UPPER TRIBUNAL (LANDS CHAMBER)

	
UT Neutral citation number: [2013] UKUT 0502 (LC)
UTLC Case Number: LRX/181/2011

	TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

LANDLORD AND TENANT – Right to manage – jurisdiction under section 84(3) of the Commonhold and Leasehold Reform Act 2002  

	IN THE MATTER OF AN APPEAL AGAINST A DECISION
OF THE LEASEHOLD VALUATION TRIBUNAL FOR THE
LONDON RENT ASSESSMENT PANEL

BETWEEN	FAIRHOLD (YORKSHIRE) LIMITED	Appellant
	and
	TRINTIY WHARF (SE16) RTM CO LIMITED	Respondent
Re: Trinity Wharf, 
305-309 Rotherhithe Street, 
London SE16	
	
		Before: The President, Sir Keith Lindblom

	Sitting at 43-45 Bedford Square, London WC1B 3DN
on 11 July 2013

Mr Andrew Skelly, instructed by Estates & Management Limited, for the appellant
Ms Rosana Bailey, instructed by Lake Jackson solicitors, for the respondent

© CROWN COPYRIGHT 2013

The following cases are referred to in this decision:

Dawlin RTM Ltd v. Oakhill Park Estates, LON/00AG/LEE/2005/00012
The Circle (No. 3) RTM Company Ltd. v Tenacity Ltd., LON/00BE/LRM2008/0009
The Cove RTM Company Ltd. v Residential Services Management Ltd. MAN/OOCL/LRM/2009/0002
Regent Court RTM Company Ltd. v Avon Freeholds Ltd. CH/00HG/LRM/2011/0011 and CH/00HG/LCP/2011/0013

Decision

Introduction

1.	The appellant, Fairhold (Yorkshire) Limited, the freehold owner of Trinity Wharf, 305-309 Rotherhithe Street, London SE 16 (“Trinity Wharf”), appeals against the decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel (“the LVT”), in which it determined that on 19 April 2011 the respondent, Trinity Wharf (SE 16) RTM Co Ltd, was entitled to acquire the right to manage Trinity Wharf. The appeal is by way of review. It concerns the scope of the LVT’s jurisdiction when hearing a right to manage application under section 84(3) of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). 

2.	At the hearing of the appeal Mr Andrew Skelly appeared for the appellant, Ms Rosana Bailey for the respondent.  

The issues in the appeal

3.	The parties have provided a statement of agreed facts and issues, in which they have said that the main issue in the appeal is whether, in opposing an application under section 84(3), a landlord is limited to arguing only the grounds raised in its counter-notice. A secondary issue, they agree, is whether the Tribunal should investigate the material that was before the LVT to see whether it included a copy of a valid notice of invitation to participate. If that is a relevant matter in the appeal the respondent asks the Tribunal to accept that a valid notice of invitation to participate can be given in several documents served on tenants at the same time. And in any event, it says, the LVT did not have to address these questions because of the appellant’s delay in raising its concerns about the validity of the right to manage process.

4.	The Tribunal gave permission to appeal only on the main issue to which I have just referred. I shall, therefore, confine myself to that issue in deciding the appeal. 

The facts

1.	From the statement of agreed facts and issues and the documents submitted by the parties I take the following facts as the basis for my decision.

2.	Trinity Wharf is a development of flats in five blocks: Harwood Point, Somerville Point, Jellicoe Point, Rodney Point and Hood Point. Between 1999 and 2002 all of the flats in Harwood Point, Somerville Point, Jellicoe Point and Rodney Point were let on 999 year leases. Hood Point is let on a single lease to a housing trust that provides social housing, London and Quadrant Housing Trust, which has let several of the flats in that block on 125 year leases from 25 March 1999.

3.	The respondent served a claim notice on the appellant on 19 April 2011. The appellant therefore had to serve any counter-notice no later than 18 May 2011.

4.	In a letter dated 3 May 2011, before serving its counter-notice, the appellant sought from the respondent copies of its Memorandum and Articles of Association, its Certificate of Incorporation, and “Copies of Notices of Invitation to Participate as served on all lessees”. 

5.	The respondent’s agents, Rendall & Rittner Limited replied on 11 May 2011, noting the appellant’s “request for information”, and saying they would “revert shortly”. 

