Failure to Serve a Notice of Invitation to Participate Does Not Defeat an Otherwise Valid Right-to-Manage Claim

1. Introduction

This unanimous judgment clarifies the consequences of procedural non-compliance under the right-to-manage scheme in Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. The Supreme Court held that an RTM company’s failure to give an eligible qualifying tenant a notice of invitation to participate (“NIP”), and consequently to observe the 14-day waiting period before serving its claim notice, does not invalidate the claim notice or provide a landlord with a ground for opposing the acquisition through a counter-notice.

Avon Freeholds Limited owned the freehold of a 20-flat building. Cresta Court E RTM Company Limited was formed by leaseholders seeking to acquire the statutory right to manage it. The RTM company failed to serve one qualifying tenant with a NIP before giving its claim notice on 21 January 2022. Five days later, that tenant joined the company and supported the claim.

Although the First-tier Tribunal and Upper Tribunal upheld the RTM company’s claim, the Court of Appeal held that the omission rendered the claim notice a nullity. The Supreme Court reversed that decision and restored the Upper Tribunal’s ruling.

2. Summary of the Judgment

Lord Briggs, with whom Lord Reed, Lord Stephens, Lady Rose and Lord Snowden agreed, held that:

• Sections 78(1) and 79(2) of the 2002 Act impose mandatory procedural requirements concerning NIPs and the timing of claim notices.
• Neither provision expressly states that non-compliance invalidates a claim notice.
• Section 79(2) is principally a timing rule requiring a 14-day interval after the last required NIP has been given; it is not an express invalidity sanction for breach of section 78(1).
• The grounds that may be raised by counter-notice under section 84(2)(b) concern substantive entitlement to acquire the right to manage, not every procedural defect in pursuing that entitlement.
• A landlord cannot rely on non-compliance with sections 78(1) or 79(2) to defeat an otherwise substantively valid RTM claim.
• The appropriate enforcement mechanism for such procedural defaults is the First-tier Tribunal’s discretionary jurisdiction under section 107.
• The contrary statement in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd was not part of that decision’s ratio decidendi and should not be followed.

The appeal was therefore allowed and the Upper Tribunal’s decision reinstated.

3. Statutory Framework

3.1 Substantive entitlement conditions

Sections 72–77 contain the principal qualifying rules. They address the nature of the premises, the constitution of the RTM company, qualifying tenants and qualifying long leases. In addition, sections 79(3)–(5) require qualifying tenants representing at least half of the flats to be members of the RTM company on the relevant date.

The Supreme Court characterised these provisions as substantive “entitlement conditions”. Failure to satisfy them means that the company is not entitled to acquire the right to manage.

3.2 Notices of invitation to participate

Section 78(1) requires an RTM company, before making its claim, to give a NIP to each qualifying tenant who is neither a member nor has agreed to become a member. The notice informs the tenant about the proposed acquisition and invites participation.

Section 78(7) expressly provides that inaccuracies in the required particulars do not invalidate a NIP. Section 78 contains no equivalent provision declaring that complete non-service invalidates a later claim notice.

3.3 Claim notices and the 14-day requirement

Under section 79(2), a claim notice “may not be given” unless every person entitled to a NIP has received one at least 14 days earlier. The Court held that these mandatory words do not, without more, prescribe nullity as the consequence of breach.

3.4 Counter-notices and disputes about entitlement

Section 84 permits landlords and certain other stakeholders—but not qualifying tenants—to serve counter-notices. An objector may allege that, by reason of a specified provision of Chapter 1, the RTM company was not entitled on the relevant date to acquire the right to manage.

The Court interpreted this language as permitting objections based on failure to satisfy substantive entitlement conditions. It does not transform every procedural default into a ground for defeating the acquisition.

3.5 Section 107 enforcement

Section 107 allows an interested person to seek a discretionary order requiring compliance with an obligation imposed by Chapter 1. This provision supplies a proportionate remedy for procedural defaults. Depending on the seriousness of the breach, the tribunal may order compliance and could, in an appropriate case, require the claim process to be restarted.

