EASTERN PYRAMID GROUP CORPORATION SA v SPIRE HOUSE RTM COMPANY LIMITED [2020] UKUT 199 (LC)

UPPER TRIBUNAL
LANDS CHAMBER
[2020] UKUT 199 (LC)Case No LRX/147/2019
Between
EASTERN PYRAMID GROUP CORPORATION SAApplicantSPIRE HOUSE RTM COMPANY LIMITEDRespondent
Before
Judge Elizabeth CookeMr Jonathan Upton for AppellantNicola Muir for RespondentProperty: Spire House,, Lancaster Gate,, London,, W2 3NP, Judge Elizabeth CookeCatchwords: LANDLORD AND TENANT – RIGHT TO MANAGE – withdrawal of a claim notice – service of notice of withdrawal on landlord – service of notice of withdrawal on qualifying tenants AN APPEAL AGAINST A DECISION OF THE FIRST TIER TRIBUNAL (PROPERTY CHAMBER)
[1]The respondent claims to be entitled to the right to manage Spire House, a property in Lancaster Gate including 23 residential flats. This appeal is about whether it has withdrawn a notice of claim, pursuant to section 79 of the Commonhold and Leasehold Reform Act 2002, served on the appellant landlord on 18 March 2019. The reason why that matters is that if that notice was not withdrawn by a letter dated 17 June 2019, a second claim notice served on that date cannot have been valid.[2]The First-tier Tribunal (“the FTT”) decided on 30 October 2019 that the first notice was withdrawn; this Tribunal gave permission to appeal 8 January 2020 and gave directions for the appeal to be determined on written representations as a review of the decision of the FTT. Representations have been made on behalf of the appellant by Mr Jonathan Upton and for the respondent by Ms Nicola Muir, both of counsel.[3]In the paragraphs that follow I set out briefly the factual and legal background to the dispute; I then consider the appeal; I examine the FTT’s decision and the arguments made by the parties, and explain my conclusion that the notice of 18 March 2019 was indeed withdrawn by the letter of 17 June 2019. The factual background[4]Spire House is, as the FTT put it, an unusual building in three parts; a Victorian church tower and spire, a block of 23 flats on 6 floors accessed through the tower with a car park beneath, and an enclosed garden. The appellant is the freeholder of the flats and holds a lease of the other two parts.[5]Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) enables qualifying tenants (holding long leases of flats) to acquire the right to manage their block, provided that it is a self-contained building (as Spire House is) and provided that at least two-thirds of the flats in the building are held by qualifying tenants (sections 72 and 75). 22 of the 23 flats in Spire House are held by qualifying tenants.[6]Sections 73 and 74 provide that in order to acquire the right to manage the tenants must set up an “RTM company” of which they are entitled to be members.[7]The RTM company must ensure that all qualifying tenants in the building are invited to become members by sending them a “notice inviting participation” under section 78 of the 2002 Act; the next step is to give notice under section 79 of the company’s claim to acquire the right to manage to (among others) everyone who is a landlord under a lease of the whole or any part of the building.[8]The landlord may give a counter-notice in response (section 84) saying either that the company is entitled to the right to manage or that it is not entitled because of a specified 4 provision in Part 2 of the 2002 Act. In the latter event, section 84(3) gives the company the right to apply to the FTT for a determination.[9]This appeal arises from the following sequence of events:a. On 18 March 2019 the respondent served a claim notice (“the first notice”) seeking to exercise the right to manage the building. The notice was served on the appellant and on the freeholders of the tower and of the garden.b. On 29 April the appellant sent a counter-notice saying that the first notice did not comply with a number of provisions of the 2002 Act.c. On 18 June 2019 the respondent served a second claim notice (“the second notice”) under cover of a letter dated 17 June 2019.d. On 24 July 2019 the appellant sent a counter-notice which stated that the second notice was invalid, for non-compliance with the same provisions that it had referred to in response to the first notice and also for non-compliance with section 81(3) of the 2002 Act.[10]Section 81(3) states: “(3) Where any premises have been specified in a claim notice, no subsequent claim notice which specifies—(a) the premises, or(b) any premises containing or contained in the premises, may be given so long as the earlier claim notice continues in force.