Factual and Procedural Background
The appeal concerns the right to manage ("RTM") legislation under the Commonhold and Leasehold Reform Act 2002 (the "CLRA"). The Appellant, RTM Company, was formed by leaseholders of flats at a property in North London to take over its management. The Respondent, Company A, purchased the freehold and a 999-year headlease of the property in October 2019 from two companies collectively referred to as "Company B".
The dispute arose because when the RTM Company served its claim notice under section 79 of the CLRA in June 2021, Company B was still the registered owner of the freehold and headlease, not Company A. Company A later became the registered owner of the freehold but not the headlease, as the registered owner of the headlease was dissolved in 2021.
The RTM Company served its claim notice on both Company A and Company B. Company A served a counter-notice challenging the claim on the basis that the legislative requirements were not met. The RTM Company applied to the First-tier Tribunal ("FTT") for a determination but then sought to withdraw its application, which was dismissed by consent.
Company A applied for costs under section 88(4) of the CLRA for costs incurred responding to the claim and the FTT proceedings, totaling £14,747.22. The RTM Company argued Company A was not a "landlord" under section 88(1) because it had no legal interest in the property.
The FTT decided on the papers that Company A was not a "landlord" and the RTM Company had no liability for costs. Company A appealed to the Upper Tribunal ("UT"), which allowed the appeal, holding that the RTM Company was estopped from denying Company A was the landlord for costs recovery purposes. Costs were awarded accordingly.
The RTM Company now appeals with permission and a costs capping order. The court indicates it will allow the appeal.
Legal Issues Presented
- Whether Company A was properly regarded as a "landlord" under sections 79(6) and 88 of the CLRA despite not being the registered legal owner at the date of the claim notice.
- Whether estoppel (by representation or convention) can operate to treat Company A as landlord for the purpose of costs under section 88.
- Whether the Upper Tribunal erred in enlarging the First-tier Tribunal's jurisdiction through estoppel.
Arguments of the Parties
Appellant's Arguments
- Estoppel should not apply to determine landlord status under section 88.
- The Upper Tribunal improperly expanded the FTT's jurisdiction beyond the statutory scheme.
- No estoppel arose because the correct test of detrimental reliance was not applied and reliance on the facts could not have occurred.
Respondent's Arguments
- Equitable ownership of the freehold and headlease was sufficient to qualify as a "landlord" for sections 79(6) and 88 purposes.
- Alternatively, Company A and Company B jointly constituted the landlord under section 112(5) of the CLRA.
- Company A had management responsibility and was effectively the landlord despite registration delays.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| A1 Properties (Sunderland) Ltd v Tudor Studios RTM Co Ltd [2024] UKSC 27 |
Clarification of RTM legislative provisions and the intended simplicity of the process. |
Used to interpret the RTM legislation's purpose and the definition of persons to be served with claim notices. |
| Benedictus v Jalaram (1989) 58 P&CR 330 |
Estoppel by convention and abuse of process principles related to pleading and conduct. |
Considered by the UT in support of estoppel; discussed but not fully adopted by this court. |
| Plintal SA v 36-48A Edgewood Drive RTM Co Ltd LRX/16/2007 (2008) |
Application of estoppel principles in RTM context. |
Preferred reasoning by the UT judge over other case law concerning estoppel. |
| The Lough's Property Management Ltd v Robert Court RTM Company Ltd [2019] UKUT 105 (LC) |
Approach to estoppel in RTM proceedings. |
UT judge's approach was contrasted and not preferred by this court. |
| Assethold Ltd v 7 Sunny Gardens Road RTM Co Ltd [2013] UKUT 509 (LC) |
Definition of "tenant" and the focus on legal estate rather than beneficial interests under RTM legislation. |
Supported the conclusion that equitable ownership does not confer landlord status under the CLRA. |
| Brown & Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [2001] Ch 733 |
Distinction between legal and beneficial title in lease assignments. |
Supported the legal interpretation that only legal owners are landlords under the CLRA. |
| Sackville UK Property Select II (GP) No.1 Ltd v Robertson Taylor Insurance Brokers Ltd [2018] EWHC 122 (Ch) |
Interpretation of assignment and beneficial ownership under the Landlord and Tenants (Covenants) Act 1995. |
Did not support equitable ownership conferring landlord status under CLRA. |
| Skelwith (Leisure) Ltd v Armstrong [2015] EWHC 2830, [2016] Ch 345 |
Limits on powers of equitable owners versus registered proprietors under Land Registration Act 2002. |
Supported that equitable owners do not have full landlord powers under the CLRA. |
| Pye v Stodday Land Ltd [2016] EWHC 2454 (Ch) |
