Landlord not bound by Right to Manage Company’s Claim Notice

Where a company (a “RTM Company”) applies to a residential landlord to acquire the right to manage conferred by Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”), section 78(5)(b) of the 2002 Act requires the service of “a notice inviting participation” to inform non-participating tenants that the RTM company’s articles of association are available for inspection on 3 days – at least one of which must be a Saturday or Sunday.

The claim notice must also be served on any landlord of the property under section 79(6) of the 2002 Act.

Would non-compliance with these requirements be fatal to the whole right to manage procedure or might it be overlooked?

In the recent case of Elim Court RTM Co Ltd v Avon Freeholds Ltd [2014] the first requirement was not complied with and as to the second requirement it was served not on the intermediate landlord but on one of the flats and not passed on to the intermediate landlord.

The Upper Tribunal (Lands Chamber) decided that the requirements were mandatory and that non compliance was fatal on both counts.

That disposed of the case in favour of the landlord but the case did raise an interesting signature issue.

The landlord argued that the disputed claim notice purported to be signed on behalf of the RTM Company by the secretarial company which was the company secretary of the RTM Company and that, accordingly, there being just the one unwitnessed signature on the claim notice, it was ineffective for failing to comply with section 44 of the Companies Act 2006.

The statement after the signature mentioned the signatory’s name and the words “RTMF Secretarial” which was the trading name of Federation Limited, the RTM Company’s company secretary, which suggested that he was signing as a representative of “RTMF Secretarial”, and not as the immediate agent of the RTM Company.

Had the signature been the purported signature of the secretarial company it would indeed have been ineffective for failure to comply with section 44.

However the Tribunal said the claim notice contained no indication as to who or what “RTMF Secretarial” was or indeed that it was a limited company. The provision of the additional information below his signature did not derogate from the fact that the signatory actually had separate authority to sign and give the notice in his individual capacity as authorised member or officer acting on behalf of the RTM Company.

The signatory’s signature neither purported to be that of a company to the intent that it was being given by the secretarial company on behalf of the RTM company, nor would Section 44 have allowed it to be. Had the secretarial company been pursuing that option a second company officer’s signature or a witness to his signature would have indeed have been required under Section 44 and their omission here would have been fatal to the validity of the notice.

We might disagree with the Tribunal and think the fact that someone acting in a particular way as a secretarial company’s signatory would have been legally ineffective has little probative value as a pointer to them having intended to act in their individual capacity as agent of the RTM Company (effective) especially when their signature was accompanied by a trading name which suggests they were actually signing, not in their individual capacity, but instead as the secretarial company’s signatory (ineffective).

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.