[11]Following the second counter-notice the respondent applied to the FTT under section 84(3) for a determination that it was entitled to acquire the right to manage. There were three respondents: the appellant, and the freeholders of the tower and the garden. The second and third respondents have taken no part in this appeal.[12]The appellant’s case before the FTT, and on appeal, is that when the second notice was given the first remained in force because it was not withdrawn by the letter dated 17 June 2019.[13]The respondent, as the applicant in the FTT, had three arguments in response:a. That the first notice was withdrawn by the letter of 17 June 2019. 5b. Alternatively, that the first notice was invalid and therefore was not in force when the second one was given,c. As a further alternative, that the appellant was estopped from denying that the first notice was invalid, because it asserted that it was invalid in the first counter-notice.[14]The FTT decided only the first of those three arguments because “the first of the Applicant’s 3 arguments would be the simplest to argue and, if upheld, determinative of the application as a whole”. The FTT decided that the first notice was withdrawn by the letter of 17 June 2019, and that therefore the second notice was valid. The issues in the appeal[15]Section 86 of the 2002 Act says this about the withdrawal of the claim notice:
“(1) A RTM company which has given a claim notice in relation to any premises may, at any time before it acquires the right to manage the premises, withdraw the claim notice by giving a notice to that effect (referred to in this Chapter as a “notice of withdrawal”). (2) A notice of withdrawal must be given to each person who 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, (c) a manager appointed under Part 2 of the 1987 Act to act in relation to the premises, or any premises containing or contained in the premises, or (d) the qualifying tenant of a flat contained in the premises.”
[16]There are circumstances where a claim notice is deemed to have been withdrawn, set out in section 87:
“(1) If a RTM company has been given one or more counter-notices containing a statement such as is mentioned in subsection (2)(b) of section 84 but either— (a) no application for a determination under subsection (3) of that section is made within the period specified in subsection (4) of that section, or (b) such an application is so made but is subsequently withdrawn, the claim notice is deemed to be withdrawn. 6 (2) The withdrawal shall be taken to occur— (a) if paragraph (a) of subsection (1) applies, at the end of the period specified in that paragraph, and (b) if paragraph (b) of that subsection applies, on the date of the withdrawal of the application.”
[17]Section 84(4) requires the RTM company to make an application to the FTT for a determination within two months of the service of the counter-notice. Accordingly the first notice would have been deemed withdrawn on 29 June 2019.[18]The appellant says that the first notice was not withdrawn by the respondent in the manner prescribed by section 86, first because the letter of 17 June 2019 was not a notice of withdrawal given to the appellant (section 86(2)(a), and second because notice of withdrawal was not given to the qualifying tenants (section 86(2)(d)). Was a notice of withdrawal given to the appellant?[19]The letter of 17 June 2019, which enclosed the second notice, said this:
“Following receipt of your counter-notice the decision has been made to reserve the Notice of Claim and to restart the process from this stage relying on the existing Notices of Participation. Accordingly we enclose, by way of service upon you, a Claim Notice claiming the rights to manage the property known as Spire House…”
[20]The respondent says that this was a notice of withdrawal conforming to the requirements of section 86. It argued before the FTT[21]The FTT referred to the principle of construction derived from Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, which was about whether a tenant’s break notice was valid when it had specified the wrong date by mistake. The FTT quoted the summary given at paragraph 40 of Lay v Ackerman [2004] EWCA Civ 184:
“One must first consider whether there was a mistake in the information contained in the notice... If there was such a mistake, one must then consider how, in the light of the mistake, a reasonable person in the position of the recipient would have understood the notice in the circumstances of the particular case. Finally one must consider whether, as a result, the notice would have been understood as conveying the information required by the contractual, statutory or common law provision pursuant to which it was served.”
