions and St Stephens Mansions each has its own separate RTM company. 

11.    On 29 February 2013 each of the RTM companies gave separate notices claiming the right to manage to the landlord and to the management company. Each claim notice was signed by the same individual who is a director of both companies.  No copy of the covering letter or letters which accompanied the claim notices is before the Tribunal but from the responses to them I infer that the claim notices were served on behalf of the RTM companies by the same solicitors.

12.    On 26 March 2013 counter-notices were given on behalf of the management company by Peverel Property Management, its managing agent.  I have not seen those counter-notices and I assume that nothing turns on them.  They were almost immediately withdrawn by two letters sent by Peverel on 27 March 2013 and replaced by the counter-notices which have been relied on ever since. 

13.    The counter-notice given by the management company to the St James RTM company arrived under cover of a letter addressed to that company by name, care of its solicitors.  The letter was headed “re: St James Mansions …”  and included Rees Wood Terry’s own file reference (which I assume had come from the letter under cover of which the solicitors had served the St James claim notice – a different file reference appears on the letter enclosing the St Stephens counter-notice).  It was sent by special delivery and by fax. 

14.    The management company’s St James counter-notice was in the form required by regulation 8 (3) of the Right to Manage (Prescribed Particulars and Forms) (England) Regulations 2010 rather than the Right to Manage (Prescribed Particulars and Forms) (Wales) Regulations 2011 (“the 2011 Regulations”).  The two forms are very similar, though not identical.  No point has been taken by Mr Howells on behalf of the RTM Companies that the use of the English form for premises in Wales was a defect of any consequence.

15.    The management company’s St James counter-notice began by stating that it was a counter-notice to St James Mansions RTM Company Ltd “Re: St James Mansions”.  Paragraph 1.2 of the document contained the following statement:

       “I allege that, by reason of the following provisions of 72(1)(a), 72(3), 72(4), 73 and 79(5) of Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002, on 29 February 2013 St Stephens Mansions RTM Company Ltd (“the Company”) was not entitled to acquire the right to manage the premises specified in the Claim Notice.”

It will be seen that although the counter-notice was addressed to the St James RTM company and stated that it concerned St James Mansions, paragraph 1.2 stated that the management company considered that the St Stephens RTM Company was not entitled to acquire the right to manage the premises specified in the claim notice.  Nothing was said, in terms, about the management company’s view of the St James RTM company’s entitlement to acquire the right to manage those premises. 

16.    Paragraph 1.2 of the document made it clear that for the purpose of the counter-notice the expression “the Company” meant the St Stephens RTM company.   Paragraph 2 contained the further statement that if “the Company” had been given one or more counter-notices it could apply to a leasehold valuation tribunal for a determination of its entitlement to acquire the right to manage the premises specified in its claim notice.  In paragraph 3 the reader was also informed that, if “the Company” had been given a counter-notice it would not acquire the right to manage those premises unless either its entitlement was finally determined by a leasehold valuation tribunal or those who had given the counter-notices agreed that it was so entitled.

17.    On the day they received the management company’s St James counter-notice, Rees Wood Terry also received a counter-notice relating to St Stephens Mansions, again given by Peverel on behalf of the management company.  It arrived under cover of a very similar letter (different only in that it was addressed to the St Stephens RTM company care of the solicitors, gave the solicitor’s reference for the St Stephens claim and was entitled “re: St Stephens Mansions”).  The counter-notice itself was in the same (English) prescribed form but was addressed to St Stephens RTM Company Ltd “Re: St Stephens Mansions”.  Paragraph 1.2 was identical to paragraph 1.2 of the management company’s St James counter-notice.  It therefore informed the recipient that the management company alleged that the St Stephens RTM company was not entitled to acquire the right to manage the premises specified in the claim notice.

18.    Two counter-notices were also given by the landlord, one addressed to each of the RTM companies at its registered office (the same address in each case).  Each of the landlord’s counter-notices arrived under cover of a letter dated 27 March 2013, was addressed to the appropriate RTM company, and identified that company’s building as its subject. 

19.    The landlord’s counter-notices were in the form required by the 2011 Regulations.  Each began by identifying the RTM company to whom the counter-notice was addressed.  Neither counter-notice included the additional statement which had appeared in the management company’s counter-notices (“re: St Stephens Mansions” in the one case and “re: St James Mansions” in the other).  Paragraph 1 of the landlord’s St James counter-notice was identical to paragraph 1.2 of the management company’s St James counter-notice, and alleged that the St Stephens RTM company was not entitled to acquire the right to manage the premises specified in the claim notice.  The landlord’s St Stephens counter-notice was in the same form and alleged that the St Stephens RTM company was not entitled to acquire the right to manage the premises specified in its claim notice.

20.    The RTM companies each having received two counter-notices, one from the management company and the other from the landlord, each then applied separately to the LVT for a determination that it was entitled to acquire the right to manage its building. 

The St James Mansions appeal

21.    In the St James Mansion appeal the landlord and the management company are appellants.  The issue is whether the counter-notices which they gave were valid, despite the fact that in each case the counter-notice disputed the entitlement of the St Stephens RTM company to acquire the right to manage.  It is common ground that each of the St James counter-notices contained an error and the question for determination is whether that error had the effect of rendering the counter-notices ineffective so that the St James RTM company’s claim notice was unchallenged.

The relevant statutory provisions

22.    Section 79(6) of the 2002 Act requires that an RTM company which wishes to acquire the right to manage must give a claim notice to each person who on the relevant date is landlord of the whole or any part of the premises or party to a lease otherwise then as landlord or tenant (for example, as in this case, in the capacity of a management company).  The contents of a claim notice are prescribed by section 80.  So far as is material for this case it provides:

       “80. Contents of claim notice

       (1) The claim notice must comply with the following requirements.

       (2) It must specify the premises and contain a statement of the grounds on which it is claimed they are premises to which this Chapter applies.

       …

       (5) It must state the name and registered office of the RTM company.

       …”

23.    The procedure for responding to a claim notice is provided for by section 84.  So far as is relevant, it provides:

       “84. Counter-notices

            (1) A person who is given a claim notice by a RTM company under section 79(6) may give a notice (referred to in this Chapter as a “counter-notice”) to the company no later than the date specified in the claim notice under section 80(6).

