Right to Manage: Court of Appeal Overturns Upper Tribunal & Finds an RTM Claim Notice Had Not Been Valid Due to Procedural Failures (Avon Freeholds Limited v Cresta Court E RTM Company Ltd – 2025)

Avon Freeholds Limited v Cresta Court E RTM Company Ltd [2025] EWCA Civ 1016 was recently considered by the Court of Appeal, following a second appeal by the freeholder.

Our earlier report sets out the background to this case, which asks whether a leaseholder, whose lease has been granted but not yet registered at the Land Registry, could be classed as a qualifying tenant under the Commonhold and Leasehold Reform Act 2002 Chapter 2 Part 1. The court was then asked whether, if the leaseholder was a qualifying tenant for the purposes of the Act, did a failure to serve a Notice of Invitation to Participate under section 78 on the equitable leaseholder invalidate the RTM Company’s claim notice?

The background

In this Right to Manage case, a lease of a flat within the premises (flat 17) had been granted but had not been registered at the time the claim notice was served by the RTM Company. The freeholder challenged the claim in the FTT on the basis that notice of invitation to participate in the action had not been served on the leaseholder of flat 17, and that therefore the claim notice was invalid. The First-tier Tribunal found the claim notice to have been valid on the basis that it would be difficult for an RTM company to identify an equitable tenant.

On appeal by the landlord, the Upper Tribunal again deemed that the notice was valid, albeit for different reasons than the FTT. The UT concluded that the equitable leaseholder had been a qualifying tenant (as defined within section 75 of the 2002 Act) at the relevant time, but that the RTM Company’s claim was not invalidated by failure to serve the Notice of Invitation to Participate. The UT held that this only rendered the RTM claim voidable, but that only the party directly affected by the statutory failure could render the claim notice void. The qualifying tenant of flat 17 supported the RTM claim, and the UT found that the landlord could not take advantage of its failure to serve the notice on the tenant of flat 17 in order to support its opposition to the claim. As a result, the UT found the claim notice to be valid.

The landlord made a second appeal to the Court of Appeal.

The decision

The Court of Appeal found in favour of the landlord, allowing its appeal and concluding that the RTM claim notice was invalid.

The court was asked:

1. Was the leaseholder of flat 17 a “qualifying tenant” for the purposes of the Commonhold and Leasehold Reform Act 2002 where the lease had been granted but registration had not been completed; and
2. If the leaseholder was a qualifying tenant, whether a failure to serve her with the invitation to participate in the RTM claim invalidated the RTM Company’s claim notice.

On the first question, the Court of Appeal agreed with the Upper Tribunal, finding that the leaseholder was a “qualifying tenant” on the basis that an equitable lease awaiting registration was sufficient for the tenant to meet the “qualifying tenant” criteria where the 2002 Act’s definition of a “long lease” is met. Under the Act, a “long lease” includes both legal and equitable leases. The judgment states:

“[56.]…By any normal metric, a tenant under such a lease [an equitable lease] who has taken possession of the flat on completion and lives there…is for most practical and economic purposes the owner of the flat and would naturally describe himself or herself. Equally, such a tenant is clearly within the class of residential long-leaseholders whom the RTM regime enacted in 2002 was intended by Parliament to benefit… ”

The Court referenced the Supreme Court’s decision in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co. Ltd, and said that nothing in the facts of the present case casts any doubt on the view of the Supreme Court in A1 Properties that there will “ordinarily be no difficulty in finding or identifying qualifying tenants”.

The appeal also succeeded on the second question, where the Court of Appeal disagreed with the Upper Tribunal. The Court of Appeal found that the failure to serve the Notice of Invitation to Participate on the leaseholder was fatal to the RTM claim, invalidating the claim notice.

The Court again referred to A1 Properties which had considered the affect of a failure to comply with a procedural requirement of the 2002 Act where there is no consequence for non-compliance specified within the legislation.

In the present case, the 2002 Act states at section 79(2) that  “The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before.”

The Court of Appeal concluded that, where statute was clear and unambiguous as to its intention, and states the consequences of non-compliance, it was the duty of the court to apply the statutory provisions accordingly. There was no need to consider specific facts of the case.

Accordingly, the UT’s decision was reversed. The failure to serve the participation notice on the qualifying tenant of Flat 17 invalidated the claim notice served by the RTM Company, regardless of whether this point was raised by the landlord.

Advice and action for landlords

Landlords will welcome the Court of Appeal’s decision, which finds that clear and unambiguous wording in statute does not require further interpretation or fact-specific consideration by the Tribunal where the validity of an RTM Company’s claim notice is challenged.

This precedent is objective, strictly following the wording and consequence of the statute; where there is a statutory consequence for non-compliance (in this case a claim notice may not be served unless participation notices are served on all qualifying tenants at least 14 days beforehand), the consequence should be applied.