[22]What the FTT said about the letter was this: 7 “11. There is a mistake in the letter of 17 June 2019. The Applicant’s solicitors meant to say “re-serve” the Notice of Claim. The First Respondent claims that they understood this word to be “reserve” and that the phrase “reserve the Notice of Claim” meant that the Applicant was reserving the right to rely on that Notice.[12]Taken in isolation, the Tribunal does not understand the phrase “reserve the Notice of Claim.” The Applicant’s explanation that there is a hyphen missing makes it comprehensible but it is certainly not obvious on first reading that there is a missing hyphen. While the First Respondent’s interpretation is a possible one. The language is jarring and leads to the question why a lawyer intending to convey that they were reserving their position would not use more typical or clearer language, such as stating that the service of the notice of claim is “without prejudice” to the first. At most, the phrase is ambiguous but it is noteworthy that the First Respondent did not seek any clarification in the 5 weeks between receiving the letter and serving their Counter-Notice.[13]The answer as to why the First Respondent did not seek clarification may lie in the fact that the phrase “reserve the Notice of Claim” would never have been read in isolation. The question is not what this phrase conveys but what the whole letter taken in context, conveys. On that, the Tribunal is satisfied that the First Respondent would have been left in no doubt that the Applicant was withdrawing its notice.”[23]The FTT identified the following features of the context in which the letter would have been read:a. In the same sentence the letter said that the process was being “restarted”, “notably without the hyphen”. The appellant’s solicitors knew that the process could not be re-started unless the first notice was withdrawn; they also knew that the respondent had lost a previous attempt to acquire the right to manage through the FTT in 2015 and that although they might have made an error “they would also have learned from their mistakes”.b. The respondent had not criticised or objected to the first counter-notice.c. The second notice was clearly different from the first and corrected errors identified by the appellant.d. The was no reason to retain the right to rely on the first notice.e. Even if the appellant misunderstood the letter of 17 June 2019 on receipt, by the time its solicitors served the second counternotice they knew that the time limit for the respondent to apply to the FTT on the basis of the first notice had passed and that therefore they had no intention of relying on the first notice. The arguments for the appellant 8[24]The appellant refers to the decision in Mannai and to Lord Steyn’s words at 767G (recently referred to in the Court of Appeal’s decision in Stobart Group Limited v Stobart [2019] EWCA Civ 1376):
“The question is not how the landlord understood the notices. 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.”
[25]The appellant says that the mistake identified by the FTT, that the letter said “reserve” when it meant “re-serve”, was not the sort of mistake to which the principle in Mannai applies. The respondent says that the word “reserve” should have read “re-serve” – in other words that it was a typographical error. But even if that is put right, says the appellant, the word “re-serve” does not mean “withdraw” and would not have been so understood by the reasonable recipient. Moreover, what this particular landlord understood is not the point; only the reasonable recipient is relevant; so the fact that the appellant did not seek clarification of the letter is irrelevant, and in any event the fact that the appellant served a counter-notice relying on section 81(3) demonstrates that it did not in fact understand the notice to have been withdrawn.[26]Turning to the FTT’s five points of context, as to point (a) the appellant says that the FTT cannot import to the reasonable recipient a belief that the respondent understood the statutory scheme and was going to get it right. As to point (d), again the FTT is assuming that the reasonable recipient would assume that the writer of the notice understood that there was no reason to continue to rely on the first notice and that therefore the letter must have been intended as a notice of withdrawal.[27]Point (b) is said to be at best neutral; the reasonable recipient would not infer from the absence of comment on the first counternotice that the respondent accepted that the notice was bad and was therefore withdrawing it.[28]Paragraph (e) is said not to help the respondent because the notice must be construed on the day it is received, not at the later point when the first notice expired for want of an application to the FTT.