In 5 conjoined appeals the Court of Appeal considered whether there had been a failure to comply with the statutory procedural provisions and the consequences thereof.
The facts of each case were slightly different but together they raised the following issues:
“(a) The Saturday/Sunday issue, namely, whether a notice inviting participation is required by section 78(5)(b) of the 2002 Act 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, and, if that question is answered affirmatively, whether the consequence of non-compliance with the requirement is fatal to the whole right to manage procedure or may be overlooked.
(b) The signature issue, namely whether the disputed claim notices purported to be signed by a company and, if they did, whether that signature was ineffective for failing to comply with section 44, Companies Act 2006 ; if the signature was ineffective, whether the notice was nonetheless a good notice for the purpose of section 79 of the 2002 Act and, if it was not, whether its deficiencies are fatal to the whole procedure or may be overlooked.
(c) The intermediate landlord issue, namely whether the claim notice at Elim Court was served on the intermediate landlord and, if it was not, whether service on the intermediate landlord was required and, if it was, whether the failure to serve the intermediate landlord was fatal to the whole right to manage procedure or whether the deficiencies in service could be overlooked.”
In relation to the Saturday/Sunday issue the judge held that the notice failed to comply with the statutory provisions and that there had not been substantial compliance because it was an important part of the statutory scheme that the articles of the RTM should be available for inspection on at least one weekend day.
In relation to the signature issue the Tribunal held that the notices were compliant and the issue of substantial compliance did not arise.
In relation to the intermediate landlord issue the court held that the obligation to serve the landlord was not one where substantial compliance can have been held by Parliament to suffice, and therefore the failure to serve the intermediate landlord invalidated the claim.
Decision on appeal
The Court of Appeal applied the principles set out in Natt v Osman  EWCA 1520 Civ. The principle of substantial compliance had no relevance in the context of the RTM legislation. The question was one of statutory construction and what can fairly be supposed by Parliament to be the consequence of non-compliance.
In relation to the Saturday/Sunday issue it could not be supposed that Parliament had intended that a failure to specify a Saturday or Sunday for inspection of the company’s articles would invalidate the claim.
In relation to the signature issue the Court of Appeal upheld the reasoning of the Upper Tribunal.
In relation to the intermediate landlord issue the Court of Appeal held that failure to serve a single intermediate landlord, in circumstances where that landlord had no management responsibilities did not invalidate the notice. It was not part of the purpose of the legislation that a mistake of that kind should invalidate the claim.
As pointed out in the Propertylawuk case comment of the UT decision the reasoning in that decision, in particular the reference to “substantial compliance” was already out of date when we covered it in the light of the decision of the Court of Appeal in Natt v Osman  EWCA 1520 Civ which came out at roughly the same time.
Here the Court of Appeal applies the principles set out in Natt v Osman but very much with the emphasis on Parliament having intended that RTM should be a simple process and it not having been Parliament’s intention that minor slips should invalidate a claim.
The Court of Appeal in achieving a sensible result has somewhat blurred the lines of the decision in Natt, in particular in relation to the relevance of actual prejudice. In relation to the intermediate landlord issue the Court of Appeal clearly took into account the fact that the landlord who was not served had no management responsibility. In considering the statutory purpose of the legislation is it likely that Parliament intended that the court refract the legislation through the lens of the actual facts of the case? Are we to conclude that Parliament intended that where it has used mandatory language there should be a variety of different outcomes depending on the factual situation; e.g. a simply mandatory instruction to serve all intermediate landlords may mean that one ought to serve all the intermediate landlords, but if one were to omit to serve such a landlord the notice will be valid if that particular landlord has management responsibilities but will be invalid if he does not. That looks like re-introducing the doctrine of substantial compliance by the back door.