6.	Before the deadline for service of its counter-notice the appellant was not sent any of the documents it had sought.

7.	The appellant served its counter-notice on 12 May 2011.

8.	In the counter-notice the appellant contended (in paragraph 1):

“… that, by reason of a failure to comply with/satisfy the following provisions of Chapter 1 of Part 2 of [the 2002 Act]:

1.1.	[Section] 72 of [the 2002 Act] provides that premises will only be the subject of RTM premises [sic] if (inter alia) they consist of a self-contained building or part of a building with or without appurtenant property

1.2. The premises described in the claim notice are not a self contained building or part of a building as they fail to comply with section 72(2) or 72(3) of [the 2002 Act]

1.3 Notices inviting participation have not been given to London and Quadrant Housing Trust the qualifying Tenant for 1-9 Hood Point

1.4 [No] claim has been served on Trinity Wharf Management Company Limited a party to all of the leases 

On 19th April 2011 [the respondent] was not entitled to acquire the right to manage the premises specified in the claim notice. 

…”. 

9.	The respondent made its application for a determination of its entitlement to acquire the right to manage on 11 July 2011.

10.	The appellant submitted its statement of case on 15 August 2011. In that statement of case the background to the appellant’s opposition to the application was described in this way:

“1. [The respondent] applies for the right to manage various blocks which are collectively known as Trinity Wharf[.] 

2. A Right to Manage claim notice dated 19th April was served on the [appellant] who appointed their agents Estates and Management to deal with the matter on their behalf[.]

3. The [appellant’s] agents requested more information on 3rd May 2011 and whilst the letter was acknowledged on 11th May no further information was received. …

4. As no reply had been received on the evidence available to them the [appellant] served counter notice on 12th May 2011 and received no further communication from the [respondent] until receipt of the reference to the LVT”.

The outline of the appellant’s grounds of opposition to the claim was this:

“1. [The respondent] has failed to provide copies of Invitations to Participate so it has not been possible for the [appellant] to establish whether or not correct procedures have been followed. In addition the [appellant] wished to have sight of the register of members at the date of the claim and also applications for membership. Without these the [the appellant] must maintain its objection to the claim[.]

2. No evidence has been supplied that the manager Trinity Wharf Management Company Limited, the named manager in the leases has been served with the notice of claim[.]

3. There is only one qualifying tenant for the block known as Hood Point and that is London and Quadrant Housing Trust. The claim notice lists two lessees as members of the RTM Company, namely Martin Ronan of flat 1 and Panahiota Mills of flat 9. It is believed that both of these people are shared ownership lessees and are therefore not qualifying tenants by virtue [of] section 76(2)(e) of the 2002 Act. It is therefore assumed as there has been no evidence to the contrary that … a notice of invitation to participate has not been served on … London and Quadrant Housing Trust.

4. Following inspection by its surveyors the [appellant] withdraws paragraph 1.2 of its counter notice[.]”

The appellant therefore asserted that, “having failed to comply with certain provisions of [the 2002 Act, the respondent] is not entitled to exercise the right to manage … Trinity Wharf”.

1.	The respondent submitted its statement of case on 29 September 2011. In paragraph 5 of the statement of case it said:

“On 10 May 2010 the managing agents sent to all lessees:-

(a)	A circular letter, which expressly refers to the RTM process and gives information in relation to the process as well as dealing with more general management matters. A specimen copy of the letter is found at Tab 1 of bundle 1; &
(b)	A Notice of Invitation to Participate in the RTM process, a specimen copy of which is at Tab 2 of bundle 1; & 
(c)	The lessee’s service charge demand dated 10 May 2010 for the period 25 March to 28 September 2010, copies of which appear at Tab 3 of bundle 1.”

In paragraph 6 of its statement of case the respondent said that “the Social Landlord[, London & Quadrant Housing Trust,] was treated identically to the residential lessees”. In paragraphs 7 and 8 it said:

“7. Out of an abundance of caution reminder letters were sent to lessees, who had not responded, on 15 July 2010, advising of the on-going RTM process and their right to participate therein, copies of which are found at Tab 5 of bundle 1. 

8. Further reminders were sent on 25 August 2010, copies of which are found at Tab 6 of bundle 2.”

The respondent concluded its statement of case in this way, in paragraphs 12 to 14:

“12. The [respondent] therefore contends that it has sent a Notice of Participation to all qualifying lessees on 10 May 2011 with further reminders in this regards [sic] to non participants in both July and August 2010. 

13. The claim notice was served on all relevant parties and at the time of issue all lessees, who were named on the claim notice, were qualifying lessees and members of the [respondent]. 