            (2) A counter-notice is a notice containing a statement either –

  (a) admitting that the RTM company was on the relevant date entitled to acquire the right to manage the premises specified in the claim notice, or

  (b) alleging that, by reason of a specified provision of this Chapter, the RTM company was on that date not so entitled,

and containing such other particulars (if any) as may be required to be contained in counter-notices, and complying with such requirements (if any) about the form of counter-notices, as may be prescribed by regulations made by the appropriate national authority.

(3) Where an RTM company has been given one or more counter-notices containing a statement such as is mentioned in sub-section (2)(b), the company may apply to a leasehold valuation tribunal for a determination that it was on the relevant date entitled to acquire the right to manage the premises.

(4) An application under subsection (3) must be made not later than the end of the period of two months beginning with the day on which the counter-notice (or, where more than one, the last of the counter-notices) was given.

(5) Where an RTM company has been given one or more counter-notices containing a statement such as is mentioned in sub-section (2)(b), the RTM company does not acquire the right to manage unless –

(a) on an application under subsection (3) it is finally determined that the company was on the relevant date entitled to acquire the right to manage the premises, or

(b) the person by whom the counter-notice was given agrees, or the persons by whom the counter-notices were given agree, in writing that the company was so entitled.”

24.    In the case of premises in Wales the appropriate national authority referred to in s. 84 (2) is the Welsh Ministers by whom the 2011 Regulations were made.  Paragraph 5 of the 2011 Regulations provides as follows:

       “5. Additional content of counter-notice

       A counter-notice must contain (in addition to the statement referred to in section 84(2)(a) and (b) (counter-notices) of the 2002 Act) –

                 (a) a statement that, where the RTM company has been given one or more counter-notices containing such a statement as is mentioned in section 84(2)(b) of the 2002 Act, the company may apply to a leasehold valuation tribunal for a determination that, on the date on which notice of the claim was given, the company was entitled to acquire the right to manage the premises specified in the claim notice;

                 (b) a statement that, where the RTM company has been given one or more counter-notices containing such a statement as is mentioned in section 84(2)(b) of the 2002 Act, the company does not acquire the right to manage the premises specified in the claim notice unless –

            (i) on an application to a Leasehold Valuation Tribunal, it is finally determined that the company was entitled to acquire the right to manage the premises; or

(ii) the person by whom the counter-notice was given agrees, or the person by whom the counter-notices were given agree, in writing, that the company was so entitled; and

       (c)   The information provided in the notes to the form set out in schedule 3 to these Regulations.”

25.    Regulation 8(3) of the 2011 Regulations is concerned with the form of counter-notices, and states that:

“(3) Counter-notices must be in the form set out in Schedule 3 to these Regulations or a form to the like effect provided that it contains all of the prescribed particulars as set out in Regulation 5.

26.    For ease of reference the form of counter-notice which appears in Schedule 3 to the 2011 Regulations is appended to this decision.

The LVT’s decision

27.    By its preliminary decision of 17 October 2013 the LVT decided that each of the counter-notices given in relation to St James Mansions was invalid. 

28.    The LVT’s conclusions can be summarised as follows.  First, section 84(2)(b) of the 2002 Act required that a counter-notice should contain a statement alleging why “the RTM company” was not entitled to acquire the right to manage; the company which was referred to had to be the RTM company which had given the claim notice to which the counter-notice was a response.  Secondly, two decisions of this Tribunal (Assethold Limited v 14 Stansfield Road RTM Company Limited [2012] UKUT 262 (LC) and Assethold Limited v 15 Yonge Park RTM Company Limited [2011] UKUT 379 (LC)) identified the name of the relevant RTM company as a “required particular” which had to be correctly stated in a claim notice and in respect of which any error could not be regarded as an inaccuracy capable of being cured by section 81(1).  Thirdly, the same authorities precluded the adoption of a “reasonable recipient” test of the type approved by the House of Lords in Mannai Investment Co Limited v Eagle Star Life Assurance Co Limited [1997] AC 749.  Finally, even if a “reasonable recipient” test was capable of being adopted in principle, the LVT was far from satisfied either that the mistake or the necessary correction were obvious.  At paragraph 24(c) the LVT concluded by saying:

“This unfortunate slip has occurred in circumstances where neighbouring blocks served notices on the same date.  A reasonable recipient might believe that the title and sub-heading was incorrect, given the statement in the counter-notice wherein St Stephens Mansions is referred to.  We accept that a reasonable recipient might have concluded that the reference to St Stephens was an error, but this is not the only reasonable interpretation.”

29.    The LVT therefore found that the St James Mansions counter-notices were invalid.  As to the consequence of that conclusion it stated at paragraph 27 that:   

       “It follows from this short determination …. that there was no counter-notice served and the Right to Manage has been acquired by the [St James RTM company].”

Discussion

30.    In his submissions in support of the appeal, Mr Justin Bates accepted that there was an error in the St James counter-notices but directed attention to the factual context in which the effect of that error ought to be evaluated.  He pointed out that each of the covering letters was correctly addressed to the St James RTM company, care of its solicitor; the counter-notices themselves were expressed to be directed to that company; in the case of the management company’s counter-notice the subject property was identified by the reference “re: St James Mansions”, and the covering letter bore a solicitor’s reference which would have enabled the recipient to connect it to the St James Mansions claim notice; an additional valid counter-notice had also been give for St Stephens Mansions.

31.    In Mannai Ltd v Eagle Star Insurance Co Ltd [1997] AC 749 a contractual break clause allowed a tenant to determine two leases of office premises by giving not less than six month’s notice expiring on the third anniversary of the term commencement date (which had been 13 January 1992).  The tenant gave notices to determine the leases on 12 January 1995.  The Court of Appeal held that the notices were ineffective because they purported to expire one day early, but the House of Lords (by a majority of three to two) allowed the tenant’s appeal and decided that the leases had been validly terminated.   The issue concerned the meaning of the document.  At p. 767G Lord Steyn identified the correct approach as an objective one:

“The construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices. And in considering this question the notices must be construed taking into account the relevant objective contextual scene. … three propositions can be formulated. First, in respect of contracts and contractual notices the contextual scene is always relevant. Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant. But admissibility is not the decisive matter. The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation. That depends on what meanings the language read against the objective contextual scene will let in. Thirdly, the enquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind. It follows that one cannot ignore that a reasonable recipient of the notices would have had in the forefront of his mind the terms of the leases. Given that the reasonable recipient must be credited with knowledge of the critical date and the terms of clause 7(13) the question is simply how the reasonable recipient would have understood such a notice.”

