Assethold Ltd v 13-24 Romside Place RTM Co. Ltd [2013] UKUT 603 (LC)

IN THE MATTER OF AN APPEAL AGAINST A DECISION
UT Neutral citation number: [2013] UKUT 603 (LC)Venue OF THE LEASEHOLD VALUATION TRIBUNAL FOR THE, LONDON RENT ASSESSMENT PANEL
Between
Assethold Ltd13-24 Romside Place RTM Co. Ltd
[1]This is an appeal from the decision of the Leasehold Valuation Tribunal for the London Rent Assessment Panel ("the LVT") dated 17 August 2012 whereby the LVT decided that the respondent, a right to manage company, was entitled on the relevant date (16 March 2012) to acquire the right to manage premises at 13-24 Romside Place, Brooklands Lane, London RM7 7EE ("the property"). The appellant is the freehold owner and landlord of the property.[2]Various points were raised by the appellant before the LVT as to why the respondent was not entitled to acquire the right to manage the property. The LVT rejected all the appellant's arguments, but the LVT did subsequently grant to the appellant permission to appeal to the Upper Tribunal upon one of the grounds raised in the appellant's grounds of appeal, namely whether the LVT was correct in deciding that an error in the notice inviting participation (which had been served under section 78 of the Commonhold and Leasehold Reform Act 2002) did not invalidate the claim notice which had subsequently been served under section 79. The appellant applied to the Upper Tribunal for permission to argue its other grounds of appeal (on which permission had been refused by the LVT) but permission was refused by the Upper Tribunal. Accordingly the only point raised in the present appeal is the above-mentioned point upon which permission to appeal has been granted by the LVT.[3]This appeal has proceeded upon written representations. The respondent, having originally served a respondent's notice and statement of case, has subsequently withdrawn from the proceedings and has indicated it intends to take no part in them. Accordingly the present appeal is to be determined upon written representations in circumstances where there is no participation by or representation on behalf of the respondent.[4]The point in issue is this. Section 79(1) and(2) provides as follows: 79 Notice of claim to acquire right (1) A claim to acquire the right to manage any premises is made by giving notice of the claim (referred to in this Chapter as a “claim notice”); and in this Chapter the “relevant date”, in relation to any claim to acquire the right to manage, means the date on which notice of the claim is given. (2) The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before. The appellant contends (i) that a valid claim notice can only be given if a valid notice of invitation to participate has first been served as required by subsection 79(2), and (ii) that on the facts of the present case no such valid notice of invitation to participate ("NIP") was served prior to the service of the claim notice dated 16 March 2012.[5]The reason why the appellant contends that no valid NIP was served is that the document which was served purporting to be the NIP was a document dated 20 February 2012 which stated in paragraph 4:
"The names of the landlord and of the person (if any) who is party to a lease of the whole of (sic) any part of the premises otherwise than as landlord or tenant are BERMAC ESTATES PLC"
However as at 20 February 2012 the landlord was not Bermac Estates Plc but was instead the present appellant, namely Assethold Limited.[6]The LVT found as a fact in paragraph 24 of its decision that the freehold was acquired by Assethold from Bermac on 24 January 2012 and that Assethold was shown as the freehold owner on the Land Register on 20 February 2012. In order to support this finding the appellant has provided copy Land Registry documents showing that on 24 January 2012 Assethold was registered with title absolute in respect of the property.[7]Section 78 of the 2002 Act makes provision in respect of NIPs in the following terms:
“78 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. (5) A statement under subsection (4)(b) must— (a) specify a place (in England or Wales) at which the articles of association may be inspected, (b) specify as the times at which they may be inspected periods of at least two hours on each of at least three days (including a Saturday or Sunday or both) within the seven days beginning with the day following that on which the notice is given, (c) specify a place (in England or Wales) at which, at any time within those seven days, a copy of the articles of association may be ordered, and (d) specify a fee for the provision of an ordered copy, not exceeding the reasonable cost of providing it. (6) Where a notice given to a person includes a statement under subsection (4)(b), the notice is to be treated as not having been given to him if he is not allowed to undertake an inspection, or is not provided with a copy, in accordance with the statement. (7) A notice of invitation to participate is not invalidated by any inaccuracy in any of the particulars required by or by virtue of this section.”
