A landlord sought to stop the transfer of the right to manage a block of flats because the right to manage company had not given one qualifying tenant a notice of invitation to participate before serving its claim notice. The Supreme Court held that this procedural failure did not invalidate the claim notice or give the landlord a ground for disputing the company’s entitlement under the Commonhold and Leasehold Reform Act 2002. The company’s claim was therefore well-founded.
Avon Freeholds Ltd owns the freehold of 7–26 Cresta Court, a building containing 20 flats. Cresta Court E RTM Company Ltd was formed by leaseholders to acquire the right to manage under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. On 4 November 2021 the company gave notices of invitation to participate to the qualifying tenants it had identified who were not already members or agreed members. It did not give one to Ms O’Connor of Flat 17. She held a long lease granted in 2020, but her application for registration was still pending, so she was an equitable tenant. It is now common ground that she was a qualifying tenant.
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On 21 January 2022 the company served its claim notice on Avon. That date was the relevant date. Five days later Ms O’Connor agreed to become a member and supported the claim. On 24 February 2022 Avon served a counter-notice. The only ground that remained live was the failure to give Ms O’Connor a notice of invitation to participate. The company applied to the First-tier Tribunal for a determination that it was nevertheless entitled to acquire the right to manage. The First-tier Tribunal and the Upper Tribunal upheld the claim. The Court of Appeal held that the claim notice was a nullity.
The statutory scheme
Sections 72 to 77, together with section 79(3) to (5), contain the substantive eligibility conditions. They include the requirement that, on the relevant date, qualifying tenants who are members of the company number at least half the flats. Sections 78 to 89 then set out the procedure for making and challenging a claim.
Section 78(1) requires a notice of invitation to participate to be given, before a claim is made, to each qualifying tenant who is not, and has not agreed to become, a member. Its function is to tell that tenant of the intended claim and invite membership. Section 79(2) provides that the claim notice may not be given unless each person required to be given such a notice has been given one at least 14 days before. A claim notice must be given to landlords and certain other persons, who alone may serve a counter-notice. Qualifying tenants receive only a copy and have no statutory right to object.
Under section 84(2), a counter-notice must either admit entitlement or allege that, by reason of a specified provision of the Chapter, the company was not entitled on the relevant date to acquire the right to manage. If a counter-notice alleges non-entitlement and the company applies to the First-tier Tribunal, the tribunal determines that dispute about entitlement. The scheme is intended to operate automatically if no person entitled to object does so. Section 107 separately gives the tribunal a discretion, on the application of any interested person, to order a defaulter to make good a failure to comply with a Chapter 1 requirement.
Why the failure was not fatal
Lord Briggs, with whom Lord Reed, Lord Stephens, Lady Rose and Lord Snowden agreed, rejected the argument that section 79(2) expressly makes a premature or incomplete claim notice void and therefore excludes the approach in R v Soneji. Section 78 states the invitation rule but contains no sanction for breach. Section 79(2) is a timing rule about claim notices: the 14-day period runs from the last required invitation. It can be broken even where every required invitation has been given, and it states no express consequence for giving the claim notice too early. Elsewhere Parliament expressly preserved validity despite inaccuracies, including in sections 78(7) and 81.
Treating the claim notice as absolutely void would also be unworkable. Only a person given a claim notice can serve a counter-notice, and only a counter-notice enables the company to invoke the tribunal’s jurisdiction under section 84. The relevant date itself is defined by the giving of the claim notice. A notice that was valid for procedure but void for the claim would still leave unexplained why, if nobody objected, section 90 would not produce an automatic transfer. Invalidity would also let a landlord rely on a breach of a rule intended to benefit eligible qualifying tenants, who themselves have no right to object.
The correct question was whether non-compliance can found a dispute about entitlement. Lord Briggs read the scheme as separating substantive entitlement conditions from the procedural code. Only failure to satisfy the substantive conditions can be raised by counter-notice. Sections 78(1) and 79(2) are procedural and do not affect entitlement. The available sanction is a discretionary enforcement order under section 107, which any interested person may seek and which can be tailored to blame, prejudice and the seriousness of the default.
That reading was supported by the scheme’s purpose and its pre-legislative materials. The August 2000 consultation paper explained that the invitation and the two-week wait give leaseholders an opportunity to consider whether to support the transfer, and that a counter-notice could be served only for non-compliance with specific qualifying criteria. The Explanatory Notes likewise said that an effective counter-notice denying entitlement must state the grounds on which the company did not comply with the eligibility criteria. A qualifying tenant notified in advance still cannot stop the transfer. It would be inexplicable if every minor breach nevertheless allowed a landlord, who was not the intended beneficiary and who suffered no prejudice, to defeat the claim.
On these facts the company satisfied the eligibility conditions, including the membership threshold. The defaults caused no prejudice to Avon, Ms O’Connor or anyone else. She could complain only that she should have received an invitation by 21 January, yet she joined five days later. Had the company waited those five days, she would no longer have been entitled to an invitation. She supported the claim and had no right to oppose it.
Earlier authority
The Court of Appeal had treated a passage in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd as binding or at least compelling. That passage said that section 79(2) meant no valid claim notice could be given unless the invitation requirements had been met in time. Lord Briggs held that it was not part of the ratio on any of the available definitions. A1 Properties concerned failure to give a claim notice to an intermediate landlord under section 79(6), not sections 78 and 79(2). The passage was not argued, was not necessary to the result, and the Court had expressly reserved the present question. A brief summary in Settlers Court RTM Co Ltd v FirstPort Property Services Ltd was likewise not directed to this issue. The earlier statement should not be followed.
Applying the Soneji analysis, the landlord could not rely on the breaches as the basis of a counter-notice. Avon was not a person intended to be protected, the failure did not affect its right to object or the tenants’ inability to oppose the transfer, and Parliament did not intend the acquisition to fail unless the qualifying tenant invoked section 107. Passages in A1 Properties reinforced that conclusion: a procedural omission should not give an unaffected person a windfall power to thwart the process, and the procedure was not intended to create traps or opportunities for obstructive landlords.
Verdict: The Supreme Court allowed the appeal and restored the decision of the Upper Tribunal. The right to manage company’s claim was well-founded notwithstanding its failure to give Ms O’Connor a notice of invitation to participate.
Source: Avon Freeholds Limited v Cresta Court E RTM Company Limited [2026] UKSC 31