32.    Lord Steyn, Lord Hoffmann and Lord Clyde all approved the test for the validity of a notice which had been stated by Goulding J in Carradine Properties Ltd v Aslam [1976] 1 WLR 442: “Is the notice quite clear to a reasonable tenant reading it?  Is it plain that he cannot be misled by it?”  Lord Clyde said of that test (at p. 782 C):

“The standard of reference is that of the reasonable man exercising his common sense in the context and in the circumstances of the particular case. It is not an absolute clarity or an absolute absence of any possible ambiguity which is desiderated. To demand a perfect precision in matters which are not within the formal requirements of the relevant power would in my view impose an unduly high standard in the framing of notices such as those in issue here. While careless drafting is certainly to be discouraged the evident intention of a notice should not in matters of this kind be rejected in preference for a technical precision.”

33.    Lord Clyde’s conclusion that “the formal requirements of the relevant power” did not require technical precision reflected the views of Lord Steyn (at p.767 D) and Lord Hoffmann (at p. 774A) both of whom pointed out that the particular contractual right to determine under consideration did not prescribe any “indispensable condition for its effective exercise that the notice must contain specific information” or “any particular form of words”.  

34.    Mr Bates submitted that the purpose of the counter-notice had been to alert the St James RTM company to the opposition of the landlord and the management company to its acquisition of the right to manage and to inform it that it must apply to the LVT if it wished to exercise the right.  Despite the error in the counter-notices that purpose had been achieved, and the necessary application had been made.  In those circumstances the Tribunal ought to give effect to the counter-notice, since the alternative was that the claim would go uncontested; a claim to exercise the right to manage which was not soundly based might nonetheless succeed.

35.    On behalf of the RTM company, Mr Howells’ main submission was that the counter-notices were invalid because they failed to include information which was mandatory, and for that reason (as the LVT had concluded) the Mannai approach was simply not a permissible one.  Before discussing that submission I will consider the LVT’s alternative reasoning, that the counter-notices were ambiguous and so would fail the Mannai test if it was appropriate to apply it.

36.    Mr Howells supported the LVT’s alternative reasoning only on the basis that its conclusion was not unreasonable.  He suggested that unless I was satisfied that the LVT’s assessment was irrational, I was not entitled to overturn it.  I do not accept that submission.  The interpretation of a document does not involve the exercise of a discretion or an evaluation of evidence.  The interpretation of the counter-notices by the LVT was either right or it was wrong, and if it was wrong it is open to the Tribunal to set the decision aside without the need to be satisfied that it was a decision which not rational LVT could have arrived at.

37.    If it is permissible to apply the Mannai test to a counter-notice under section 84 of the 2002 Act, I have no doubt that these counter-notices would have been quite clear to a reasonable recipient and that it would follow that they were valid. 

38.    The reasonable recipient must be taken to know what the actual recipient knew, which was that the counter-notices were given in response to claim notices asserting the right to manage the two buildings.  The recipient must also be credited with a general appreciation of the statutory scheme, just as the landlord in Mannai was taken to be familiar with the requirements of the leases.  He or she would therefore know that a counter-notice is required either to admit that the RTM company is entitled to acquire the right to manage the premises specified in the claim notice, or to allege that it is not so entitled and to give reasons by specifying those provisions of Chapter 2 which are said not to be satisfied.  That much is apparent from the counter-notice itself.

39.    It was clear that these counter-notices disputed the entitlement to exercise the right.  In the management company’s counter-notice the second of the available alternatives was signified by placing an “X” next to the words “Yes. [Tick if the statement in paragraph 1.2 applies]”.  No mark had been placed next to the statement admitting the right which appeared in paragraph 1.1 with a similar instruction.  Opposition to the acquisition of the right to manage was also apparent from the landlord’s counter-notice.

40.    The only question in the mind of the reasonable recipient would therefore have been over the identity of the RTM company whose right was being disputed by the management company and the landlord in their St James counter-notices.  On their face the counter-notices told the recipient that it was alleged that the St Stephens RTM company was not entitled to acquire the right to manage the premises specified in the claim notice, but the documents themselves and their covering letters explicitly identified them as referring to St James Mansions.  It would have been obvious to the recipient, applying a common sense approach, that there had been a mistake.

41.    The reasonable recipient would then have considered whether the mistake was that each of the references to St James Mansions in the covering letters and counter-notices ought to have referred instead to St Stephens Mansions and its RTM company, or whether the allegation of an absence of entitlement ought to have named the St James company, rather than the St Stephens company.  The reasonable recipient would have noted that the landlord and the management company had at the same time given the St Stephens RTM company counter-notices disputing its right to manage St Stephens.  Knowledge of the content of the St Stephens counter-notices by the recipient of the St James counter-notice may be assumed because not only did the RTM companies share a solicitor, they had also had at least one director in common. No purpose would be served by the givers of the counter-notices informing the St James company that they objected to the St Stephens company acquiring the right to manage St James Mansions, because it had not claimed to be entitled to do so.  It would also have been surprising to the recipient that no response disputing the right of the St James company had been received, despite the fact that the givers of the counter-notices were the same in each case and the circumstances of the two buildings is so similar.  The only reasonable conclusion the recipient could arrive at was that the counter-notices were intended to allege that the company claiming the right to manage St James Mansions i.e. St James Mansions RTM Company Ltd, was not entitled to acquire that right.

42.    I therefore respectfully disagree with the alternative basis of the LVT’s decision and am satisfied that, if it is open to me to apply the Mannai approach, the counter-notices were valid.