Strict interpretation of powers of persons entitled to be registered as proprietors. |
Supported limiting landlord status to legal owners. |
| Avon Freeholds Ltd v Cresta Court E RTM Company Ltd [2024] UKUT 335 (LC) |
Service of notice to equitable leaseholders under specific statutory provisions. |
Distinguished from current case; related to equitable leases rather than transfers of legal interests. |
| Malik v Malik [2024] EWCA Civ 1323 |
Estoppel by conduct and abuse of process principles. |
Referenced as an example of broader estoppel concepts not argued here. |
| Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank [1986] AC 80 |
Requirements for estoppel by representation. |
Set out the essential elements of representation, reliance, and detriment. |
| Steria Ltd v Hutchinson [2006] EWCA Civ 1551 |
Classic requirements for estoppel by representation. |
Used to analyze whether estoppel arose in this case. |
| Amalgamated Investment & Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd [1981] 1 All ER 923 |
Causal connection requirement between representation and reliance for estoppel. |
Supported the need for a causal link absent in this case. |
| Free Grammar School of John Lyon v Mayhew (1997) 29 HLR 719 |
Estoppel arising from acceptance of invalid notice and reliance on it. |
Distinguished on facts; reliance was not established here. |
| Tinkler v Revenue and Customs Comrs [2021] UKSC 39, [2022] AC 886 |
Principles of estoppel by convention in non-contractual dealings. |
Applied to assess whether estoppel by convention arose; found not to apply. |
| Revenue and Customs Comrs v Benchdollar Ltd [2009] EWHC 1310 (Ch) |
Framework for estoppel by convention. |
Followed in Tinkler; used to reject estoppel by convention here. |
| NRAM plc v McAdam [2015] EWCA Civ 751 |
Limits on reading down representations to narrower contexts. |
Referenced regarding scope of representation for estoppel. |
| Essex County Council v Essex Incorporated Congregational Church Union [1963] AC 808 |
Jurisdictional limits of tribunals and estoppel. |
Argued by Appellant regarding limits on FTT jurisdiction. |
| Secretary of State for Employment v Globe Elastic Thread Co Ltd [1980] AC 506 |
Jurisdictional limits and estoppel principles. |
Argued by Appellant. |
| Dutton v Sneyd Bycars Co Ltd [1920] 1 KB 414 |
Jurisdictional issues related to estoppel. |
Argued by Appellant. |
Court's Reasoning and Analysis
The court first addressed whether Company A was a "landlord" under the CLRA at the date of the claim notice. It rejected the argument that equitable ownership sufficed, holding that only legal ownership confers landlord status for sections 79(6) and 88. The court relied on statutory language, the Land Registration Act 2002, and precedent establishing that legal title is required for landlord status. Equitable ownership does not suffice because the transfers were not completed by registration at the relevant time, thus legal title remained with Company B.
The court also considered the statutory context and purpose of the RTM legislation, emphasizing the need for certainty and simplicity in the process. Including equitable owners as landlords would undermine this by complicating identification and notification requirements. The court noted that buyers in the "registration gap" can protect their interests contractually but cannot be treated as landlords absent registration.
Regarding estoppel, the court distinguished between estoppel by representation and estoppel by convention. It found no evidence that Company A induced the RTM Company to act to its detriment or that the RTM Company relied on any representation by Company A. The counter-notice served by Company A implied a representation of landlord status, but Company A was professionally advised and aware of its own position, while the RTM Company was unrepresented and simply responding to Company A's objection. There was no causal link between any representation and the RTM Company's conduct causing detriment.
The court rejected estoppel by convention because no shared assumption was expressly communicated or relied upon to the necessary degree. The RTM Company responded to Company A's own representations and knowledge. The court also declined to decide whether estoppel can affect the statutory determination of landlord status, as it found no estoppel arose on the facts.
Consequently, the court agreed with the FTT's original conclusion that Company A was not a landlord entitled to costs under section 88.
Holding and Implications
The court's final decision is to ALLOW THE APPEAL.
The direct effect is that Company A is not entitled to recover costs under section 88 of the CLRA because it was not the legal landlord at the date of the claim notice. The FTT's original decision denying costs liability to the RTM Company is upheld. No new precedent is established beyond affirming that legal ownership is required to be a "landlord" under the RTM legislation and that estoppel does not override this statutory requirement in the absence of clear detrimental reliance.