14. The [respondent] therefore contends that it has satisfied the statutory rubric and is entitled to the ‘right to manage’.”

16.	The circular letter to tenants, a copy of which is at tab 1 of the bundle produced by the respondent with its statement of case, was on Rendall & Rittner’s writing paper and was dated “May 2010”. Its heading referred to the service charge for Trinity Wharf for the period from 25 March to 28 September 2010. It enclosed the service charge demand for the first half of the new service charge year. It dealt with various matters under the headings “Service Charge”, “Insurance”, “Right to Manage”, “Future works” and “Payment of service charges”. Under the heading “Right to Manage” it said this:

“
•	Acquiring the ‘Right to Manage’ means that a company of leaseholders with flats in a block or estate development is able to take control of the management, repair, maintenance and insurance of their property, including the power to raise service charges to pay for it. In return, the leaseholders’ company, in this case [the respondent] will be liable to all leaseholders and the Landlord for the management obligations. Please note that the freeholder would continue to own the freehold and collect the ground rent. 
•	Acquiring the “Right to Manage” will allow Rendall & Rittner Limited to place the building insurance on your behalf. 
Rendall & Rittner enter into bulk purchase negotiations for gas, electricity, and lift maintenance contracts from which you already benefit and as a result achieve substantial cost savings. …
•	To acquire the ‘Right to Manage’ there must be at least 50% participation (i.e. at least 60 leaseholders) for the acquisition to succeed. … 
•	As you know, the lessees already have the ability to manage Trinity Wharf through Trinity Wharf Management Limited, the company set out in the lease, which all lessees are shareholders of. 
•	We have discussed this matter at length with the current directors of Trinity Wharf Management Ltd and it has been agreed that the potential savings on your service charges will make this process worthwhile. 
•	Please find enclosed an invitation to become a member of [the respondent]. If you have any questions relating to this issue, please email … .
•	If you wish to participate and become a member of the new company, please complete the enclosed form and return it to our offices for the attention of Joanna Biles, by no later than Wednesday 30th June 2010.”

The “invitation to become a member of [the respondent]” referred to in that part of the letter was the document of which a copy was included at tab 2 of the bundle. This is a pro forma letter, headed “NOTICE OF INVITATION TO PARTICIPATE[:] TRINITY WHARF (SE16) RTM COMPANY LIMITED[:] CONSENT FORM”, which was intended to be completed and signed by the recipient. Space was left for the date, the signature, the name, the “Block Name” and the “Flat Number” to be filled in. It said this:

“I hereby give notice in agreement with Schedule 1 (Form of Notice of Invitation to Participate) to participate in becoming a member of [the respondent].”

A note at the bottom of the letter said:

“This Consent Form must be returned in the enclosed stamped addressed envelope to Rendall and Rittner Limited, Gun Court, 70 Wapping Lane, London E1W 2RF”.

At tab 5 of the bundle are copies of letters, each dated 15 July 2010, from Rendall & Rittner to a number of tenants of Trinity Wharf, which said:

“Further to our recent letter sent in May this year regarding the Right To Manage at Trinity Wharf, we are writing to you to advise that to date we have received 19 responses. In order to proceed with the Right To Manage we require a minimum of 60 responses.

Therefore we would respectfully ask any lessee that would like to take part to return the enclosed form to us as soon as possible. 

Although we have previously explained the benefits of taking part in the Right To Manage we thought that it would be useful to provide this information again. 

…

If you wish to participate and become a member of the new company, please complete the enclosed form and return it to our offices for the attention of Joanna Biles without delay.”

At tab 6 of the bundle are copies of letters, each dated 25 August 2010, from Rendall & Rittner to a number of tenants, which said:

“Further to our recent letters sent in May and July this year regarding the Right To Manage at Trinity Wharf, we are writing to you to advise that to date we have received 47 responses and now only need the consent of a further 13 lessees in order to begin the process.

Acquiring the right to manage at Trinity Wharf will enable the lessees to place the building insurance. At present, your building insurance is placed by your Freeholder, [the appellant]. This is in accordance with the terms of your lease. 

…

If you wish to participate and become a member of the new company, please complete the enclosed form and return it to our offices for the attention of Joanna Biles without delay.”

17.	On 7 October 2011 the appellant submitted further representations in response to the respondent’s statement of case, in paragraph 2 of which it said:

“The bundle of documents purports to include a copy of a Notice of Invitation to Participate at tab 2 … when in fact all that is exhibited is an application form to join the Right to Manage Company. No copy of a Notice of Invitation to Participate has been produced at any time nor any evidence of service of such a notice.”

