On 16 August 2024 the Supreme Court gave its judgement in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024] UKSC 27, which upheld a ruling that failure of a right to manage (“RTM”) company to serve a claim notice under s79(6)(a) of Part 2 of the Commonhold and Leasehold Reform Act 2002 (“CRLA”) on an intermediate landlord did not invalidate the transfer of the right to manage the accommodation in question. 

 The issues for the court to address were:

 “(1) Whether a failure to serve a claim notice on a landlord as required by section 79(6)(a) will always invalidate the acquisition of the right to manage powers by the RTM company pursuant to the process purportedly commenced by service of the claim notice on other relevant landlords; and

 (2) If not, whether nevertheless the failure to serve the claim notice in this case on all relevant landlords had the effect of invalidating the purported acquisition of the right to manage powers by the RTM company pursuant to the CLRA acquisition process.”

 In addressing these issues, the Supreme Court’s main focus was to consider Parliament’s intention as to how the statutory regime of the CRLA should be interpreted and its purpose. It noted that the CRLA was designed to minimise opportunities for obstructive landlords to thwart the transfer of the right to manage. It also acknowledged that the absence of a central register made the process of identifying relevant landlords inherently difficult.

The Supreme Court held that in evaluating whether a procedural failure under the regime invalidated the process, the questions to be addressed were whether a relevant party has been deprived of its opportunity to oppose the making of an order to transfer the right to manage, having regard to (a) what objections they could have raised and would have wished to raise and (b) whether, despite the procedural omission, they in fact had the opportunity to have their objections considered.   

 As the appellant in this case had been joined to the Tribunal proceedings, it had been afforded the same opportunity of participating in the statutory procedure as it would have had if it had been served with a claim notice in accordance with s79(6)(a).  Accordingly, the failure to serve notice on it had not invalidated the process. 

 The Supreme Court considered the similar Court of Appeal case of Elim Court RTM Co Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89 (“Elim Court”) where Lewison LJ concluded that failure to serve a claim notice on an intermediate landlord of a flat with no management responsibilities did not invalidate the notice.  Although the Supreme Court upheld the result in Elim Court, it departed from the reasoning on the basis it did not consider it was sufficient to say that the right to participate may be ignored if the intermediate landlord has no power of management.  

 It also considered the case of Osman v Natt [2014] EWCA Civ 1520  which followed the guidance of R v Soneji [2006] 1 AC 340 , a case that questioned whether it was the purpose of the legislation that an act done in breach of a provision should be invalid.  The Supreme Court ruled that in accordance with the approach in Soneji, the respondent’s failure to serve a notice of claim upon the appellant did not render the transfer of the right to manage void, it instead rendered it voidable unless, or until, the tribunal approved the transfer scheme.

 The judgment reduces the “traps for the unwary” involved in the process of transferring rights to manage, and will be welcomed by tenants and their advisers alike.