43.    Accordingly it is necessary to consider Mr Howells’ main submission that the counter-notices were invalid because they failed to provide information which was mandatory, and the inclusion of which was essential to their validity.  If that submission is correct the case would not be covered by the Mannai principle; the passages from the speeches in Mannai referred to in paragraph 32 above make it clear that, if some precondition is not satisfied or some mandatory piece of information is not provided, a notice will not achieve its purpose.  Lord Hoffmann provided a colourful illustration of the point in his speech (at p.776B):

“If the clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease.”

In Elim Court RTM Company Ltd v Avon Freeholds Ltd [2014] UKUT 397 (LC) the Tribunal adopted the same approach, when construing the requirements of s.78(5)(b) of the 2002 Act concerning the content of a notice inviting participation in an RTM company as essential to the formal validity of such a notice.

44.    The proper approach to the application of Mannai to the validity of statutory notices is sequential.  First it is necessary to identify what information the statute requires the document to contain in order to have the intended consequences; it is then necessary to ask whether the document under consideration complies with those requirements.  The first question is a matter of construction of the statute and involves an assessment whether Parliament intended that the omission of a particular item of information from the notice would render it invalid.       

45.    Mr Howells’ submission began with s.84(2)(b) which provides that a counter-notice challenging the right to manage is a notice “alleging that, by reason of a specified provision of this Chapter, the RTM company was at that date not so entitled”.  The RTM company referred to was obviously the RTM company which had served the claim notice.  The making of the allegation was essential because s.84(5) provides that it is the service of a counter-notice containing the statement mentioned in s.84(2)(b) which prevents the RTM company from acquiring the right to manage until an application has finally been determined in its favour.  It is therefore necessary to examine the counter-notice to see if it contains such a statement and, if it does not, there is no obstacle to the company’s acquisition of the right to manage.

46.    Mr Howells then referred to the further requirement of s.84(2) that a counter-notice should be a notice containing such other particulars and complying with such requirements about the form of counter-notices as may be prescribed by regulations, which in this case meant the 2011 Regulations.  Regulation 5(c) of the 2011 Regulation requires that a counter-notice “must contain” the information provided in the notes to the form set out in schedule 3 to the Regulations.  Those notes, Mr Howells suggested, included the italicised words in square brackets in the form set out in schedule 3, and in particular the words “[insert name of company by which claim notice was given]” in paragraph 1.2 of the form.  In his submission, a counter-notice which failed to state the name of the RTM company by which the claim notice had been given did not comply with regulation 5(c) or s.84(2) and was therefore invalid. 

47.    The reference to the St Stephens RTM company in paragraphs 1 and 1.2 of the St James counter-notices also infected the statements in the remainder of the document which referred to “the company”.  That expression had been defined to mean the St Stephens company.  The subsequent statements in the counter-notices that “the company may apply to a leasehold valuation tribunal” and that “the company does not acquire the right to manage those premises unless …” which are required to be included by regulation 5(a) and (b) respectively were therefore defective.

48.    It was also significant, Mr Howells submitted, that s.84 contained no equivalent of s.82(1) of the 2002 Act, which provides that “a claim notice is not invalidated by any inaccuracy in any of the particulars required by or by virtue of section 80”.  Parliament must have intended a higher standard of accuracy and a less forgiving approach to errors in counter-notices than in claim notices.  

49.    Previous decisions of the Tribunal in relation to claim notices were also relied on by Mr Howells in support of his submission that a correct statement of the name of the RTM company whose entitlement was disputed was essential to the validity of a counter-notice.   In Assethold Ltd v 15 Yonge Park RTM Company Ltd [2011] UKUT 379 (LC) Her Honour Judge Walden-Smith noted that s.80 of the 2002 Act listed the name and registered office of the RTM company as among the required particulars which must be included in a claim notice, and said that “a failure to provide those details would clearly prevent the claim form from being valid”.  Such an omission could not be cured by reliance on s.81(1) because there was a distinction between the failure to provide the required particulars and an inaccuracy in the statement of those particulars.  The same distinction was recognised in Assethold Ltd v 14 Stansfield Road RTM Company Ltd [2012] UKUT 262 (LC) and in Assethold Ltd v 13-14 Romside Place RTM Company Ltd [2013] UKUT 0603 (LC).

50.    I do not accept these submissions.    

51.    I agree with Mr Howells that there is no equivalent of s.81(1) preventing any inaccuracy in the required particulars in a claim notice from invalidating it.  He could not suggest any explanation for a more stringent approach to counter-notices, nor can I think of one.  Nonetheless, I do not agree that the three Assethold decisions he relied on are relevant in this context, other than to illustrate the consequences of a failure to provide information which, as a matter of construction of the relevant statutory provision, is essential.  Nowhere in s.84 itself is there a requirement that the name of the RTM Company be stated in a counter-notice.

52.    In order to comply with s.84(2)(b) a counter-notice must contain a statement alleging that by reason of specified provisions of the Act “the RTM company” was not entitled to acquire the right to manage.  In the context of the statutory scheme the purpose of that statement is not to inform the RTM company of its own identity, but to inform it of the grounds on which the recipient of the claim notice which it gave intends to challenge its entitlement to acquire the right to manage.  Provided the counter-notice communicates that information, in whatever form, it will have complied with the requirement of s.84(2)(b).  Where the required statement contains an obvious error, as the statements in these counter-notices did, and where the meaning intended to be conveyed would be understood by a reasonable recipient, I am satisfied that s.84(2)(b) was complied with and that the error did not invalidate the counter-notice.

53.    A counter-notice is also required by s.84(2) to comply with the regulations made by the appropriate national authority so far as they prescribe additional particulars to be supplied or the form of the document.  In considering the proper construction of a statutory provision governing the content of a notice, the fact that particulars are prescribed by regulation rather than by the statute itself has sometimes been taken as an indication that they are not intended to be crucial to the validity of the notice (see, for example, the decision of the Court of Appeal in Seven Strathray Gardens v Pointstar Shipping & Finance Ltd [2004] EWCA Civ 1669).  Wherever the requirement is found, however, the question will always be whether it was the intent of the statute that an omission to provide the information in question should be fatal to the process.   

