RTM Claim: Effective Withdrawal of RTM Claim Notices

In this blog we review a Court of Appeal case which considered whether the failure to give notice of a withdrawal to the qualifying tenants at the same time as serving upon the landlord, rendered the withdrawal ineffective meaning a second claim notice was invalid.  Read on for our analysis of the implications for landlords...

The Background

By a claim notice dated 18 March 2019, the Respondent RTM Company serviced on the landlord a claim notice seeking to exercise the right to manage the Premises. The Appellant landlord served a counter notice denying the entitlement, as the claim notice did not comply with several provisions of the Commonhold and Leasehold Reform Act 2002. On 17 June 2019, the RTM Company wrote to the landlord, received on 18 June 2019, where the RTM Company purported to withdraw the first claim notice and to serve a second claim notice, in which the defects were corrected. On 18 June 2019, the RTM Company wrote to the qualifying tenants, notifying them about the withdrawal of the first claim notice, and giving a copy of the second claim notice.

Under section 86 of the Act, notice of the withdrawal of the claim notice is required to be given to both the landlord and to the qualifying tenants. The landlord submissions were made in the alternative. Firstly, as the RTM Company gave the notice of withdrawal to leaseholders on 18 June 2019, then that is the date of the withdrawal; such that the second claim notice, given on 17 June 2019, was invalid. Alternatively, the failure to give notice to the qualifying tenants on 17 June 2019 was a breach, which rendered the withdrawal ineffective.

The earlier judgments

The First-tier Tribunal rejected the arguments for the landlord; finding that the RTM Company had sufficiently conveyed the withdrawal of the first claim notice to the landlord, and the fact that the landlord learned of possible flaws in how others were notified later was irrelevant

The landlord appealed. On appeal to the Upper Tribunal, it was held that the main practical purpose of the notice of withdrawal is to alert the landlord to the fact that the claim to a right to manage has been abandoned. The UT went on to add that failure to serve a landlord with the notice to withdrawal would render such non-compliance to be fatal.

However, the UT held that the purpose of giving to the qualifying tenants was simply a matter of information; the consequence of not sending the notice to qualifying tenants did not to render the withdrawal ineffective.

The decision

The Court of Appeal agreed with the Upper Tribunal.

It was held that the correct approach was to consider what the effect was of giving the notice of withdrawal to the landlord on the date it was given, having regard to the principles concerning failure to comply with statutory requirements.

Applying those principles, it was held that the failure to give notice to one of the persons specified in sections 86(2)(a)-(d) was a breach of the Act. However, when examining the scheme as a whole, there is a difference in importance between giving notice of withdrawal to the landlord and manager, as compared to the qualifying tenants.

The Court of Appeal agreed with the UT’s position that the main practical purpose of the notice of withdrawal is to alert the landlord to the fact that the claim to which the notice applies has been abandoned. The service on qualifying tenants was a matter of information; there was nothing within the procedure which qualifying tenants can do on being given notice of the withdrawal.

Advice and action for landlord and management companies

The case provides useful guidance in assessing the main practical purpose for the step of withdrawal of notices. By analogy, it can be applied to other steps in the procedure to assist in identifying the main practical purpose of that “step”, by having regard to who is being altered and whether there is anything within the procedure that the recipient can do on receipt of the notice in question.

Therefore, the important thing for landlords to note is that, on receipt of a withdrawal of a claim notice, it would be prudent to request confirmation that the withdrawal has been served on the other classes of persons identified in section 86(2) and reinforces the position that, upon receipt of a claim notice, a landlord should request copies of the invitations to participate, and copies of the claim notice being given to the qualifying tenants.

If you would like to discuss this case further, or if we can help you in a similar matter, please contact us.