Supreme Court ruling alters RTM law

In a landmark decision, the Supreme Court has ruled on the significant case of A1 Properties v Tudor Studios, fundamentally altering the landscape of Right to Manage (RTM) law. The court dismissed the appeal by A1 Properties, the intermediate landlord, which had argued that the failure to serve an RTM claim notice invalidated the transfer of management rights.

The ruling, delivered on August 16, 2024, resets the approach of the courts to minor procedural errors in the complex area of RTM legislation. The decision also partly overrules the 2015 Court of Appeal guidance in Natt v Osman, which had previously allowed landlords greater leeway to challenge RTM claims based on procedural missteps.

The case arose when Tudor Studios Management Company Limited, the RTM company, inadvertently failed to serve the RTM claim notice on A1 Properties. Despite this oversight, the Supreme Court ruled in favor of Tudor Studios, asserting that minor procedural errors should not invalidate the transfer of management rights unless significant prejudice to the landlord or other stakeholders can be demonstrated.

The Association of Leasehold Enfranchisement Practitioners (ALEP), a not-for-profit organization representing leasehold enfranchisement professionals, played a critical role in this appeal. ALEP intervened to seek clarification on the service of notices, particularly in light of the complex requirements of RTM legislation. The Supreme Court took the unusual step of allowing ALEP to make oral submissions, with Lord Justice Briggs praising their "scholarly and helpful intervention" and "carefully prepared and very helpful submissions."

Mark Chick, Partner at Bishop & Sewell LLP and a director of ALEP, who acted pro bono for the organization, commented, "The law relating to notices continues to cause difficulty, particularly where mandatory procedures laid down by Parliament are not followed. The case of A1 v Tudor provides a thorough review of the law in this area and provides greater clarity in that the courts will now look to the consequences of any non-compliance, and in particular the extent of the prejudice to any party affected by that non-compliance.”

Mark Loveday, a barrister at Tanfield Chambers who also represented ALEP, noted the significance of the ruling: “This is a significant decision which simplifies the work of enfranchisement and RTM professionals and their clients. ALEP’s intervention was timely.”

John Midgley, Partner at Seddons Solicitors and another director of ALEP, added, “This decision provides clarity and will be welcomed by advisors looking to serve notices in what can be big and complex exercises where the scope for procedural errors exists.”

The ruling arrives as the UK government’s 2024 Leasehold and Freehold Reform Act takes effect, with further reforms on the horizon under the new Labour government’s Leasehold and Commonhold Reform Bill. The decision marks a critical moment for RTM law, offering greater certainty to tenants and RTM companies while emphasizing the importance of substantive compliance over strict adherence to procedural requirements.