54.    By regulation 8(3) of the 2011 Regulations a counter-notice is required to be in the form appended to this decision “or a form to the like effect provided that it contains all of the prescribed particulars as set out in regulation 5”.  The corresponding regulations applying in England (the Right to Manage (Prescribed Particulars and Forms) (England) Regulations 2010) do not contain those words.  Whatever the effect of the English regulations, the fact that the Welsh version has some flexibility suggests that errors which do not compromise the effect of the document are not intended to be fatal to the validity of a counter-notice. 

55.    I am satisfied that the counter-notices in this case are in all respects “to the like effect” to the form of counter-notice in Schedule 3 to the 2011 regulations.  It would be entirely clear to a reasonable recipient that the RTM company which claimed to be entitled to acquire the right to manage St James Mansion would not be able to exercise that right unless, on an application to the LVT, its right was confirmed.  The recipient would be in no doubt that it could, if it wished, make an application to the LVT.  The definition of the expression “the Company” to mean the St Stephens company, rather than the St James company, would not interfere with that understanding because it would immediately be recognised as an error.

56.    Finally, in my judgment the direction in regulation 5(c) of the 2011 regulations that a counter-notice must contain the information provided in “the notes” to the form set out in Schedule 3, was complied with.  The notes referred to are clearly the 3 numbered paragraphs which appear at the end of the form under the word “NOTES”.  Those notes provide important information for the recipient of the counter-notice, including the time limit for an application to the appropriate tribunal, and they were reproduced in both counter-notices.  I do not accept Mr Howells’ submission that the notes referred to in regulation 5(c) include the italicised words in square brackets in the form.  Those words are not designated as “notes” in the form itself and they serve a different function from the three numbered paragraphs which appear under that heading; they are not for the information of the recipient of the counter-notice but rather are instructions to the person completing the form.  They are not intended to be included in the completed document.  An error in complying with those instructions will only invalidate the counter-notice if the error means that the document is not “to the like effect” to the prescribed form.  If it is clear that the entitlement of the recipient of the counter-notice to acquire the right to manage is disputed, a mis-statement of the recipient’s name in one part of the document does not prevent it from being “to the like effect”.

57.    For these reasons I am satisfied that the LVT came to the wrong conclusion on the St James Mansions appeal.  The counter-notices were valid, and the grounds of opposition identified in them ought to have been considered on their merits, as they were in relation to St Stephens Mansions.                                                                                                      

The St Stephens Mansions appeal

58.    The issue in this appeal is whether St Stephens Mansions comprises a self-contained part of a building satisfying the description in section 72(3) of the 2002 Act.  Throughout these proceedings St James Mansions and Stephens Mansions have been assumed to be a single self-contained building capable of division into two parts.  It has not been suggested that either of them is a self-contained building in its own right.  To understand the issue it is necessary to have the relevant statutory provisions in mind.

The relevant statutory provisions

59.    Chapter 1 of Part 2 of the 2002 Act makes provision for the acquisition and exercise by an RTM company of the right to manage premises to which the Chapter applies.   The premises to which the Chapter applies are identified in section 72 which, so far as is material to this appeal, provides:

“72    Premises to which Chapter applies

(1)   This Chapter applies to premises if –

                   (a) they consist of a self-contained building or part of a building, with or                        without appurtenant property,

                   (b) - (c) …  

(2)     A building is a self-contained building if it is structurally detached.

(3)     A part of a building is a self-contained part of the building if –

         (a)     it constitutes a vertical division of the building,

          (b)             the structure of the building is such that it could be redeveloped independently of the rest of the building, and

          (c)     subsection 4 applies in relation to it.

(4)     This subsection applies in relation to a part of a building if the relevant services provided for the occupiers of it –

          (a)             are provided independently of the relevant services provided for occupiers of the rest of the building, or

          (b)     could be so provided without involving the carrying out of works likely to result in a significant interruption in the provision of any relevant services for occupiers of the rest of the building.

(5)     Relevant services are services provided by means of pipes, cables or other fixed installations.”    

 

60.    It was common ground before the LVT (on the basis of the evidence of a civil engineer) and before the Tribunal that the requirements of sub-section 3(a) and (b) are satisfied: St Stephens Mansion was acknowledged to be divided vertically from St James Mansion and to be capable of being redeveloped independently.  The focus of the dispute is whether sub-section (4) applies.   

61.    I have already described the relevant facts found by the LVT in paragraphs 8 and 9 above.  The only relevant service which has been considered is the supply of cold water.  An application by the management company on the day of the hearing to amend its statement of case to raise issues about the configuration of drains was refused by the LVT.

The issue 

62.    The layout of the mains water services supplied to the buildings gives rise to the following questions:

(1)    Is mains water provided to St Stephens Mansions independently of the supply of water to St James Mansions?

(2)    If not, could water be supplied independently to St Stephens Mansions without carrying out works likely to result in a significant interruption in the provision of any relevant services for the occupiers of St James Mansions? 

63.    Before the LVT no evidence was adduced by the RTM companies concerning the potential to separate the water supply to the two buildings.  On behalf of the landlord and the management company evidence was provided by Mr Robert Churches, the managing director of the company which maintained the services to the buildings. 

64.    Mr Churches described two alternative approaches to the separation of the water supply.  The first option would be to provide separate water tanks and pumps for each block.  The plant room was large enough to accommodate this additional equipment but Mr Churches said that he could not comment on the logistics if a second supply pipe was also proposed and did not know how the water company might view a request for a second separate supply.  The second option was to install two water sub meters, one for each of the existing outgoing supplies, which would enable independent measurement of water consumption. 

65.    It was common ground that whichever of these approaches was taken all of the preparatory work could be done without disconnecting the existing supply to either building and that the final connection of the new tanks, pumps and separate pipes under the first option, or the installation of the sub meters under the second option, could be completed without significant disruption to the service.

66.    It was not suggested by either party that it was necessary for the RTM company to demonstrate an intention actually to carry out any of the work described by Mr Churches.  That consensus seems to me to be sound.  The question posed by s.72(4) is whether relevant services are provided independently to one part of the building, or could be so provided without significant interruption to the supply to the remainder of the building. It is irrelevant that the RTM company proposes to continue with the current arrangements and to cooperate with the owners or managers of the remainder of the building in providing a service on a common basis, rather than independently.     

