Property Week quotes Lauren Fraser on the case of A1 Properties (Sunderland) vs Tudor Studios RTM Company in the Supreme Court

In a recent judgment, the Supreme Court ruled that a right-to-manage (RTM) company’s failure to serve a notice on an intermediary landlord did not invalidate its right to manage. The case of A1 Properties (Sunderland) vs Tudor Studios RTM Company, which was heard on 8 February, centres on the issue of RTM claims and the serving of statutory notices. Tudor Studios, a former factory in Leicester that was converted into student accommodation, is held by investor tenants on 250-year leases in tripartite form between the freeholder, the investor tenant and the management company.

A1 Properties (Sunderland) holds the common room, the laundry, the gym and the reception area on four 999-year leases, from which it receives a total of £30,600 in annual rent. The dispute arose due to an application made by investor tenants of Tudor Studios to acquire the right to take over the management of the block of flats through the formation of an RTM company. Under Section 79 of the 2002 Commonhold and Leasehold Reform Act, an RTM company is required to serve a notice of a claim to acquire the right to manage on each person who is a landlord under a lease for the whole or part of the premises.

After the case was rejected by the First-tier Tribunal and Upper Tribunal, which decided that the tenants’ failure to serve notice did not invalidate their RTM claim, A1 Properties took its case to the Supreme Court to settle the issue definitively. The case is only the second-ever instance of an appeal being allowed to ‘leapfrog’ straight from the Upper Tribunal to the Supreme Court. The court upheld the previous decision and dismissed A1 Properties’ appeal. In doing so, however, the court changed the reasoning given by the lower courts.

Reacting to the judgment, Lauren Fraser, Senior Associate in our Real Estate Disputes team, comments for Property Week:

The ruling gives you the potential for an extra life and [means] you are not immediately booted out because of a lack of strict compliance [with the stipulations of the law].

"The Supreme Court has continued the direction of travel [of the tribunal courts] but it has changed the basis of the reasoning and highlighted another case [the 2005 case of Regina vs Soneji and another], which deals with the situations of statutory procedure.

"You look at the ruling and immediately think: ‘Great, here’s guidance – this is really useful.’ However, rather than a narrow ruling, the court has widened the interpretation of the law into how we as an industry should be approaching statutory property notices; and it will need a bit of reframing in how we analyse [cases].

Read the full article in Property Week here (subscription required).