The further representations concluded with the submission that “there has been a failure to comply with sections 78, 79 and 80 of [the 2002 Act] and the [respondent] is not entitled to exercise Right to Manage of the Block”.

18.	The LVT decided the application, without a hearing, on 8 October 2011. Its decision is dated 18 October 2011. It determined that on 19 April 2011 the respondent was entitled to acquire the right to manage Trinity Wharf. It described the issues in paragraphs 7 to 11 of its decision. The passages relevant in this appeal are in paragraphs 7, 9, 10 and 11:

“7. In its Statement of Case dated 15 August 2011 [the appellant] withdrew the objections in the Counter Notice to the effect that the premises were not such as to comply with [section] 72(2) or (3) of [the 2002 Act] but maintained the other grounds and sought to add a further relating to the Invitations to Participate and its desire to have a sight of the register of members at the date of claim and the applications for membership.
…

9. In the reply to the [respondent’s] Statement of Case a further point is raised relating to the failure to exhibit in the documents a copy of the Invitation to Participate and there was no evidence one had ever been served. … 

10. The [respondent] in its Statement of Case says that Invitations to Participate were sent under a covering letter sent by Rendall and Rittner, the managing agents for Trinity Wharf Management Ltd as well as agents for the RTM [sic], in May 2010 to all lessees paying a service charge. The letter explained amongst other matters the reason for the Invitations to Participate in the RTM. The service charge demands for the first half of the new service charge year were enclosed together with the estimate of expenditure for the year, the Invitation to Participate and the reply form. At least 3 copies were sent to L&Q as payees of the service charges in respect of some of the Hood Point flats. Reminder letters were sent on 15 July and 25 August.

…”.

In paragraphs 12 to 15 the LVT gave the reasons for its decision:

“12. It is the opinion of the Tribunal that the only grounds that can be relied upon in opposing a Right to Manage application are those set out in the Counter Notice.  It is not open to a respondent landlord to seek to add to those grounds at a later date.

13.	Having considered the copy documents provided the Tribunal is satisfied on the balance of probabilities that L&Q were served with an Invitation to Participate in the RTM. The fact that some other Hood Point lessees were also served does not affect this finding; they may in any event have acquired a 100% share and would then be qualifying tenants. The fact that two have joined the RTM [sic] does not affect the requisite majority even if they were not qualified to join. The omission of a copy of the Invitation to Participate from the bundle is of no consequence as clearly from the responses one was sent to each service charge paying lessee with [the] May 2010 letter and in any event [section 78(7) of the 2002 Act] provides that an invitation is not invalidated by any inaccuracy therein.

14.	The remaining Counter Notice ground for objection relates to service of the claim notice on the management company. Rendall and Rittner Ltd are agents for that company and the RTM [sic] and they appear from the papers to be fully conversant with the requirements of the RTM process and again on the balance of probabilities the Tribunal is satisfied that the required service was effected.

15.	Accordingly [the respondent] will acquire the right to manage the premises in three months time from the date of this decision unless there is an appeal to the Lands Tribunal.”

19.	Refusing permission to appeal against its decision, on 22 November 2011, the LVT said this:

“a) The counter-notice provisions of [section 84(2)(b) of the 2002 Act]  would seem to be of little purpose if the person giving the notice can, after the date specified in the claim notice, raise further or different provisions of the Chapter to oppose the RTM claim;

b) The application to the [LVT] was, with the parties’ consent, determined without an oral hearing. From the papers submitted with [the respondent’s] statement of case the [LVT] was entitled to determine that the remaining two grounds from the counter-notice relating to an invitation to participate being sent to London & Quadrant Housing Trust and service of the notice of claim on the managing agents failed despite the omission of copies of some of the relevant documents given the manner in which the [respondent’s] agents had conducted the process and the response from some 70 leaseholders who had become members of [the respondent]; 

	…”.

20.	On 29 November 2011 the appellant sought permission to appeal from the Tribunal. There were three grounds of appeal. Ground (a) was that the LVT should have required a copy of the respondent’s notice of invitation to participate rather than merely assuming that such a notice had been served. Ground (b) was that even if a notice of invitation to participate had been served both the appellant and the LVT itself were entitled to see a copy of it so as to be able to consider its validity. Ground (c) was this:

“… [The] LVT at paragraph 12 of its determination concluded that the only grounds open to challenge are those set out in the counter notice. This cannot be correct as there is nothing in law to compel a Right to Manage Company to produce any requested documents to a Landlord in the one month period open to the Landlord from receipt of the claim notice to decide whether or not to serve a counter notice.”