[29]That leaves only point (c) which, it is argued for the appellant, is simply insufficient to lead the reasonable recipient to understand that the first notice was withdrawn. The difference between the two notices was minimal – being only the date and the names of the qualifying tenants – and might not even have been noticed by the reasonable recipient. The reasonable recipient, says the appellant, would have understood the letter of 17 June 2019 to have been a letter enclosing the second notice and not a notice of withdrawal of the first notice. The arguments for the respondent[30]The respondent draws attention to the explanation of the scheme of Part 2 of the 2002 Act given by Lewison LJ in Elim Court RTM Co Limited v Avon Freeholds Limited [2017] EWCA Civ 89 at paragraphs 2 to 8. I do not set it in full here, but I accept that the provisions 9 relating to the right to manage were enacted for the benefit of tenants. The respondent therefore argues that the Act should be construed so as to make it effective to confer the right to manage upon tenants. The procedure was intended to be simple and an unduly literal construction of the Act should be avoided. The legitimate interests of the landlord should be safeguarded, but no such interest is damaged here by a finding that the first notice was withdrawn.[31]The respondent observes that there is no prescribed form for a notice of withdrawal, and there is no requirement that the words “withdraw” or “withdrawal” be used. All the notice has to do is to inform the addressee that the company no longer relies upon the first notice. Withdrawal is a unilateral act and does not require the landlord’s consent, and indeed the first notice would have been deemed withdrawn only a few days after 17 June by virtue of the respondent not having applied to the FTT for a determination on the basis of the first notice by 29 June 2019.[32]The respondent points to the provisions of sections 88 and 89 of the 2002 Act. The RTM company is liable to pay the landlord’s costs if it is unsuccessful before the FTT, or if the claim notice is withdrawn or ceases to have effect; and liability for those costs continues only until the point when the notice is withdrawn or ceases to have effect. The respondent therefore argues that the purpose of the provisions about withdrawal are, firstly, to indicate that the procedural timetable has come to a halt, and second, to mark the point at which the RTM company’s liability for the landlord’s costs ceases. It is not a provision that affects the landlord’s property rights.[33]Furthermore the respondent says that the notice was unambiguous. It says nothing to contradict the allegation of invalidity in the first notice and the letter as a whole in its context would leave the reasonable recipient in no doubt that the respondent accepted the appellant’s first counter-notice and accepted that the first notice was invalid. The letter says that the respondent is restarting the process, it encloses a new notice, and the new notice is not the same as the old notice. It is therefore clear that the first notice is withdrawn and a new one is being served.[34]The respondent refers to the Tribunal’s decision in St Stephen’s Mansions RTM Company Ltd v Fairhold NW Limited [2014] UKUT 0541, where the Deputy President said at paragraph 38:
“The reasonable recipient must … 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.”
[35]Accordingly, says the respondent, the reasonable recipient is taken to be familiar with the statutory scheme and to know its requirements. That does not mean that the reasonable recipient has to assume that the party giving the notice had complied with those requirements, but it would read the notice with the requirements in mind and would consider any ambiguity in that context. 10[36]In this case it is said that the appellant demonstrated that it knew that the first notice had been withdrawn by responding to the second one. It is also said that by the time the appellant served the second counternotice it knew in any event that the first notice was deemed withdrawn by virtue of section 87; there is no reason, says the respondent, why a notice has to be construed on the date it is received. Conclusion[37]Whilst I accept that the right to manage provisions were enacted for the benefit of tenants, I do not think that that makes a difference to the way that documents are to be construed. The landlord is entitled to know what is happening and to have clear information about what is going on in the process of the acquisition of the right to manage.[38]As both parties acknowledge, the decision in Mannai sets out the important principle that what matters is not what this recipient should have been able to work out from the letter – for example in the light of the history of the dealings between them – but what the reasonable recipient would have understood. The reasonable recipient will not simply assume that the sender of the letter is going to get the procedure right and will not make mistakes. But the reasonable recipient will read the document objectively and is aware of the statutory scheme.[39]The letter of 17 June 2019 is not a model of clarity. At the heart of the problem, as the FTT identified, is the word “reserve”. It is ambiguous. Does it mean that the respondent reserves its position about the first notice, and does not withdraw it? Two points lead me to believe that the reasonable recipient would have understood, as the FTT said, that the first notice was being abandoned. One is that the word has to be read in context; the letter says “the decision has been made to reserve the Notice of Claim and to restart the process”. It says not just “reserve”, but “reserve … and restart.” There is no difficulty in reading that second verb as “re-start”, and that is the key to what is being said. The respondent is starting again. And the second reason that the reasonable recipient would have read this as a notice of withdrawal is that the reasonable recipient is familiar with the terms of the statute and knows that the process cannot be started again without withdrawing the first notice; therefore the ambiguous word “reserve” unlikely to have meant “reserve our position about the first notice”. It means re-serve, in the sense of serving a fresh notice.