4. Legal Reasoning

4.1 Rejection of automatic nullity

The Court of Appeal had reasoned that, because section 79(2) says a claim notice “may not be given”, a prematurely served notice must be a nullity. The Supreme Court identified serious practical and legal difficulties with that conclusion.

If the notice were wholly void, it could not trigger the landlord’s right to serve a counter-notice or the RTM company’s right to apply to the First-tier Tribunal. That would undermine the statutory machinery intended to resolve disputes. It would also create difficulties in identifying the “relevant date”, which is defined by reference to the date on which the claim notice is given.

Treating the notice as valid for procedural purposes but void for establishing entitlement was equally unsatisfactory. In the absence of any counter-notice, the scheme operates automatically. It would create unacceptable uncertainty if an apparently completed transfer remained vulnerable to an undisclosed NIP defect.

4.2 The Soneji principle

The Court applied the approach derived from R v Soneji. Where legislation does not expressly prescribe the consequences of procedural non-compliance, the court must determine Parliament’s intention from:

• the purpose of the requirement;
• the statutory scheme as a whole;
• the nature and seriousness of the breach;
• any prejudice caused; and
• the injustice or disruption that would follow from invalidating or affirming the process.

Section 79(2) states what the RTM company must do but does not expressly declare a premature claim notice invalid. The former distinction between “mandatory” and “directory” provisions is not decisive.

4.3 Section 79(2) is a timing rule

Section 79(2) may be breached even where section 78(1) has been fully observed—for example, if the claim notice is served 13 rather than 14 days after the last NIP. The Court considered it inconceivable that Parliament intended such a one-day error automatically to destroy the claim, particularly where it caused no material prejudice.

The provision therefore could not sensibly be treated as an express invalidity sanction for either its own breach or a breach of section 78(1).

4.4 Substance distinguished from procedure

The Court divided the statutory scheme into three broad parts:

1. substantive qualifying or entitlement conditions;
2. procedures for making, opposing and determining a claim; and
3. the consequences of acquiring the right to manage.

Sections 78(1) and 79(2) fall within the procedural compartment. Non-compliance with them does not mean that the RTM company lacks substantive entitlement. Accordingly, it cannot found a landlord’s counter-notice under section 84(2)(b).

4.5 Absence of prejudice

The omitted qualifying tenant had no statutory right to object to the acquisition and, in fact, joined the RTM company five days later. The landlord suffered no prejudice and was not among the class for whose protection the NIP requirement was enacted.

Allowing the landlord to defeat the claim would therefore confer an unjustified windfall arising from a procedural right belonging to someone else.

4.6 Legislative purpose

The consultation paper preceding the Act explained that NIPs were intended to give leaseholders an opportunity to consider whether to support and participate in the RTM company. It also indicated that counter-notices were to address failure to meet specific qualifying criteria.

The Explanatory Notes similarly stated that an objection should identify non-compliance with the Act’s eligibility criteria. These materials supported a distinction between substantive entitlement and procedural implementation.

5. Precedents Cited

A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024] UKSC 27; [2025] AC 1075

This was the principal authority. It concerned failure to give a claim notice to an intermediate landlord under section 79(6). The Supreme Court held that the omission did not defeat the acquisition because the intermediate landlord had ultimately suffered no material disadvantage and had been joined to the tribunal proceedings.

Paragraph 69 had stated that non-compliance with sections 78 and 79 meant that “no valid claim notice can be given to anyone”. The Court of Appeal treated that statement as binding. In the present case, however, the Supreme Court held that it was not part of the ratio decidendi: the issue had not been argued, was unnecessary to the result, and had expressly been left open later in the judgment.

The wider reasoning in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd supported the RTM company. It warned against using procedural requirements as traps for the unwary or as opportunities for unaffected landlords to obstruct the statutory process.

R v Soneji [2005] UKHL 49; [2006] 1 AC 340

This authority supplied the governing interpretive principle. Procedural non-compliance does not automatically invalidate a statutory process merely because the statutory language is mandatory. The decisive question is what consequence Parliament intended, assessed purposively and contextually.

Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2026] UKSC 26

This recent Supreme Court decision was cited as reaffirming the Soneji approach: purpose, statutory context, prejudice and potential injustice must be considered where legislation does not expressly state the consequence of non-compliance.

Settlers Court RTM Co Ltd v FirstPort Property Services Ltd [2022] UKSC 1; [2022] 1 WLR 519

An earlier general description of the RTM scheme suggested that acquisition could occur only after all qualifying tenants had been invited to participate. The Court explained that this was merely background commentary in a case concerning a different issue—the extent of management rights in a multi-block estate—and did not decide whether an omission invalidated a claim notice.

Elim Court RTM Co Ltd v Avon Freeholds Ltd [2017] EWCA Civ 89; [2018] QB 571

This case had held that failure to give a claim notice to a landlord did not inevitably invalidate an RTM acquisition. It formed part of the procedural history leading to the leapfrog appeal in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd.

Quinn v Leathem [1901] AC 495

The Court referred to the classic proposition that a case is authority only for what it actually decides. This supported the conclusion that the incidental statement in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd was not binding.

R (Youngsam) v Parole Board [2019] EWCA Civ 229; [2020] QB 387

This authority was discussed in examining the meaning of ratio decidendi. Whether the test was necessity or whether a proposition formed part of the best justification for the result, the disputed statement in A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd did not qualify.

Sinclair Gardens Investments (Kensington) Ltd v Oak Investments RTM Co Ltd [2005] RVR 426

This tribunal decision had rejected a landlord’s attempt to rely on the failure to serve a NIP on a qualifying tenant. The correctness of that approach had previously been left open but is now supported by the Supreme Court’s ruling.

Avon Freeholds Ltd v Regent Court RTM CO Ltd [2013] UKUT 213 (LC); [2013] L & TR 23

This earlier Upper Tribunal decision likewise held against a landlord relying on a NIP omission. The present judgment resolves the previously reserved issue consistently with that approach.

6. Complex Concepts Simplified

Right to manage

A statutory right allowing qualifying long leaseholders, through an RTM company, to take over management of their building without proving fault by the landlord.

Notice of invitation to participate

A notice informing eligible qualifying tenants of the proposed RTM claim and inviting them to join the RTM company.

Claim notice

The formal notice that starts the statutory process for acquiring the right to manage.

Counter-notice

The formal response by a landlord or other authorised stakeholder admitting or disputing the RTM company’s substantive entitlement.

Ratio decidendi

The legal reasoning necessary to decide a case and therefore binding in later cases.

Obiter dictum

A judicial observation not necessary to the decision. It may be persuasive but is not binding.

Void and voidable

Something void has no legal effect from the outset. Something voidable remains effective unless a person entitled to challenge it successfully does so.

Soneji principle

The principle that breach of a statutory procedural rule does not automatically invalidate the resulting act; the consequence depends on Parliament’s objectively assessed intention.

7. Impact

The judgment substantially limits the ability of landlords to use procedural NIP defects to obstruct RTM claims. Counter-notices must address substantive eligibility rather than defects that neither affect entitlement nor prejudice the objector.

RTM companies must still comply with sections 78 and 79. The decision does not excuse omissions: affected or interested persons may seek discretionary relief under section 107, particularly where non-compliance is deliberate, extensive or prejudicial.

More broadly, the judgment reinforces three principles of statutory interpretation:

• mandatory wording does not necessarily imply automatic invalidity;
• procedural safeguards should not become technical traps unrelated to their purpose; and
• isolated statements in earlier judgments must not be treated as binding without examining whether they were necessary to the decision.

8. Conclusion

Avon Freeholds Limited v Cresta Court E RTM Company Limited establishes that failure to serve a required NIP, or to wait the prescribed 14 days, does not itself invalidate a claim notice or permit a landlord to dispute substantive RTM entitlement. Such defaults are procedural and are ordinarily addressed through the discretionary enforcement mechanism in section 107.

The decision promotes certainty, proportionality and the effective operation of the right-to-manage scheme while preserving an appropriate remedy for genuinely harmful procedural failures.