On 21 February 2012 the Tribunal (H.H.J. Walden-Smith) refused permission to appeal on grounds (a) and (b) but granted permission on ground (c). In its reasons for refusing permission on grounds (a) and (b) the Tribunal said (in paragraph 2) that “[the] LVT had before it a specimen copy of the Notice of Invitation to Participate and copies of the lessees’ responses”, and that it “had all necessary documents before it to be able to come to the determination that the correct procedures had been followed and that there had been proper service upon the social landlord … and upon the management company …”; and (in paragraph 3) that “the decisions of the LVT on these matters were conclusions it could properly reach on the basis of the evidence before it”. On ground (c), however, the Tribunal considered that the appeal had a realistic prospect of success, observing that this “is a matter of construction of section 84 and the Right to Manage provisions [of the 2002 Act]”. 

The statutory framework

21.	Section 78 of the 2002 Act provides: 

“Notice inviting participation

(1) Before making a claim to acquire the right to manage any premises, a RTM company must give notice to each person who at the time when the notice is given – 
(a) is the qualifying tenant of a flat contained in the premises, but 
(b) neither is nor has agreed to become a member of the RTM 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 RTM company intends to acquire the right to manage the premises, 
(b) state the names of the members of the RTM 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. 
(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 RTM company, or 
(b) include a statement about inspection and copying of the articles of association of the RTM company. 
… 
(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.”

22.	Regulation 3 of the Right to Manage (Prescribed Particulars and Forms) (England) Regulations 2010, SI 2010/825 (“the 2010 regulations”) contains further detailed provisions on the content of a notice of invitation to participate. Schedule 1 to the 2010 regulations sets out a form of notice of invitation to participate. Regulation 8 provides, under the heading “Form of notices”:

“(1) Notices of invitation to participate shall be in the form set out in Schedule 1 to these Regulations. 
…”

23.	Section 79 of the 2002 Act provides:

“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”); … 
(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. 
…
 (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 … to act in relation to the premises, or any premises containing or contained in the premises. 
…”.

24.	Section 80, “Contents of claim notice”, sets out the requirements with which the claim notice must comply, including, in subsection (6), that it “must specify a date, not earlier than one month after the relevant date, by which each person who was given the notice under section 79(6) may respond to it by giving a counter-notice under section 84”. Section 80(7) provides that the RTM company’s claim notice must specify a date at least three months after the expiry of the one month period for service of a counter-notice specified under section 80(6), on which the RTM company intends to acquire the right to manage the premises.

25.	Section 84 provides:

“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 the RTM company has been given one or more counter-notices containing a statement such as is mentioned in subsection (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. 
…”. 

Regulation 5 of the 2010 regulations specifies the “[additional] content of a counter-notice”, including the information in the notes to Schedule 3. Schedule 3 contains a form of counter-notice. 

26.	Section 90(2) of the 2002 Act provides that “[where] there is no dispute about entitlement, the acquisition date is the date specified in the claim notice under section 80(7)”.

Submissions for the appellant

27.	Mr Skelly submitted:

(1)	The giving of a counter-notice under section 84 is not mandatory, but a landlord who wishes to deny the right to manage must give one. On their face the provisions for the service of a counter-notice under section 84 provide only limited grounds for disputing the right to manage.

(2)	The form of a notice of invitation to participate is prescribed by the 2002 Act and the 2010 regulations. It is essential that the notice is in the prescribed form, accompanied by all the necessary documents, and given to every qualifying tenant who neither is nor has agreed to become a member of the RTM company. A material failure to comply with the statutory requirements in section 78 and regulation 3 would invalidate the notice and vitiate any subsequent claim notice. Any such failure is obviously a ground on which a landlord may resist a right to manage claim. 

(3)	The RTM company is not required to provide the landlord with a copy of the notice of invitation to participate and the relevant documents before the landlord’s counter-notice is due. In this case the appellant, in its letter of 3 May 2011, had sought copies of the notice of invitation to participate and the relevant documents, but these were never provided. By the time the appellant had to serve a counter-notice, therefore, it was not in a position to raise as an issue the respondent’s compliance with the requirements of section 78 and regulation 3. 