[40]In support of that, which is the reading the FTT adopted, is the FTT’s point (b) that there is no expression of disagreement with the first counternotice. The respondent is not saying “we disagree, we reserve our position, but here is a second notice.” And in further support of that is the FTT’s point (c), the fact that the second notice is a different notice. The fact that differences are minimal is not relevant, the reasonable recipient would see that they were different notices and would therefore know that the letter is not saying “we are re-serving the first notice”.[41]So whilst I am not persuaded by the FTT’s point (a), which is about the appellant’s reactions rather than those of the reasonable recipient, nor by its (d), which is ambiguous, or (e) – because I do not think that there is any element of “wait and see” in the process of construction of the letter – I take the view that the FTT was correct and I uphold its decision on this point. 11 Was a notice of withdrawal given to each of the qualifying tenants?[42]On 18 June 2019 the respondent wrote to each of the qualifying tenants. The letter said:
“As you may be aware, the decision was made to reserve the Claim Notices due to queries raised by one of the parties above, Consequently, we now enclose by way of service upon you, a further copy of the signed Claim Notices and continuation sheet for each of the parties listed above.”
[43]The respondent points out that the appellant is only aware of this letter because, in its statement of case before the FTT, the appellant put the respondent to proof that a notice had been served on all persons to whom a notice of withdrawal must be given according to section 86. But for these proceedings the appellant would have no reason to know about this letter.[44]As we have seen, section 86 of the 2002 Act says that an RTM company “may withdraw the claim by giving a notice to that effect”, and that a notice of withdrawal “must be given” to (among others) each person who is a landlord under a lease of the whole or part of the premises and to each qualifying tenant of a flat in the building.[45]The appellant says that even if notice of withdrawal was properly given to it as landlord, the sending of notice of withdrawal to the qualifying tenants one day later was too late to complete the withdrawal of the first notice before service of the second, and ineffective even when it was sent because a reasonable recipient of the letter would not understand it to be a notice of withdrawal. So there is a timing point, and a construction point.[46]These points were not pleaded at first instance; the FTT at its paragraph 15 said that the argument about service on the tenants was a new point raised in Mr Upton’s skeleton argument. The FTT said at paragraph 16 of its decision: “The Tribunal has no hesitation in rejecting Mr Upton’s submission. Section 86 does not contain such a limitation. What matters is that his client received notice of withdrawal. There is no doubt the other Respondents and the qualifying tenants know of the attempt to acquire the right to manage abut none have sought to express any dissatisfaction with the process. It is not open to the First Respondent in this case to rely on alleged failures of procedure in relation to other parties who have no wish to raise them. The Tribunal is satisfied that, as at 17th June 2019, the Applicant had sufficiently conveyed the withdrawal of their first notice to the First Respondent and the fact that the First Respondent learned of possible flaw in how other were notified considerably later (well after service of the Counter-Notice) is not relevant.[47]I turn to the construction point and the timing point in turn. The construction point 12[48]I can deal briefly with the construction point. It is not clear to me that this point – rather than the timing point – was in fact raised before the FTT, since the FTT seems to refer only to the timing point.[49]What the appellant says is that the letter of 18 June 2019 reads as if another copy of the first notice was being served, and not as service of a fresh claim notice.[50]The letter is not particularly clearly expressed, but the reasonable recipient would have noted the reference to “queries raised” about the notice, referred to as the “first” claim notice which suggests that there is a second one to come, and would have read the enclosed notice and would have seen that it was different from the first notice. The reasonable recipient would therefore have understood that the first notice was no longer relied upon and that a new notice was being served. I find that the letter of 18 June 2019 was a notice of withdrawal of the first notice, served on the qualifying tenants. Was the notice of withdrawal ineffective until the qualifying tenants were served?[51]So there was an effective notice of withdrawal given to the qualifying tenants. But it was not served until the day after the second notice was served; does that mean that withdrawal of the first notice had not yet taken effect?[52]Mr Upton in his skeleton argument says:
“The use of “must” in s.86(2) indicates that the requirement is mandatory.”
