UPPER TRIBUNAL (LANDS CHAMBER)

	
UT Neutral citation number: [2014] UKUT 0505 (LC)
UTLC Case Number: LRX/57/2014

	
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

RIGHT TO MANAGE – Commonhold and Leasehold Reform Act 2002 s.81(3) - first claim notice held by First-Tier Tribunal’s first decision to be invalid - service of a second claim notice before the end of the period for bringing an appeal against the decision on the first claim notice

IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

BETWEEN:

                                                           ASSETHOLD LIMITED                                    Appellant
	
and

                            37 WHATMAN ROAD RTM COMPANY LIMITED                Respondent

Re: 37 Whatman Road,
	London
	SE23 1EY

Before His Honour Judge Huskinson

Appeal determined on written representations

© CROWN COPYRIGHT 2014

The following case is referred to in this decision:

75 Worple Road, London SW19 4LS (LRX/147/2009)

Decision
1.	This is an appeal from the decision (given upon the papers without an oral hearing) of the First-Tier Tribunal Property Chamber (Residential Property) (hereafter the F-tT) dated 3 March 2014 whereby the F-tT decided that a claim notice, dated 16 September 2013 and given by the respondent to the appellant claiming the right to manage the above mentioned premises, was valid.
2.	The matter has proceeded before the Upper Tribunal to a decision upon written representations.  The appellant asked that the matter be dealt with in this manner.  The respondent has not objected to this course and has notified the Tribunal that the respondent does not wish to respond to the appeal.
3.	In summary the point raised by the appellant is that the claim notice dated 16 September 2013 (hereafter called “the second claim notice”) was invalid by reason of the operation of section 81(3) of the Commonhold and Leasehold Reform Act 2002, because at the date of service of the second claim notice there was still continuing in force an earlier claim notice. 
4.	The presently relevant statutory provisions are as follows.  By section 81(3) and (4) of the 2002 Act it is provided:
“(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.
(4)	Where a claim notice is given by a RTM company it continues in force from the relevant date until the right to manage is acquired by the company unless it has previously –
(a)	been withdrawn or deemed to be withdrawn by virtue of any provision of this Chapter, or
(b)	ceased to have effect by reason of any other provision of this Chapter.”
5.	Section 84 makes provision for the service of a counter notice which can either admit that the RTM company was on the relevant date entitled to acquire the right to manage the premises or can allege that, by reason of a relevant provision, the RTM company was on that date not so entitled.  Provision is made enabling the RTM company, if it has been given a notice stating it was not so entitled, to apply to the appropriate tribunal for a determination that it was on the relevant date entitled to acquire the right to manage the premises.  A time limit for the making of such an application is laid down.  Subsections 84(6) (7) and (8) are in the following terms:
“(6) If on an application under subsection (3) it is finally determined that the company was not on the relevant date entitled to acquire the right to manage the premises, the claim notice ceases to have effect.
(7)	A determination on an application under subsection (3) becomes final –
(a)	if not appealed against, at the end of the period for bringing an appeal, or
(b)	if appealed against, at the time when the appeal (or any further appeal) is disposed of.
(8)	 An appeal is disposed of –
(a) if it is determined and the period for bringing any further appeal has ended, or
(b)	 if it is abandoned or otherwise ceases to have effect.”
Section 86 provides for the withdrawal of a claim notice and is in the following terms:
“(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.”
6.	The relevant facts may be summarised as follows:
(1)	The respondent served a claim notice (hereafter called “the first claim notice”) on the appellant dated 31 March 2013.  
(2)	The appellant served a counter notice in response to the first claim notice alleging that the respondent was not entitled to acquire the right to manage.
(3)	On 14 June 2013 the respondent issued proceedings before the F-tT under section 84(3) seeking a determination that the respondent was entitled to acquire the right to manage.  That application was decided in the appellant’s favour in a paper determination dated 29 August 2013 – i.e. it was decided that the respondent was not entitled pursuant to the first claim notice to acquire the right to manage.
(4)	The period within which an application for permission to appeal against the F-tT’s decision could have been made expired on 27 September 2013.  No application for permission to appeal was made.
(5)	The respondent served upon the appellant the second claim notice, being a notice dated 16 September 2013 and given on 17 September 2013.  The respondent’s second claim notice was therefore served before the expiration of the period within which the respondent could have appealed against the decision in relation to the first claim notice. 
(6)	The respondent maintained that the first claim notice was withdrawn by a letter dated 10 September 2013 sent to the appellant and its managing agents.
7.	The Ft-T’s reasons for concluding that the second claim notice was not invalidated by section 81(3) are contained in paragraphs 17-21 of its decision which are in the following terms:
	“17. The tribunal rejects the Respondent’s contention that the first claim notice remained in force on 17.09.13, the date on which the second notice was given.  In order to have been ‘in force’ on that date the notice must have the potential to have some operative impact on the subject matter of the application.
	18. However, by that date the first claim notice had been determined by a tribunal to be invalid.  Given that finding of invalidity (which neither party contends was incorrect) the tribunal considers that the Applicant was not prevented from serving a second claim notice when it did.  In the tribunal’s view the first notice ceased to be ‘in force’ for the purposes of section 81(3) once the tribunal made its determination on 29.08.13.  As such, the prohibition on a subsequent notice contained in section 81(3) did not apply since the first notice was not a notice under section 79 and, therefore, was not in force.
19. Section 84(6) specifies that a claim notice ceases to have effect where there has been a final determination that a RTM company is not entitled to acquire the right to manage.  However, that does not prevent a claim notice from ceasing to have effect for some other reason, including invalidity or where a notice is withdrawn.  In our determination section 84(6) cannot prevent a RTM company, who a tribunal has determined has served an invalid notice, from serving a further notice until such time as the application is finally determined.
20. Nor, following the tribunal’s determination of 29.08.13, can the letter from Canonbury Management dated 10.09.13 operate as an effective withdrawal of the first notice.  As the notice was invalid, and of no further effect, it was not capable of being withdrawn.
21. Despite this determination, this tribunal is of the view that even though the first notice was invalid, it still amounted to a claim notice for the purposes of the Act and should therefore be regarded as such for the purpose of the Respondent’s application for costs under s.88(4).”
Certain other grounds were taken by the appellant, beyond the argument based upon section 81(3), whereby the appellant asserted that the second claim notice was invalid.  The F-tT decided against the appellant on these additional points and there is no appeal from its decision thereon.  The present appeal concerns the F-tT’s decision upon section 81(3).