The LVT’s decision

67.    In reaching its conclusions the LVT relied on the decision of Her Honour Judge Marshall QC, sitting in the Central London County Court, in Oakwood Court (Holland Park) Ltd v Daejan Properties Ltd [2007] 1 EGLR 121, which concerned the qualifying conditions for the collective enfranchisement of a mansion block of flats under Part I of the Leasehold Reform, Housing and Urban Development Act 1993.  The block was vertically divided from an adjoining block by a shared party wall, and the landlord supplied hot water and central heating to both blocks by means of a boiler located in a separate boiler house to the rear of the building.  The issue was whether the block was a self-contained part of a building.  The statutory test was contained in s.3(2) of the 1993 Act, which is in almost identical language to s.72(4)-(5) of the 2002 Act.

68.    The LVT first found at (paragraph 49) that the existing water supply was not independent.  Water was delivered to the site in one pipe before being distributed by one set of pumps; those features made it impossible to regard the services as independent.

69.    At paragraph 51 of its decision the LVT found that Mr Churches first option “would result in the provision of new services, rather than the provision of the services, which is a prerequisite of s.72(4)”.  In any event, it considered that as the incoming pipe would still be shared, the water supply would not be independent.  It noted that it had been provided with no evidence concerning the feasibility of bringing in a new supply to serve St Stephens Mansions alone but also felt that the introduction of a new supply would not be the provision of the same service independently but would be “a new service” which it considered would not meet the statutory test.

70.    Finally the LVT held that Mr Churches’ second option, the installation of separate meters, would not result in the provision of independent services.

71.    The outcome of the LVT’s determination was therefore that St Stephens Mansions was found not to be a self-contained part of a building and, accordingly, not to be premises to which Chapter 2 of the 2002 Act applies.  Taken together, the paradoxical result of the LVT’s two decisions was that, although the right to manage St James Mansions was found to have been acquired by its RTM company because no valid counter-notice had been given, it was not acquired by the St Stephens company because St Stephens Mansions did not comprise premises to which the Act applied.  There seems to me to be a serious problem with that outcome.  In the St James Mansions appeal, it was not contended that the LVT had lacked jurisdiction to make a determination that the right to manage had been acquired yet the circumstances which prevented St Stephens Mansions from being eligible to enjoy the benefit of the Act applied equally to its neighbour.  On the LVT’s view of the facts Parliament had never intended the right to be available to either block independently.   I will return to this unusual feature at the conclusion of this decision, as it seems to me to raise a practical issue of some importance.

The appeal

72.    Mr Howells challenged each of the LVT’s conclusions. 

73.    He first submitted that the supply of water to the two buildings was independent because the presence of isolating valves meant that the supply to one building could be closed down without affecting the supply to the other building.  That was sufficient, he suggested, to make the water services to each of the buildings independent.  I can deal with that submission quite briefly.  The LVT was correct, in my view, to conclude that the accumulation of water in shared tanks and its distribution through a shared set of pumps meant that the water provided to one part of the building was not provided independently of the water provided to the remainder of the building.  If the existing arrangements entail that the water can be provided independently to one part of the building only by terminating the supply to the remainder the test in s.72(4)(a) is clearly not satisfied.

74.    Alternatively Mr Howells submitted that the requirements of s.72(4)(b) was satisfied. 

75.    The RTM company had originally sought permission to appeal on the basis that the LVT had unfairly placed the burden of proof on it in relation to the practicality of bringing in a second, separate water supply to serve St Stephens Mansions alone, and in relation to the attitude of the water company to a request for such a supply.  The LVT relied on the uncertainty of the practical position in paragraph 52 of its decision but this had not been mentioned by Mr Churches in his written evidence and arose only during the course of the hearing before the LVT.  The Tribunal directed that the appeal be dealt with as a review with a view to a re-hearing and permitted further evidence to be adduced on the issue of practicality.  A short letter was then obtained by the appellant from Welsh Water which indicated that it would permit a new metered water supply for St Stephens Mansion, subject to the RTM company entering into a bulk metering agreement.  That evidence was not challenged.

76.     It was not disputed that the adoption of either of the forms of separation identified by Mr Churches would involve no significant interruption of the supply of water to either building.  The question was therefore whether either the installation of meters to measure the supplies to each part of the building or the provision of new pipes (if required) and separate holding tanks and pumps within the existing pump house, was sufficient to amount to the provision of water services independently.

77.    Once again I agree with the LVT’s conclusion that the installation of new water meters would not be sufficient to render the water services to each part of the building independent of each other.  They would simply permit independent measuring and billing of what would remain a shared supply.

78.    The more difficult question is whether the installation of additional pipes, tanks and pumps would result in the relevant service, the supply of water, being provided independently.  For my part I find the LVT’s critical conclusion that these alterations “would result in the provision of new services, rather than the provision of the services, which is a prerequisite of s.72(4)” a puzzling one.  At a practical level Mr Churches’ second option, which it is now known is unlikely to encounter any substantial technical obstacle, appears ideally designed to separate the pipes and other delivery installations through which water is supplied to the two parts of the building and to render the services independent of each other.

79.     The LVT based its contrary conclusion on the analysis which prevailed in the Oakwood Court case, the facts of which are referred to in paragraph 67 above.

80.      In Oakwood Court two parts of a building were served by a common boiler located in a separate plant room.  The relevant issue was whether the enfranchising part was a self-contained part of a building, which depended on whether heating and hot water services to the occupiers of that part could be provided independently of the same services provided to the occupiers of the remainder of the building without a significant interruption in the provision of services to the remainder.  At paragraph [46] the Judge proposed a five step approach to the issue, which seems to me to be equally appropriate to the issue in this appeal under s.72(4)(b).  Adapted to that purpose those steps are:

(1)   First, to identify the services provided to occupiers of the part of the building of which RTM is claimed (“the RTM part”) which are in issue because they are not provided independently.

(2)   Consider whether those services can be provided independently to the RTM part independently of their provision to the remainder of the building.

(3)   Ascertain the works required to separate the respective parts of the services supplying the RTM part and the remainder of the building, so that such services would thereafter be supplied to each part independently of the other.