He argues that until the notice of withdrawal has been sent to everyone to whom it must be sent, as provided by section 86, the claim notice has not been withdrawn. He refers to what the Deputy President said at paragraph 35 of Triplerose Ltd v Mill House RTM Company Limited [2016] UKUT 80 (LC):
“In the light of the specific prohibition in s.79(2) on the service of a claim notice until 14 dates after a notice of invitation to participate has been given to everyone required to be given one, I do not think it can be suggested that the provisions designed to ensure that every qualifying tenant has the opportunity to participate are inessential, or can be substituted by some alternative means of knowledge.”
[53]The respondent points out that section 86 does not say that withdrawal does not take effect until everyone specified has been served. That is true; but what it says is that withdrawal is effected by service. It is not the case that withdrawal takes effect by, say, burning the notice but that that cannot be done until – or has no effect until – notice of withdrawal has been served. The only action that effects withdrawal is service. If no-one is served, there is no withdrawal. And it would be absurd to suggest that withdrawal would have taken place if, say, one qualifying tenant were served but the landlord was not. Section 86 enables the withdrawal of the notice and sets out how that is to be done, namely by service on all those specified in subsection (2) (a) to (d).[54]What, then, if a person, or a category of persons, has been omitted as was the case here on the date when the respondent says it withdrew the first notice? 13[55]Mr Upton’s quotation from paragraph 36 of the Mill House RTM Company Limited case omits the immediately preceding words:
“The importance of any procedural provision must be assessed before considering the practical consequences of non-compliance on the facts of a particular case.”
[56]Prior to that paragraph the Deputy President had set out the law about non-compliance with the statutory requirements, in the same context as this appeal namely the acquisition of the rights to manage, starting with the decision of the Court of Appel in Natt v Osman [2014] EWCA Civ 1520 where the Chancellor, Sir Terence Etherton said: “24. Where a statute lays down a process or procedure for the exercise or acquisition by a person or body of some right conferred by the statute, and the statute does not expressly state what is the consequence of the failure to comply with that process or procedure, the consequence used to be said to depend on whether the requirement was mandatory or directory. If, on the proper interpretation of the statute, it was held to be mandatory, the failure to comply was said to invalidate everything which followed. If it was held, on the proper interpretation of the statute, to be directory, the failure to comply would not necessarily have invalidated what followed.[25]That approach is now regarded as unsatisfactory since the characterisation of the statutory provisions as either mandatory or directory really does no more than state a conclusion as to the consequence of non-compliance rather than assist in determining what consequence the legislature intended. The modern approach is to determine the consequence of non-compliance as an ordinary issue of statutory interpretation, applying all the usual principles of statutory interpretation. It invariably involves, therefore, among other things according to the context, an assessment of the purpose and importance of the requirement in the context of the statutory scheme as a whole.[57]The law has been further expounded by the Court of Appeal in Elim Court and applied by the Tribunal in Lexham House RTM Company Limited v European Investments & Developments (Properties) Limited [2019] UKUT 390 (LC) where I said: “20. In Elim Court the Court of Appeal had to consider the consequences of the failure to serve the claim notice on the intermediate landlord of a single flat in a block of 40 flats. That intermediate landlord appeared (although findings of fact were not made) to have acquired an intermediate lease as part of an equity release scheme, whereby the tenant in possession under a long lease had sold his interest in return for a lump sum and the right to remain in residence for his lifetime. The intermediate lessee/landlord had no management responsibilities for the block.[21]The Court of Appeal pointed out that the right to manage scheme established by the 2002 Act enabled private persons to acquire property or similar rights. In assessing whether the requirements of the statutory scheme have been 14 complied with, “substantial compliance” will not do (in accordance with the reasoning of the Court of Appeal in Osman v Natt [2014] EWCA Civ 1520). But the court must consider the intention of the legislature in prescribing a particular procedure, in the light of the statutory scheme as a whole (Elim Court paragraph 52). Where critical information, for example, is missing from a notice, it will generally be invalid; where what is missing is of secondary importance then it may be valid.