Post Box Ground Rents v The Post Box RTM Company [2015]

Upper Tribunal decision regarding costs on a withdrawn RTM application.

Post Box Ground Rents v The Post Box RTM Company [2015]
The Post Box RTM Company wrote to the First-Tier Tribunal (“FTT”) withdrawing its application to assume management responsibilities for Birmingham’s Post Box development before it was due to be heard. The landlord agreed to the withdrawal. Subsequently, the FTT decided that the RTM Company was not liable for the landlord’s costs as the application had been withdrawn, rather than dismissed. The landlord appealed to the Upper Tribunal (Lands Chamber). 
 
The Law
 
Under the Commonhold and Leasehold Reform Act 2002, an RTM company may decide at any time before it acquires the right to manage to withdraw its claim notice. Landlords have the option to issue a counter-notice when a claim by an RTM company is made, either admitting that the RTM company has a right to manage or alleging that they do not have the right to acquire such rights. 
 
The RTM company will be liable for the landlord’s costs if it decides to either:
 
•    withdraw its claim notice; or
•    a counter-notice is served by the landlord and the RTM company decides to either make no application to the FTT or withdraws its own application.
 
In an earlier 2014 case, R (on the application of O Twelve Baytree Ltd) v Rent Assessment Panel, the RTM company had received a counter-notice and an application had been made to request determination by the FTT. Prior to the hearing, the RTM advised that it wished to withdraw the application. 
 
The case reached the High Court, which held that the RTM’s communication of its intention was not sufficient to end the proceedings; the FTT must grant its consent for the withdrawal of an application to take effect. Therefore, whether the case is determined or the application dismissed and costs ordered, the FTT holds continuing authority.
 
Decision
 
The application can only be brought to an end by the FTT formally dismissing it; notice of intention to withdraw, even with the landlord’s consent, is not sufficient to draw the case to a close. In concluding the case, HH Judge Stuart Bridge dismissed the application himself and held:
 
“The effect of the dismissal means that the respondent is liable for the reasonable costs incurred by the appellant in consequence of the claim notice…and…that liability includes costs incurred as a party to the proceedings before the tribunal.”
 
Therefore the Post Box RTM Company was held to be liable for the landlord’s costs. 
 
JB Leitch’s Rob Denman comments: 
 
“In practical terms, this case sends a warning to RTM companies not to make applications unless they are absolutely sure they wish to acquire management rights. For both RTM companies and landlords, once jurisdiction is passed to the FTT by way of application, only the FTT has the authority to dismiss it and close the matter.”

This case sends a warning to RTM companies not to make applications unless they are absolutely sure they wish to acquire management rights.

Author

Robert Denman
Robert Denman
Principal Associate - Head of Real Estate

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