(4)   Assess the interruption to the services provided to the remainder of the building which would be caused by carrying out the works.

(5)   Decide whether that interruption would be “significant”.   

At paragraph [60] the Judge said that “the test under the Act is a practical test”.  I agree.

81.    In Oakwood Court a separation of the plant within the existing boiler house was dismissed as impractical on grounds of lengthy disruption (paragraph [66]).  Two options for the provision of independent heating and hot water services were considered (paragraph [63]): either by the construction of a new centralised boiler house for the enfranchising part, or by the installation of new individual boilers in each flat.  It was submitted on behalf of the landlord, and accepted by the Judge, that the installation of new systems would fail the statutory test, because it would not be the provision of the service to the occupiers, but provision by the occupiers of the same service for themselves (paragraph [74]).  The Judge then went on to develop this point in paragraphs [76] to [80] by drawing a distinction between providing the relevant services by some entirely new system, and doing so by effecting alterations to the existing system.  The object of the test was to determine whether the relevant part of the building “as it exists is either clearly self-contained or so nearly self-contained that it can effectively be so regarded”.  The proper conclusion was that “the Act is looking, not at the possibility of the supply of independent relevant services in the abstract but at the possibility of effecting a separation of the existing services … with a minimal disruption”.  Applying that approach, neither the construction of a new boiler house with a new heating and hot water boiler, nor the installation of individual boilers within each flat, satisfied the test.

82.    Mr Howells criticised the approach taken in Oakwood Court as focussing too closely on service installations rather than on the supply of the services themselves, and as not recognising that sub-paragraphs (a) and (b) of s.72(4) were true alternatives of equal significance rather than the later being a mitigation of the former.  I do not think those criticisms are justified, but care needs to be taken to avoid substituting a different test for the one laid down by the statute.  The options considered in Oakwood Court both involved entirely new systems requiring substantial works and both the magnitude of the work and the time it would take to complete, necessarily after the transfer of the freehold interest in the enfranchising part of the building, were relevant considerations.  The case was not concerned with adaptations to an existing system, and did not consider what degree of adaptation or addition to an existing system would be permissible before a line would be crossed between premises which were a self-contained part of a building and premises which could not be so described.  That question is one of degree.     

83.    The test in s.72(4)(b) contemplates “the carrying out of works” to render the supply of services independently to the different parts of the building.  Satisfaction of that test cannot therefore be restricted to situations in which a separation of service provision can be achieved simply by closing isolation valves or flicking switches.  I agree with Mr Howells’ submission that the provision of new components or installations cannot be ruled out, and that the only scale of measurement which the Act provides for deciding whether work is too substantial is by reference to the degree of interruption it will inflict on occupiers of the remainder of the building.  I therefore do not think that the LVT was right in this case to regard the provision of additional components as fatal.  The provision of the same service, the supply of water, through adapted service installations, including new components, seems to me to be equally capable of passing the test.

84.    The suggested adaptations in this case involve the provision on new tanks and pumps within the existing pump house.  In practical terms that work would result in the provision of the relevant services independently.  It is also agreed that the disruption caused by the work will be minimal.  Mr Bates gave three reasons why these works failed the test in s.72(4)(b).  First, because as the LVT had found, the provision of new tanks and pumps involved the provision of a new service and not the continuation of the existing service on an independent basis.  Secondly, the new arrangement would continue to rely on the existing shared pipe from the street to the pump house, and so would not be truly independent.  Finally, if reliance was placed on the possibility of installing a new supply pipe to serve St Stephens alone, the RTM company had no right to carry out that work in the car park at the rear of the building, there was no evidence of the degree of disruption that it would entail, nor was there evidence of whether the RTM company would be able to satisfy Welsh Water’s requirement that it enter into a bulk metering agreement.

85.    As to Mr Bates’ first submission, as I have already indicated I do not regard the language or intent of s.72(4)(b) as excluding reliance on additional equipment to adapt the supply system to operate independently for the two parts of the building.  After the provision of new pumps and tanks the same service would continue to be supplied by substantially the same method, and without significant interruption of supply.  That to my mind is enough to satisfy s.72(4)(b).

86.    I do not consider the use of a shared pipe from the water main to the pump-house to be significant.  It is in the nature of many services provided by means of pipes, cables or fixed installations that mains conduits are subdivided at a point close to the point of delivery to the consumer; until that point is reached the supply to any individual customer or group of customers is not independent of the supply to any other group.  That fact cannot prevent the relevant service from being supplied independently for the purpose of s.72(4).  A sensible line has to be drawn.  Mr Bates suggested that it should be at the point where the supply to the two buildings is taken from the water main, but it seems to me equally consistent with the statutory scheme to examine the supply from the point at which it first emerges above ground in the pump house, since that is the point at which equipment under the control of the parties first begins to operate on it. 

87.    If independence for the purpose of s.72(4)(b) could only be achieved by installing a new supply from the main to the pump house, the practical possibility of undertaking that work is established by the evidence (as it was not before the LVT, the point having emerged only in the course of the hearing).  There is no basis for the suggestion that the creation of a new link to the water main (a routine occurrence) would cause any disruption to the supply of services to other users, and the fact that some disturbance to the car park (not a relevant service) would be caused is not material.  

88.    Finally, as for legal rights to effect alterations to service installations, it would be an unusual lease which permitted a leaseholder to carry out work on communal services under the control of the landlord, and it would be unheard of for such rights to be granted prospectively in favour of a third party such as an RTM company.  An interpretation of s.72(4)(b) which made the possession of such a right a prerequisite of reliance on the ability to render services independent would deprive the provision of virtually all effect.  In order to give the statute a sensible effect it is therefore necessary to disregard the question of entitlement to carry out the necessary work.  The purpose of s.72 is to identify premises to which the Act applies, and it is appropriate to consider that question on a purely practical level, focussing on the construction and configuration of the premises, rather than on the rights of their occupiers.  

89.    For these reasons I am satisfied that the LVT’s conclusion that St Stephens Mansion is not a self-contained part of a building was wrong, and the RTM company’s appeal will be allowed.      