[8]As contemplated by section 78(2)(d), regulations have been made which provide, inter alia, for certain other particulars to be contained in a NIP. These are the Right to Manage (Prescribed Particulars and Forms) (England) Regulations 2010 and they provide in paragraph 3: "(1) A notice of invitation to participate shall contain, in addition to the statements and information referred to in section 78(2)(a) to (c) of the 2002 Act (notice inviting participation), the particulars mentioned in paragraph (2). (2) The particulars referred to in paragraph (1) are --(a) ……..(b) the names of the landlord and any third party(c) to (j) …………..”[9]The LVT dealt in paragraphs 24 to 31 of its decision with the significance of the wrong name being given for the landlord in the NIP in the following terms:
“24.Bermac was the Landlord prior to Assethold Limited. The evidence establishes that the freehold was acquired by Assethold Limited from Bermac on 24 th January 2012 and that Assethold Limited was shown as the Freehold Owner on the Land Register on 20 th February 2012. 25. At the hearing, Mrs Mahoney conceded that the reference to Bermac in the NIP was in error. 26. Regulation 2(2)(b) of the Regulations provides that a NIP shall contain the name of the Landlord. This NIP did not do so. 27. Having regard to the decisions of the Upper Tribunal (Lands Chamber) in the cases of Assethold Limited v 125 Yonge Park RTM Company Limited [2011] UKUT 379 (LC) and Assethold Limited v 14 Stansfield Road RTM Company Limited [2012] UKUT 262 (LC) , we find that this error cannot be categorised as an “inaccuracy” and therefore the defect is not cured by reason of Section 78(7) of the Act. 28.Thus, the issue we must determine is whether this error in the NIP invalidates the Claim Notice. 29. The Claim Notice was served on Assethold Limited (as well as Bermac) and it is clear that no person (individual or company) was prejudiced by the error in the NIP. 30. The Claim Notice itself contained no errors. 31. In these circumstances, we conclude that the error in the NIP did not invalidate the Claim Notice.”
Submissions on behalf of the appellant[10]The appellant has provided written submissions to the Upper Tribunal prepared by Mr Justin Bates of counsel. In summary the following submissions are advanced on the appellant's behalf:(1) There was an error in the NIP in that it failed to state the name of the landlord. Instead it stated the name of a company which had been the landlord but was no longer the landlord.(2) Section 78 (1) and (2) are in mandatory terms in requiring that, before making a claim to acquire the right to manage any premises, the RTM company "must" give a notice under section 78 to certain persons; this notice "must" contain certain particulars (including those required by regulations); regulation 3(2)(b) provides that a notice of invitation to participate "shall" contain certain information including the name of the landlord; and regulation 8 provides that a notice of invitation to participate "shall" be in the form set out in schedule 1 to the regulations.(3) The LVT held that there had been a failure to comply with regulation 3(2)(b) and that this error was not capable of being cured by section 78(7). The LVT was correct so to hold and there is no appeal against this part of its decision.(4) In consequence as at the date that the claim notice was served under section 79 the provisions of section 79(2) had not been complied with because no valid NIP had previously been given as required by that subsection.(5) The LVT concluded that the error in the NIP did not invalidate the claim notice. It gave no reasons for this conclusion beyond observing that no person was prejudiced by the error in the NIP and that the claim notice itself contained no errors. This conclusion is wrong. Section 79(2) is quite clear in providing that the claim notice "may not be given" unless the appropriate NIP has first been given. There is no power to dispense with the provisions of section 79(2) or to waive the consequences of failure to comply with these provisions. The question of whether anyone was prejudiced by the error is an irrelevant consideration.(6) The general rule is that a failure to comply with a mandatory requirement renders a notice ineffective, see per Morgan J in Sinclair Gardens Investments (Kensington) Ltd v Poets Chase Freehold Co Limited [2007] EWHC 1776 (Ch) , which case also recognises that this general position may be modified by a provision in the relevant legislation dealing with matters such as inaccuracies or misdescriptions.(7) The provisions of section 78(7) should be noted. There are similar provisions in section 81(1) in relation to a claim notice 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"
. The presence of these express provisions confirms the submission that no dispensing or waiving power can be implied beyond the ambit of these provisions. In summary, Parliament has provided in the statutory provisions for the extent to which errors in the notice can be treated as not invalidating the notice. (8) There is also the principle laid down in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 in respect of which it was stated in the Poets Chase case:
"Further, the general position is modified by the application of the Mannai test as to the reaction of a reasonable recipient to the imperfect notice."