8.	In granting permission to appeal the learned Deputy President including the following text:
“1. The proposed appeal is arguable and has a reasonable prospect of success on the basis identified in the applicant’s draft grounds of appeal.  In particular the decision of the First-tier Tribunal may give insufficient weight to sections 81(4) and 84(7) which, in combination, arguably contemplate that a claim notice will remain in force until the end of the period for bringing an appeal notwithstanding a previous determination that the RTM company was not entitled to acquire the right to manage.
2.	The F-tT’s decision in paragraph 20 that a notice which it has found to be invalid is thereafter incapable of being withdrawn (so as to make the service of a further notice permissible before the expiry of the period for bringing an appeal) also seems to be inconsistent with the statutory scheme.  Unfortunately, although the F-tT recorded the RTM Company’s contention that the first claim notice had been withdrawn by letters sent to the applicant and its agent, having found that the letters were of no effect, it was not necessary for the F-tT to come to a conclusion on the question whether the letters were sent or received.  Receipt of the letters is denied by the applicant in paragraph 7 of its grounds of appeal and, although it is not clear whether that denial was part of its case before the F-tT, it remains an open question.
3.	The appeal will be determined by the Tribunal by way of review.”
9.	The appellant’s grounds of appeal, which have been ordered to stand as its statement of case, in summary raise the following arguments:
(1) Section 84(6) and (7) make clear that the first claim notice only ceased to have effect when the determination that the first claim notice was invalid became final – which was not until the period for bringing an appeal had expired namely 27 September 2013.  Therefore the first claim notice was still in force as of the date of the service of the second claim notice.  The second claim notice therefore is invalid under section 81(3).
(2)	The appellant drew attention to another decision of the F-tT upon this point which was to the contrary effect to the decision reached by the F-tT in the present case.
(3)	The appellant also referred to the decision of the Upper Tribunal in 75 Worple Road, London SW19 4LS (LRX/147/2009) which the appellant submitted showed that once proceedings are issued under section 84 concerning the validity of the claim notice then the claim notice remains in force until the proceedings are finally disposed of and cannot be withdrawn in the meantime.  In relation to this point the appellant stated:
“7. [The appellant] highlights this point to confirm its position that it does not believe that the alleged notices of withdrawal (of which the [appellant] in fact denies receipt), could have withdrawn the initial claim notice if it were to succeed in appeal of the points noted above.”