[22]The Court of Appeal went on to consider the effect of failure to serve the notice on the intermediate landlord of one flat, in the context of a scheme designed to enable RTM companies to acquire the right to manage simply and cheaply. It considered the purpose of service and concluded at paragraph 74 that the failure to serve an intermediate landlord with no management responsibilities does not invalidate the notice.[58]So Mr Upton’s starting point, that the word “must” indicates that the requirement is mandatory, reflects a form of analysis of statutory procedural requirements that is no longer appropriate. Instead the purpose and importance of the requirement of service on qualifying tenants, in section 86(2)(d), must be assessed in the context of the statutory scheme in order to determine what is the consequence of the failure to comply with it.[59]It will be clear from what has been said already that the main practical purpose of the notice of withdrawal is to alert the landlord to the fact that the claim to a right to manage has been, so far as the withdrawn notice is concerned, abandoned and also to alert the landlord to the end point of his potential claim for costs. The landlord does not have to do anything in response to the notice of withdrawal; but if the landlord receives a later notice, as in this case, it is vital that it knows whether the earlier notice was withdrawn.[60]Accordingly if the appellant had not been served the notice would not have been withdrawn; the purpose and importance of the requirement is such that non-compliance with that particular requirement must be fatal.[61]But the service of the notice of withdrawal on qualifying tenants does not have any such purpose. It is simply a matter or information. It does not have any effect upon decisions they must make or actions they must take. It is important for them to know that the notice has been withdrawn, and they are entitled to have the notice sent to them; but the consequence of not sending it is not that the withdrawal is ineffective. Service one day late, as in this case, does not make any practical difference to anyone.[62]I would add that one difficulty with the appellant’s argument, as the respondent points out, is that in some circumstances it will be impossible to withdraw a claim notice, for example if any of the potentially large group of prescribed recipients is a company that has gone into liquidation and cannot be served. The appellants’ answer to that is that in those circumstances the RTM company can simply wait for a deemed withdrawal to take effect under section 87, by doing nothing until the expiry of the time limit for application to the FTT. I do not think that Parliament could have intended that outcome, because in some cases 15 it will be important to withdraw a notice quickly and serve another one. If the RTM company realises the day after service that it has made an error in a claim notice, and it cannot serve all the prescribed recipients with a notice of withdrawal, it makes no sense that it should have to sit back and do nothing, potentially for some three months (at least a month for the counternotice (section 80(6)) and then two months for the deemed withdrawal), before serving a fresh notice. The procedure is intended to be straightforward for tenants.[63]More seriously, the appellant’s argument, if correct, would mean that it was not possible for a landlord to know whether a claim notice had been withdrawn on the date that he or she received notice of withdrawal. As the respondent says, normally the landlord would have no information about service on others. One of the purposes of serving a notice of withdrawal is to draw a line under the RTM company’s liability for costs; another is to enable the service of a replacement notice. It cannot be right that in every case a landlord can assert, potentially months after service of the notice of withdrawal, that in fact not all the prescribed recipients were served and that therefore the RTM company’s liability for the landlord’s costs continued beyond the date of the notice until deemed withdrawal took effect, or that therefore a subsequent notice already accepted as valid was in fact invalid.[64]As Ms Muir succinctly puts it:
“It cannot have been Parliament’s intention that the Appellant is entitled to rely on an alleged defect which it did not know about and does not affect it.”
[65]I conclude that it cannot be the case that a notice of withdrawal is ineffective until te qualifying tenants specified in section 86(2)(d) have been served. Withdrawal in this case took effect when the appellant was served with the notice of withdrawal. Conclusion[66]The appeal fails and the decision of the FTT is upheld. The respondent’s application to the FTT for a determination can proceed on the basis that the letter of 17 June 2019 effected the withdrawal of the first notice. Judge Elizabeth Cooke 19 June 2020 16 (signature 1) (signature 2) (Judge Name) (Member Name) Dated: (insert date)

Cited in 1 later judgment