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Case Summary
This case focuses on a significant legal question: can a landlord recover costs incurred pursuant to a Right to Manage (RTM) Company’s application, even when the application is later withdrawn?
The dispute began when the RTM Company, formed by the majority of qualifying leaseholders in the building, sought to assume management rights over their property by exercising a right to manage claim pursuant to the Commonhold and Leasehold Reform Act 2002 (CLRA). In June 2021, the RTM Company served a formal claim notice on the freeholder and the appellant, Assethold Ltd, who had recently acquired the property’s freehold and headlease interest but the registration of the transfer of the interests at the Land Registry had not yet completed. The appellant responded with a counter-notice, citing procedural deficiencies, including the improper service of participation invitations as required by the CLRA.
In September 2021, the RTM Company made an application to the First-tier Tribunal (FTT), requesting a determination of their entitlement to manage the property. However, in May 2022, they withdrew the application. The appellant then applied for a costs order under section 88(4) of the CLRA, arguing that costs incurred due to the RTM Company’s application should be recoverable.
The RTM Company contested this, asserting that the appellant was not the legal landlord since their transfers had not yet been registered. Assethold countered that the RTM Company had acknowledged their landlord status in the claim notice and tribunal application, thereby precluding them from denying it later (a principle known as estoppel).
The FTT ruled against Assethold, denying the costs application. On appeal, the Upper Tribunal reversed this decision, determining that the RTM Company’s earlier acknowledgment of Assethold’s status as landlord was binding, and costs were awarded to the appellant.
However, on the final appeal to the Court of Appeal, the Court of Appeal concluded that the term “landlord” under the CLRA refers strictly to the registered legal owner and that Assethold could not recover their costs.
The court held that in cases of equitable ownership, the RTM Company would not typically have the means to identify such interests, reinforcing the need for clarity and fairness in applying statute.
Future Application
Section 50 of the Leasehold and Freehold Reform Act 2024 (which came into force on the 3rd March 2025) changed the legislation relating to the Landlord’s recovery of costs from the leaseholder so that generally each party will be responsible for their own legal costs.
However, this case still remains relevant for right to manage applications for claims that commenced before 3rd March 2025 and it also generally remains relevant to the principle of estoppel and its application to other types of claims.
A Practitioner’s Perspective
Our own Sajel Patel has successfully employed similar arguments in prior cases before the FTT. Her experience illustrates the importance of understanding both procedural nuances and strategic considerations when navigating RTM disputes. Sajel’s insight into the statutory interpretation has proven valuable in securing favourable outcomes for tenants facing complex challenges in RTM claims.
How We Can Assist
We have had the privilege of working extensively on lease extensions, Right to Manage claims, and freehold acquisitions for many years. Our dedicated team combines deep legal expertise with practical experience to provide comprehensive support in these areas.
If you are a landlord or leaseholder dealing with a RTM or other property-related issues, we would be delighted to assist you. Please do not hesitate to contact Sajel Patel on sajel@leaselaw.co.uk/0204 511 9103 or Sarah Osborne on sarah@leaselaw.co.uk/0204 524 3340 to discuss your proposed matter.
