Update on ALEP’s Intervention in the Supreme Court
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On Thursday 8 February, ALEP intervened in a Supreme Court case for the first time in its history.
The Association’s purpose in doing so was significant: to seek clarification of – and potentially changes to – the law in relation to service of notices. Bishop & Sewell LLP acted on behalf of ALEP; Counsel were Philip Rainey KC and Mark Loveday of Tanfield Chambers, who also appeared pro bono and led the argument in this important case.
The case of A1 Properties (Sunderland) Limited v Tudor Studios RTM Limited (Tudor) raises the question of whether an intermediate landlord with no management functions needs to be served with a copy of the RTM claim notice.
From the point of view of the public at large and those seeking to exercise their rights, the Right To Manage legislation is a particularly complicated area of landlord and tenant law. ALEP members are familiar with navigating it, but there are many traps for the unwary, as the huge body of case law around RTM notices shows – there are as many landlord notices as tenant notices.
At the heart of Tudor is a question that the courts have grappled with over the years in various fields of law; namely, when there is a failure to comply with a statutory obligation, what the practical consequences of that will be. In Tudor, the issue was the failure to service a notice claiming the Right To Manage on an intermediate landlord who actually had no management function.
The current case law is set out in the case of Elim Court RTM Co Ltd v Avon Freeholds Ltd (2017) [2017] EWCA Civ 89 (Elim Court). This decision of the Court of Appeal deals with a failure to serve a single intermediate landlord with no management functions. Here there were 237 intermediate landlords – investors in student accommodation holding individual head leases over each unit. In addition, arguably, the failure to serve was deliberate, the choice not to serve having been made on the basis of the position in case law set down in Elim Court. The discussion point in Tudor is therefore how the courts should approach the question of non-compliance with statutory procedure.
To date the courts have veered towards a distinction between public law and private law rights, generally tending to the view, following another Court of Appeal case, Natt v Osman [2014] EWCA Civ 1520 (Natt v Osman), that where the obligations arise out of a property law notice (such as an RTM claim) that parliament would have intended the consequences of non-compliance to be interpreted more strictly, i.e. that the risk of failure on procedural grounds would be much higher.
In Tudor, there is scope to move the argument forward and one option that ALEP was seeking to suggest to the Supreme Court is that the test for determining what parliament would have intended should happen in the event of a failure to comply, should perhaps mirror that in the public law space, where the test is one of subjective prejudice. The leading case on this is R v Soneji and another [2005] UKHL 49.
Part of ALEP’s submission to the court as intervener is that mirroring this test is likely to be easier for the courts to apply in practice, and so, if adopted, will give greater certainty in the future. In a case like this, the application of a test based on the ‘outcome’ of the non-compliance is likely to produce a ‘fairer’ and more transparent result.
In seeking to intervene, ALEP was not a party to the case, but rather appeared as an ‘amicus curiae’ (a friend of the court). Inherent, therefore in its submissions, was its neutrality, and the desire for greater clarity in relation to the law here not only in relation to RTM notices, but also potentially more widely given the natural symmetry between the RTM and the Enfranchisement legislation. It is possible that as a result of this intervention, the Supreme Court may well look to overrule all or part of the previous decisions of the Court of Appeal in Elim Court and Natt v Osman, and if it does so, will herald a new approach to the law as it relates to the validity of property notices.
Lord Justice Briggs credited the “scholarly and helpful intervention” of ALEP and the counsel’s “carefully prepared and very helpful submissions on this difficult piece of legislation” made on ALEP’s behalf.
Mark Loveday, Barrister at Tanfield Chambers commented: “It’s one of the big questions in property law. If Natt v Osman is right, procedural defects, no matter how trivial, are presumed fatal to the exercise of statutory property rights. If Natt v Osman is wrong, the law is more forgiving. A step is still valid if the relevant party has substantially complied with the legislation (or no prejudice was caused). ALEP’s intervention has allowed this big issue to be finally resolved by the highest court in the land – as their Lordships recognised.”
Mark Chick commented: “I would like to thank Philp Rainey KC and Mark Loveday of Tanfield Chambers for their excellent pro bono work on the part of ALEP, and the Bishop & Sewell team, particularly Matthew Davies. As experts in this area, we look forward to the further development of the law and its wider application.
“The outcome is unlikely to be known before mid March, but regardless of the ruling, we hope that our arguments were of assistance to the Court and that the wider authority and argument put forward may be of use to the Lord Justices when making their decision.”
A longer description of the case to date is available on the Bishop & Sewell website.
