In the recent case of Eastpoint Block A RTM Co Ltd v Otubaga [2023] EWCA Civ 879, the Court of Appeal has confirmed that an RTM can apply to the First-tier Tribunal (FTT) under Section 168 (4) of the Commonhold and Leasehold Reform Act 2002 (CLRA 2002) for a determination of breach. 

At first instance the application of the RTM for a Section 168 (4) determination was struck out by the FTT on the basis that they did not have jurisdiction to consider the application as the RTM was not the landlord for the purposes of CLRA 2002. The Upper Tribunal also dismissed the appeal on the basis that an RTM Company was not a landlord for the purposes of CLRA 2002. and the RTM consequently appealed to the Court of Appeal. 

The Court of Appeal disagreed with the previous decisions on the basis that enforcement of covenants was part of the landlord's management functions that were transferred to the RTM under section 96. Accordingly, an RTM could apply to the FTT under Section 168 (4) CLRA 2002 for a determination of breach. 

"Untransferred covenants" are confirmed under section 100 (2) of CLRA 2002 as being "enforceable by the RTM Company, as well as by any other person whom they are enforceable apart from this section, in the same manner as they are enforceable by any other such person". 

It was noted by Lewison LJ (giving the leading judgment) that "untransferred covenants" must mean those covenants that are outside the scope of section 96. 

The Court of Appeal held that: 

• Section 100(2) gives an RTM company the right to enforce untransferred covenants "in the same manner" as the landlord, which includes an action for damages for breach of covenant or for an injunction (in the county court) or a claim for a section 168(4) determination (in the FTT). The only remedy that an RTM company cannot exercise is forfeiture (Section 100 (3)).

• The express power given to the RTM company to enforce covenants is not the only remedies but also the forum where those remedies or issues are decided.

• Although an FTT application for a section 168(4) determination is a necessary pre-condition to the exercise of a right of forfeiture (under section 168(1)), it is not, itself, a proceeding for forfeiture.

Practically speaking, there is good reason for an RTM to be able to apply to the FTT rather than the County Court. This is because the RTM can benefit from specialist residential property judges in the FTT, the procedure is less formal and there is generally a "no costs" jurisdiction. Given that in many instances an RTM may exist in the first place because of an 'absent' landlord, they are also more likely to be better placed to give evidence regarding the breach. It could be said that the Court of Appeal was perhaps (rightly so) persuaded by such practical and policy reasons.

This is no doubt good news for RTMs who now have confirmation that they do not have to rely on the freeholder/landlord to take action to obtain a determination. However, there will still be legal limitations as to what an RTM can do about a leaseholder in breach when it comes to forfeiture as the Court made it clear that the RTM cannot exercise forfeiture. 

The decision will likely also be a welcome relief to landlords who need only engage should forfeiture proceedings becoming necessary.