Conclusion

90.    I therefore allow both appeals.  The parties agreed that, in that event, the outcome of the St Stephens’ appeal would be determinative of the entitlement of the St James RTM company, and that no remission to the LVT would be necessary.  I therefore substitute for the LVT’s decision a determination that St James RTM Company Ltd is entitled to acquire the right to manage St James Mansions, and that St Stephens RTM Company Ltd is entitled to acquire the right to manage St Stephens Mansions.

91.    By way of postscript I would add this.  I referred in paragraph 71 above to the paradoxical result of the decisions of the LVT in finding the St James RTM company eligible to acquire the right to manage premises which, applying the same reasoning as in its St Stephens decision, were premises to which Chapter 2 of the 2002 Act simply did not apply.   I raised with counsel whether the LVT had had jurisdiction to make any determination in relation to St James Mansions, given its conclusion in relation to St Stephens.  Neither had previously considered that question, which had not been raised before the LVT, but they both suggested that the absence of a valid counter-notice meant that the right to manage would be acquired automatically.  I very much doubt that.  The right to manage is a statutory creation and, as s.71(2) spells out, it can only be acquired “subject to and in accordance with” Chapter 2.  It cannot be acquired by default or omission in relation to premises to which Chapter 2 does not apply.

92.    I was referred by Mr Bates to the decision of Her Honour Judge Walden-Smith in Alleyn Court RTM Company Ltd v Abou-Hamdan [2012] UKUT 74 (LC) at paragraphs [8] to [10].  In that case it was alleged that the giver of a counter-notice had not had authority to act on behalf the registered proprietor of a head-leasehold interest.  It was suggested by the head-leaseholder that if that was correct neither the LVT nor the Tribunal would be able to determine that the right to manage had been acquired, because s.84(3) restricted the making of such a declaration to cases where a valid counter-notice had been served.  Judge Walden-Smith did not agree that, in those circumstances, it would be necessary for the RTM company to seek a declaration in the High Court.  As she pointed out, where there is no dispute about entitlement the acquisition date for the right to manage is the date specified in the claim notice (s.90(1), 2002 Act); and there is no dispute about entitlement where no counter-notice has been given under s.84 (s.90(3)(a)).  I do not doubt the correctness of those observations, but they do not seem to me to bear on the issue of jurisdiction.  My provisional view, without the benefit of argument on the point, is that unless the premises in question are premises to which Chapter 2 of the Act applies by reason of satisfying the conditions in s.72, none of the provisions of the Chapter have effect in relation to those premises.         

93.    On a matter of jurisdiction it ought not to have mattered whether the counter-notices were valid or invalid.  Any tribunal has power to consider whether it has jurisdiction to hear proceedings which are brought before it.  In Fairhold (Yorkshire) Ltd v Trinity Wharf (SE16) RTM Co Ltd [2013] UKUT 0502 (LC) the Tribunal (Sir Keith Lindblom, President) said this (at paragraph [36]):

“I would add that, in my view, a tribunal may consider the procedural integrity of the right to manage process, whether or not this has been raised by any of the parties active in the process. There is nothing in the statutory provisions to suggest that a tribunal may not act on its own initiative in that way, provided, of course, that its procedure is fair throughout and, therefore, that the parties are given a reasonable opportunity to present any relevant evidence or submissions.”

94.    If a tribunal is satisfied that it does not have jurisdiction it ought to say so, for example, because the premises in question are premises to which Chapter 2 of the 2002 Act does not apply.  It ought not to make any other unqualified determination, although in an appropriate case it could quite properly state what its conclusions would have been if it had decided that it did have jurisdiction.    

 

 

                                                                                                Martin Rodger QC

                                                                                                Deputy President

                                                                                                4 December 2014

Appendix

 

RTM (PARTICULARS) (WALES) (SI 2011/2684)

 

FORM OF COUNTER-NOTICE

 

Counter-notice

 

                        To        [name and address] (See Note 1 below)

 

                        Either

 

1.1  I admit that, on [insert date on which claim notice was given],

[insert name of company by which claim notice was given] (“the company”) was entitled to acquire the right to manage the premises specified in the claim notice.

 

Yes, Tick if the statement above applies and proceed to paragraph 2.

 

                        Or

 

1.2  I allege that, by reason of [specify provisions of Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 relied on] on [insert date on which claim notice was given], [insert name of company by which claim notice was given] (“the company”) was not entitled to acquire the right to manage the premises specified in the claim notice.

 

Yes [Tick if the statement in paragraph 1.2 applies.]

 

 

2. If the company has been given one or more counter-notices containing such a statement as is mentioned in section 84(2)(b) of the Commonhold and Leasehold Reform Act 2002, the company may apply to a leasehold valuation tribunal for a determination that, on the date on which notice of the claim was given, the company was entitled to acquire the right to manage the premises specified in the claim notice (See Note 2 below).

 

3. If the company has been given one or more counter-notices containing such a statement as is mentioned in section 84(2)(b) of the Commonhold and Leasehold Reform Act 2002, the company does not acquire the right to manage those premises unless –

 

(a)    on an application to a leasehold valuation tribunal, it is finally determined that the company was entitled to acquire the right to manage the premises; or

(b)    The person by whom the counter-notice was given agrees, or the persons by whom the counter-notices were given agree, in writing that the company was so entitled. (See Note 3 below)

 

 

Either

 

Signed:

 

[Signature of person on whom claim notice served, or of agent of such person Where an agent signs, insert also.]

 

“Duly authorised agent of

 

[insert name of person on whom claim notice served]

 

Address:

 

[Given the address to which future communications relating to the subject-matter of the notice should be sent]

 

[Date]

 

Or

 

Signed by authority of the company on whose behalf this notice is given

 

[Signature of authorised member or officer and statement of position in company]

 

 

NOTES

 

1.      The counter-notice is to be given to the company that gave the claim notice.  The company’s name and address are given in that notice.

 

2.      An application to a leasehold valuation tribunal must be made within the period of two months beginning with the day on which the counter-notice (or, where more than one, the last of the counter-notices) was given.

 

3.      For the time at which an application is finally determined, see section 84(7) and (8) of the Commonhold and Leasehold Reform Act 2002.