Avon Freeholds Limited v Cresta Court E RTM Company Limited
| Judges | Lord Reed, President; Lord Briggs; Lord Stephens; Lady Rose; Lord Snowden |
| Judgment given by | Lord Briggs, with whom Lord Reed, Lord Stephens, Lady Rose and Lord Snowden agree |
| Hearing | 7 July 2026 |
| Judgment | 27 August 2026 |
| Court | The Supreme Court of the United Kingdom |
| Jurisdiction | England and Wales |
| Appellant | Cresta Court E RTM Company Limited, the right to manage company |
| Respondent | Avon Freeholds Limited, the freeholder |
| Case reference | UKSC/2025/0170 |
| On appeal from | [2025] EWCA Civ 1016 |
Summary
A right to manage company at a block of 20 flats in Ealing invited every qualifying tenant it had identified to join it. It missed one leaseholder, whose lease had been granted but not yet registered. Five days after the claim notice went out she joined anyway and backed the claim. The freeholder said the omission had made the claim notice void, and the Court of Appeal agreed.
The Supreme Court allowed the company's appeal. Sections 78(1) and 79(2) of the Commonhold and Leasehold Reform Act 2002 are procedural. They do not go to entitlement, so a landlord cannot rely on a breach of them in a counter-notice.
Background and facts
Under the 2002 Act a right to manage company must give a notice of invitation to participate to every qualifying tenant who neither is nor has agreed to become a member: section 78(1). The claim notice may not be given until at least 14 days after the last of those notices: section 79(2). Only landlords, other parties to the leases and court appointed managers may serve a counter-notice. Qualifying tenants get a copy and no right to object.
The premises are 7 to 26 Cresta Court, Hanger Lane, London W5 3DE, containing 20 flats. On 4 November 2021 the company gave notices to the qualifying tenants it had identified who were not members. The leaseholder of Flat 17 held a lease granted in April 2020 for 150 years, but her application to register it was still pending, so she held an equitable interest only. She was never given a notice, and it became common ground that she qualified.
The claim notice was given on 21 January 2022. Five days later the leaseholder of Flat 17 joined the company. Of the counter-notice grounds, only the missed notice survived. Both tribunals upheld the claim. The Court of Appeal allowed the freeholder's appeal and held the claim notice a nullity.
The issue
Whether the failure to give a notice of invitation to participate to one qualifying tenant, in breach of section 78(1) and so also of section 79(2), invalidated the claim notice. The freeholder said section 79(2) states the consequence in terms, so the document was void. The company said the rules are procedural, were made for qualifying tenants, and cannot arm a landlord who lost nothing.
The decision
The court took the statute first, as if free from authority. Absolute voidness broke down at once. A document that is a nullity for all purposes cannot trigger the landlord's own right to serve a counter-notice, and cannot fix the relevant date by which entitlement is judged. On a fresh look at section 79(2) and section 78(1), the conclusion was that
neither was intended to affect the validity of the claim notice at allLord Briggs, paragraph 46
Section 79(2) was read as what it says it is. It can be broken with no breach of section 78(1) at all, by a company that invited everyone and then moved too soon.
It is a timing rule for claim notices, not a rule about the sanction for a breach of section 78(1).Lord Briggs, paragraph 48
That reframed the question. The issue was not whether the claim notice was void or valid, but whether the breach could found a dispute about entitlement at all.
Since the rules in sections 78(1) and 79(2) are procedural and do not go to entitlement, they cannot be raised by way of objection to the acquisition of the right to manage by the RTM company. The only sanction for non-compliance which is available is an enforcement order made under section 107.Lord Briggs, paragraph 58
Invalidity was rejected as the wrong instrument. Procedural defaults here vary without limit in seriousness and effect, and a discretion open to any interested person fits them better than one blunt consequence handed to a class the rule never protected.
In that context, invalidity is like taking a blunderbuss to a shooting gallery.Lord Briggs, paragraph 59
The passage in A1 Properties on which the Court of Appeal had relied formed no part of the ratio of that decision. It was not argued, the case turned on a different sub-section, and the result would have been the same without it. Lord Briggs acknowledged authorship and held it should not be followed.
For those reasons I would allow this appeal, and restore the decision of the Upper Tribunal.Lord Briggs, paragraph 81
Practical implications
The holding is about who may take the point, not whether the rules bind. The notices and the 14 day gap are still required. What changes is the consequence: the breach cannot be raised by counter-notice, and the missed leaseholder must apply under section 107, where relief is discretionary.
The judgment splits the scheme into substance and procedure. The qualifying rules in sections 72 to 77, and the membership threshold in section 79(3) to (5), go to entitlement. The notice rules do not. A counter-notice must be built on the first category.
The remarks about prejudice and blame were directed at a section 107 application the leaseholder never made, and were not the ground of the decision.
The reasoning applies R v Soneji, affirmed by the same court this year in Akbars Restaurant. Where a statute requires a procedural step but says nothing about the consequence of missing it, that consequence is inferred from the step's purpose and the class it protects.
Practice points
- Before running a notice point, ask whether the provision breached was made for your client's benefit. A landlord objecting to a right to manage claim now has to show that the breach goes to entitlement, not merely that a step was missed.
- Draft counter-notices against the entitlement conditions. On this judgment the qualifying rules in sections 72 to 77 and the membership threshold in section 79(3) to (5) can found an objection. Sections 78(1) and 79(2) cannot.
- A right to manage company that has missed a qualifying tenant is not home free. The missed tenant may apply under section 107, and the tribunal's discretion extends to ordering the notices to be given and the claim process to be started again.
- Registration gaps create invisible qualifying tenants. A leaseholder whose lease has been granted but not yet registered may still qualify, and the company will not find her on the register. Check the landlord's own records and the grant history, not the title alone.
- Do not treat a general description of a statutory scheme in an earlier judgment as a ruling on a point that was never argued. The passage relied on here came from a decision on a different sub-section and was held not to bind.
- Where a contract or a statute forbids a step until something has been done, ask separately what happens if the step is taken early. The prohibition and the consequence of ignoring it are two questions, and the second usually turns on purpose and prejudice.