(4)	Section 84(3) provides for the RTM company, when served with a counter-notice alleging that it was not entitled to acquire the right to manage, to 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”. So, regardless of whether or not the issue has been raised by the landlord, it is for the RTM company to satisfy the leasehold valuation tribunal that it has complied with the statutory requirements. The leasehold valuation tribunal must be satisfied that the RTM company has served a valid claim notice, which in turn requires it to be satisfied that the notice of invitation to participate had been properly served, in the correct form, on all of the tenants who had to be served. A right to manage is acquired only in accordance with a valid claim notice under section 79. 

(5)	It is perverse and unjust for a leasehold valuation tribunal to refuse to consider a genuine issue on the validity of a right to manage claim when that issue has been raised by the landlord, simply because it was not raised, and could not have been raised as an allegation, in the landlord’s counter-notice. 

(6)	Comparing the issuing of a counter-notice under section 84 of the 2002 Act with notices required in other statutory schemes, such as the Leasehold Reform and Urban Development Act 1993 and the Landlord and Tenant Act 1954, is not useful exercise.

(7)	Although, as the authors of the second edition of “Service Charges and Management: Law and Practice” note (at paragraph 32-001), a leasehold valuation tribunal held in Dawlin RTM Ltd v. Oakhill Park Estates, LON/00AG/LEE/2005/00012 that a landlord is limited to the points raised in its counter-notice, there have been many right to manage cases in which that approach has not been followed, and rightly so (see, for example, The Circle (No. 3) RTM Company Ltd. v Tenacity Ltd., LON/00BE/LRM2008/0009, The Cove RTM Company Ltd. v Residential Services Management Ltd. MAN/OOCL/LRM/2009/0002 and Regent Court RTM Company Ltd. v Avon Freeholds Ltd. CH/00HG/LRM/2011/0011 and CH/00HG/LCP/2011/0013). 

(8)	In this case the LVT plainly took the wrong approach. Before it could conclude that the respondent was entitled to acquire the right to manage it had to satisfy itself that the statutory procedure had been followed. This was in dispute. The appellant did not, and does not, accept that notices of invitation to participate, in the prescribed form, were served on all the tenants on whom they should have been served. The LVT was not shown a copy of such a notice. The document entitled “NOTICE OF INVITATION TO PARTICIPATE … CONSENT FORM” clearly was not a notice of invitation to participate complying with the statutory requirements; it was a consent form. The LVT ought to have required the respondent to show that a valid notice of invitation to participate had been served.

Submissions for the respondent

28.	Ms Bailey submitted:

(1)	In May, July and August 2010 the respondent wrote to the appellant, making plain its intention to seek the right to manage of Trinity Wharf. In the right to manage process the respondent served “the notice of invitation to participate form” – the document headed “NOTICE OF INVITATION TO PARTICIPATE … CONSENT FORM” – on every tenant. A copy of this document had been sent to the appellant in 2010. The appellant did not suggest then that the notice of invitation to participate was defective. Nor did it in its counter-notice of 12 May 2011.

(2)	The crucial question in the appeal is whether Rendall & Rittner’s letter to tenants dated May 2010, the document headed “NOTICE OF INVITATION TO PARTICIPATE … CONSENT FORM” and Rendall & Rittner’s letters to tenants on 15 July 2010 and 25 August 2010, all of which were sent to every tenant, were sufficient to discharge the requirements of section 78 and regulation 3. The document headed “NOTICE OF INVITATION TO PARTICIPATE … CONSENT FORM” is, on its own, an adequate notice of invitation to participate. Together with the other documents it was certainly enough to explain to the tenants what the right to manage process involved, and to give them the opportunity of taking part in that process. 
  
(3)	It is wrong to apply the requirements for the form of a notice of invitation to participate too strictly. To do so in this case would undermine the right to manage process itself. The appellant’s complaints about defects in the notice of invitation to participate must be seen in the light of section 78(7). As section 78(7) provides, such a notice is not invalidated by “any inaccuracy in any of the particulars required”. In this case the defects, if there are any, do not render the notice of invitation to participate invalid.
 
(4)	In any event, to question the notice of invitation to participate for the first time at the hearing before the LVT was simply too late. By then the appellant had had more than enough time to warn the respondent of its concerns. To suggest that it did not see the notice of invitation to participate until after its counter-notice was due is wrong. And even when it had given its counter-notice it waited another two weeks before seeking copies of documents it already had.