Discussion
10.	The purpose of section 81(3) of the 2002 Act would appear to be to ensure that there are not “in force” two separate claim notices in respect of the same premises (or any premises containing or contained in such premises) at the same time.
11.	I leave aside for the moment the F-tT’s decision in paragraph 20 regarding the letter dated 10 September 2013 seeking to withdraw the first claim notice.  I proceed for the moment on the basis that there was no valid withdrawal of the first claim notice.
12.	The relevant question is whether as at the date of service of the second claim notice (17 September 2013) the first claim notice was still in force.  
13.	Section 81(4) makes express provision as to the time for which a claim notice continues in force, namely it does so from the relevant date until the right to manage is acquired by the company, unless it has previously been withdrawn or:
	“(b) ceased to have effect by reason of any other provision of this Chapter.”
For the moment I am not concerned with any question of withdrawal.  Accordingly the first claim notice continued in force until it ceased to have effect.
14.	Section 84(6) makes provision for the claim notice to cease to have effect, namely if on an application under section 84(3) “it is finally determined” that the company was not on the relevant date entitled to acquire the right to manage the premises, then the claim notice ceases to have effect.  The expression “it is finally determined” is in my judgment explained in the following subsection, namely subsection 84(7) which makes provision as to when a determination on an application under subsection 84(3) “becomes final”.  In a case where (as here) the F-tT’s decision is not appealed against, then the determination become final “at the end of the period for bringing an appeal” which here was 27 September 2013.
15.	Accordingly the first claim notice continued to be “in force” until 27 September 2013, see section 81(4).
16.	It follows that as at the date of service of the second claim notice the first claim notice was still in force.  Therefore as at the date of the giving of the second claim notice the respondent was not entitled to give this second claim notice by virtue of the provisions of section 81(3).
17.	In paragraph 21 of its decision the F-tT concluded that even though the first claim notice was invalid it still amounted to a claim notice for the purposes of the Act.  I agree with this statement.  Accordingly it would be wrong to argue that the moment that the F-tT ruled that the first claim notice was invalid that first claim notice thereupon became something which could not properly be described as a “claim notice” within the Act, such that a second claim notice for the same premises could immediately thereafter be served notwithstanding section 81(3) and notwithstanding that the time for appealing against the F-tT’s decision had not expired.  The way the F-tT has expressed its decision in paragraph 19 suggests that the F-tT might at that stage (in contrast to its position in paragraph 21) have been concluding that as soon as the first claim notice was found to be invalid it ceased in effect to be a claim notice at all and the way was immediately cleared for the service of a second claim notice.  If the F-tT was so finding in paragraph 19 then I disagree.  A claim notice remains a claim notice and remains in force as provided for in section 81(4).  It can remain “in force” for the purposes of section 81(3) after a finding by an F-tT that the notice is invalid – the date at which a claim notice ceases to be “in force” is to be found in section 81(4) and section 84(6) to (8), unless of course the claim notice is withdrawn or deemed to be withdrawn.  
18.	I now return to the F-tT’s decision upon the question of withdrawal which the F-tT dealt with in paragraph 20.
19.	I disagree with the F-tT’s decision that if a notice was invalid it was not capable of being withdrawn.  I have already given my reasons for concluding that the statute provides that a claim notice, even if found by the F-tT to be invalid, remains “in force” until the date provided for in section 81(4).  It does not immediately upon the F-tT’s decision that it is invalid cease to be in force.  Once the time for appealing has expired (with no appeal being brought) or once an appeal has been disposed of, then the claim notice does cease to have effect and thereupon ceases to be “in force”.  But in making these express provisions as to the period during which a claim notice continues to be in force and as to when it ceases to have effect, the statute in my judgment is clearly providing that the claim notice does not automatically cease to be in force as soon as a decision has been issued by an F-tT stating that the claim notice is invalid.
20.	Section 86 deals with withdrawal of a claim notice and provides that an RTM company may at any time before it acquires the right to manage the premises withdraw the claim notice by giving a notice of withdrawal.  This contemplates that a claim notice can be withdrawn at a date that may well be after some decision as to its validity by an F-tT or the Upper Tribunal or the Higher Courts.  There is nothing in the Act to provide that a claim notice can only be withdrawn if, as at the date of the withdrawal notice, the status of the claim notice is such that it is not the subject of a current finding by the latest tribunal or court to consider it that it is invalid.
21.	Accordingly I disagree with the F-tT’s decision that the first claim notice was not capable of being withdrawn.
22.	Unfortunately there is no finding by the F-tT as to whether the letter of 10 September 2013 was a valid withdrawal notice or whether it was given to each of the persons to whom it must be given under section 86(2).  I know that it is apparently disputed by the appellant that the withdrawal notice was served upon it, although (as noted in the grant of permission to appeal in the present case) it is not clear whether that denial by the appellant was part of its case before the F-tT. 
23.	In these circumstances it is necessary that I allow the appellant’s appeal but that I remit the matter back to the F-tT for the F-tT to decide upon the following question, namely whether the letter of 10 September 2013 (which is not before me) constituted a valid notice of withdrawal under section 86 which was given, prior to the date of service of the second claim notice, to each person which it was required to be given pursuant to section 86(2).  These are not points which I can consider upon this appeal by the way of review.  If the answer to this question is yes, then the first claim notice was withdrawn at a date prior to the service of the second claim notice with the result that the second claim notice was valid.  If the answer to this question is no, then as at the date of the giving of the second claim notice the respondent was not entitled to serve a claim notice because of section 81(3), with the result that a second claim notice was invalid.
24.	For completeness I would observe that I do not consider the case of 75 Worple Road assists the appellant.  That was concerned with the question of whether an appeal to the Upper Tribunal had been/could be withdrawn – it was not concerned with whether there had been service of a valid notice of withdrawal under section 86.

		Dated:  11 November 2014

His Honour Judge Huskinson