In connection with this Mr Bates made reference to the following passage in Burnham v Mount Cook Land Ltd [2001] EWCA Civ 1712 per Chadwick LJ at paragraph 26:
“26 Mr Justice Rimer (with whose judgment the other members of the Court, Lord Justice Pill and Lord Justice May, agreed), after referring to the speeches in the House of Lords in the Mannai case, pointed out, at paragraph 17 of his judgment, that it was important “to emphasise that the House of Lords was not saying that anything less than proper compliance with the terms of a contractual break clause would be sufficient to effect the break”
. He referred, also, to the passage in the judgment of Lord Justice Peter Gibson in York v Casey [1998] 2 EGLR 25 , at page 27C-D which I have already set out. He went on, at paragraph 22, to say this:
“…I consider that the better approach is to look at the particular statutory provisions pursuant to which the notice is given and to identify what its requirements are. Having done so, it should then be possible to arrive at a conclusion as to whether or not the notice served under it adequately complies with those requirements. If anything in the notice contains what appears to be an error on its face, then it may be that there will be scope for the application of the Mannai approach, although this may depend on the particular statutory provisions in question. The key question will always be: is the notice a valid one for the purpose of satisfying the relevant statutory provision.”
In my view, that passage encapsulates, succinctly and accurately, the correct approach. I may add that I think that that is the approach to be adopted not only in relation to notices served under statute but also to notices served under contractual provisions such as those commonly found in leases.” (9) In the present case there is no scope for "saving" the NIP under the Mannai approach because a reasonable tenant would not necessarily know who the freeholder was at any time; Parliament clearly thinks that there are good reasons for telling the leaseholders who the landlord is before they decide whether they want to join the RTM company; and a tenant needs to be given the correct information in order to permit them to make an informed decision about whether to join the RTM company. (10) If the NIP was invalid then it necessarily follows that the notice of claim was invalid because the invalidity of the NIP meant that section 79 (2) was not complied with. Discussion[11]I conclude that the present appeal must be allowed. My grounds for so concluding are substantially those advanced in argument by Mr Bates and are as follows.[12]As at the date of the NIP the landlord was not Bermac Estates PLC but was Assethold Ltd. Accordingly the NIP failed to comply with the requirements of section 78(2)(d) and the regulations because it failed to contain the name of the landlord.[13]Section 78(7) provides that a NIP is not invalidated by "any inaccuracy in any of the particulars required by or by virtue of this section". However a distinction must be drawn between a failure to provide the required particulars and an inaccuracy in the statement of the particulars, see the analysis of the Upper Tribunal (George Bartlett QC, President) in Assethold Ltd v 14 Stansfield Road RTM Company Limited [2012] UKUT 262 (LC) agreeing and adopting the approach of this Tribunal (Her Honour Judge Walden-Smith) in Assethold v 15 Yonge Park RTM [2011] UKUT 379 (LC) . In my judgement a failure to give the name of the landlord (or to give an entirely incorrect name for the landlord) constitutes a failure to provide the required particulars rather than an inaccuracy in the statement of the particulars. Accordingly I conclude that the NIP was not saved by section 78(7) from being invalid. The LVT so concluded. I agree with the LVT on this point. There has been no appeal against this aspect of the LVT's decision.[14]No argument was advanced by the respondent (who has not participated as a respondent in this appeal) to the effect that the NIP was nonetheless valid by reason of some other legal argument, such as an argument based upon the Mannai case. I conclude in these circumstances that I must accept Mr Bates's submissions that the NIP was indeed invalid. (For the avoidance of doubt I should state that I have not overlooked a document on the file entitled Respondents Statement of Case dated 20 February 2013 but, in so far as this document does not fall to be treated as withdrawn bearing in mind the respondent's subsequent withdrawal from these proceedings, there is nothing in the document that can justify a conclusion that the NIP was valid).[15]It is a prerequisite under section 79(2) before a claim notice can be given that "each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before". Thus a valid NIP must be served as contemplated by this subsection prior to any claim notice being given. If a claim notice is given in circumstances where there has not been service of a valid NIP as contemplated by section 79(2) then the claim notice is invalid. The claim notice cannot be saved by section 81(1) because a failure to comply with section 79(2) cannot be said to constitute an "inaccuracy in any of the particulars required by or by virtue of section 80". Conclusion[16]I find that the claim notice dated 16 March 2012 was served in circumstances where there had not been compliance with section 79(2). In consequence the respondent was not entitled on that date to serve a claim notice. It follows that the appeal must be allowed. I conclude that the respondent was not entitled to acquire the right to manage the property on the relevant date (16 March 2012). His Honour Judge Huskinson 28 November 2013

Cited in 4 later judgments