(5)	In its counter-notice of 12 May 2011 the appellant put forward three grounds of objection. These were later reduced to two. None of the grounds in the counter-notice succeeded, and the Tribunal granted permission to appeal only on a very narrow basis. The appellant is seeking to avoid the consequences of failing to put the whole of its case into its counter-notice. An RTM company must be able to rely on any counter-notice being complete when it is deciding whether to go ahead with the right to manage process. The 2002 Act does not contain any provision for saving a counter-notice that does not raise all of the relevant points. 

 Discussion

29.	In my view Mr Skelly’s argument is sound. 

30.	Section 84 of the 2002 Act provides for the service of a counter-notice by a person who has been given a claim notice by an RTM company under section 79(6). There is a time limit for the giving of a counter-notice. That limit is set as the date specified in the claim notice given under section 80(6). Section 84(1) is permissive. A person who has been given a claim notice is not obliged to give a counter-notice; he “may” do so. There is no need to serve a counter-notice admitting the right to manage if it is not in dispute. If no counter-notice is served disputing the entitlement to right to manage, the right to manage will be acquired on the date specified in the claim notice under section 80(7) (section 90(2)). However, a landlord who seeks to deny the right to manage has no option but to serve a counter-notice within the time allowed for this to be done. 

31.	Section 84(2) gives the person who serves a counter-notice two choices. He may either, under sub-section (2)(a), admit that the RTM company was entitled, on the relevant date, to acquire the right to manage, or, under sub-section (2)(b), he may allege “by reason of a specified provision of this Chapter” that the RTM company was not so entitled. A counter-notice must also contain the required particulars and comply with the requirements for the form of counter-notices prescribed by regulations.

32.	Under section 84(3) the effect of a counter-notice alleging that the RTM company was not entitled to acquire the right to manage is that the RTM company may apply to a leasehold valuation tribunal for a decision, which will determine whether it was entitled to acquire the right to manage. Thus a statutory process is begun. It is open to the RTM company either to go on with the process by making an application to a tribunal, or to refrain from doing so. 

33.	In this case, as Ms Bailey confirmed, it has never been suggested that the appellant’s counter-notice was an invalid counter-notice. What is suggested, however, is that it was incumbent on the appellant in that counter-notice to raise every matter it wanted the LVT to decide. The counter-notice, it is suggested, had to set out all the issues on which the appellant, as landlord, sought a conclusion from the LVT. 

34.	I do not accept that proposition. In the first place, there is no statutory requirement to that effect. Section 84 does not provide that if an application is made by the RTM company under section 84(3) a counter-notice is to be treated by the leasehold valuation tribunal as delimiting its jurisdiction. Section 84(3) effectively defines the scope of a tribunal’s jurisdiction as being to determine whether the RTM company was “on the relevant date entitled to acquire the right to manage the premises”. That is its statutory remit. There is no provision in section 84, or elsewhere in the 2002 Act, whose effect is to confine that jurisdiction to the contents of the counter-notice that has prompted the RTM company to apply for a determination of its entitlement to acquire the right to manage. 

35.	In my view it is a perfectly legitimate point for a landlord to take in opposing a claim to acquire a right to manage its premises that the procedures prescribed in the 2002 Act and the 2010 regulations have not been correctly followed. This may include the contention that either the notice of invitation to participate required by section 78 or the claim notice required by section 79, in accordance with the requirements in section 80, is materially defective and thus invalid. It is, of course, desirable that such a point should be taken at the earliest opportunity and should, if possible, be raised in the counter-notice given under section 84. But this is not to say that a tribunal can avoid the task of satisfying itself that the statutory procedures have been correctly followed if the point is taken only after the counter-notice has been served, as it was in this case – in the appellant’s statement of case. 

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. 

37.	In this case it was one of the parties that raised the point, and it did so before the case came before the LVT. In paragraph 1 of the outline of its grounds of opposition to the right to manage claim the appellant had expressed its concern about the apparent failure of the respondent to follow the statutory procedure for notice of invitation to participate. And the respondent reacted in its own statement of case. But the LVT did not reach a conclusion on this point in its decision. It declined to do so because it did not think its jurisdiction went that far. This is plain from paragraph 12 of the decision. There would have been no point in the LVT saying it was not open to the appellant to seek to add to the grounds in its counter-notice if it was, nevertheless, proposing to deal with the additional question raised in the appellant’s statement of case. And, as Mr Skelly pointed out, when the LVT refused permission to appeal it did not say that, in spite of its view on the purpose of section 84(2)(b) of the 2002 Act, it had in fact reached a conclusion on whether the procedure for the giving of notice of invitation to participate had been followed. It did not say the appeal on this ground would be academic. On the contrary, what it said was, in effect, that it had no jurisdiction to consider points not raised in the appellant’s counter-notice, and that it had no choice but to decide only “the remaining two grounds from the counter notice”.

38.	The question raised by the appellant in its statement of case was perfectly clear. The appellant was saying that the respondent had failed to produce a copy of the notice of invitation to participate given to the tenants, and therefore that it was not possible to be sure that the “correct procedures” had been followed. When that question was raised the appellant was waiting for an answer from the respondent to its request in its letter of 3 May 2011 for copies of the notice of invitation to participate “as served on all lessees”. In their letter of 11 May 2011, Rendall & Rittner, on behalf of the respondent, had noted that request and promised to “revert shortly”. In the circumstances it seems to me to have been reasonable for the appellant to query whether the statutory procedure had in fact been followed, and to do so in the way that it did. 

39.	I do not think that the last sentence of paragraph 13 of the LVT’s decision can be read as a clear conclusion on that question. In paragraph 7 of its decision the LVT acknowledged that the appellant had sought to add a further ground in opposing the claim. And it was to this further ground that the LVT was referring in paragraph 12 when it said it was “not open to a respondent landlord to seek to add to [the grounds set out in its counter-notice] at a later date”. The last sentence of paragraph 13 indicates that the LVT did not have before it what it considered to be a copy of the respondent’s notice of invitation to participate. It is hard to think that the LVT could have referred to the “omission of a copy of the Invitation to Participate from the bundle” if it thought the bundle contained a copy of that notice. Again, when refusing the appellant’s application for permission to appeal, the LVT referred to “the omission of copies of some of the relevant documents”. The “omission” referred to both in the LVT’s decision itself and in its decision on the application for permission to appeal can only be taken to mean that, in the LVT’s view, the documents provided by the respondent in the bundle sent with its statement of case did not include a copy of the notice of invitation to participate. 

40.	If that is what the LVT meant I think it was right. Rendall & Rittner’s circular letter dated “May 2010”, a copy of which was included in the bundle at tab 1, does not seem to me to be a notice of invitation to participate in the form prescribed by the statutory provisions of section 78 and regulations 3 and 8 of the 2010 regulations. Nor does the document headed “NOTICE OF INVITATION TO PARTICIPATE[:] TRINITY WHARF (SE16) RTM COMPANY LIMITED[:] CONSENT FORM”, a copy of which was included in the bundle at tab 2.  Nor do the letters dated 15 July 2010, copies of which were included at tab 5. Nor again do the letters dated 25 August 2010, copies of which were included at tab 6. I cannot see how a consent form indicating “agreement” to an invitation to participate could itself be regarded as being a notice of invitation to participate, or how in referring to “Schedule 1 (Form of Notice of Invitation to Participate)” it could be regarded as being that schedule. The schedule, if it exists, has never been provided to the appellant, nor was it produced to the LVT, nor has it been included in the papers before the Tribunal in this appeal. 

41.	As Mr Skelly submitted, if the LVT was going to tackle the question raised by the appellant in paragraph 1 of the grounds of opposition in the statement of case, it needed to satisfy itself that a valid notice of invitation to participate had in fact been given to the tenants who ought to have been given such a notice, in accordance with the statutory requirements in section 78 of the 2002 Act and regulations 3 and 8 of the 2010 regulations. I do not believe it did that. Nor, in my view, could it rely on section 78(7) as justifying the approach it took, which was to assume, without seeing it, that a notice of invitation to participate had been given and that any shortcomings in its form and content would have been immaterial. Section 78(7) does not excuse the omission of the particulars required “by or by virtue of” section 78. What it does excuse is “any inaccuracy” in those particulars.

42.	But in any event, without going further than I should in deciding the appeal, I accept Mr Skelly’s submissions on the scope of the LVT’s jurisdiction, which in my view was broader than the LVT said it was in paragraph 12 of its decision.  

Conclusion

43.	It follows that this appeal must be allowed and the respondent’s application remitted to the First-tier Tribunal for redetermination. Within 21 days of the date of this decision the appellant must seek from the First-tier Tribunal directions for the further conduct of the case. 

Sir Keith Lindblom, President

        7 October 2013