Landlord and tenant – Right to manage – Commonhold and Leasehold Reform Act 2002 – Respondent RTM company applying for right to manage property comprising part of terrace of properties – First-tier Tribunal granting application – Upper Tribunal remaking decision – Appellant freeholder appealing – Whether respondent entitled to acquire property as a whole – Whether separate claims necessary for each original terraced house – Appeal dismissed
The appellant was the freehold owner of 36 Eveline Road, Mitcham, (the property) which was originally two terraced houses. They had been converted into four flats, two in each of the original terraced houses. The lessees of the four flats established the respondent company with a view to acquiring the right to manage the four flats.
Although the property was not structurally detached (since it shared a party wall with No 38), it fell within the definition of “premises” in section 72 of the Commonhold and Leasehold Reform Act 2002, as did each of the original terraced houses.
The First-tier Tribunal (FTT) decided that the respondent was entitled to acquire the right to manage the property on a basis which the Upper Tribunal held to be incorrect.
Nevertheless, the UT remade the decision and held that neither the property nor its constituent parts qualified as a self-contained building.
The whole terrace was a self-contained building; The property satisfied the definition of a self-contained part of a building (ie the terrace); but so too did each of the original terraced houses.
There was nothing in the 2002 Act which excluded from the right to manage a self-contained part of a building which itself contained a self-contained part or parts of the same building.
Therefore, the respondent was entitled to acquire the right to manage in respect of the property: [2023] UKUT 26 (LC); [2023] PLSCS 33; [2023] HLR 33. The appellant appealed.
Held: The appeal was dismissed.
(1) A fundamental purpose of the 2002 Act was to confer management rights and responsibilities on a body (the RTM company) which was accountable to and controlled by the tenants who would be affected by the conduct of that management, through their right to be members of the RTM company.
Chapter 1 of the Act made provision for the acquisition of the right to manage only in relation to “premises to which this Chapter applies” “and only by a company “which, in accordance with this Chapter may acquire and exercise those rights”. Section 72 imposed a much tighter qualification requirement in relation to premises than the equivalent provision in the Landlord and Tenant Act 1987.
Section 72(1) made it clear that Chapter 1 only applied to premises if they satisfied the three separate conditions set out in section 72(1)(a), (b) and (c). The premises had to be self-contained. If they constituted a whole building it had to be structurally detached.
If part of a building, that part had to be divided vertically from the rest of the building, be capable of being independently redeveloped and have services which either were or could without interruption to the rest of the building be made independent.
All those requirements pointed strongly towards confining the right to manage to separate premises within which the quality of the management provided by the RTM company affected only the occupants of that building or part of it. The property here satisfied those requirements. The quality of management provided by the RTM company would affect only the occupants of the property.
The relevant provisions of the 2002 Act, construed as a whole, in context, necessarily pointed to the conclusion that the words “the premises” had the same meaning wherever they were used (save where otherwise expressly provided).
That meant that the references in section 72 to “premises” were to a single self-contained building or part of the building.
It was not open to an RTM company to acquire the right to manage more than one self-contained building or part of a building: Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd [2015] EWCA Civ 282; [2015] EGLR 51 and FirstPort Property Services Ltd v Settlers Court RTM Co Ltd [2022] UKSC 1; [2022] PLSCS 5; [2022] 1 WLR 519 considered.
(2) Whether premises satisfied the definition of “self-contained building or part of a building” in section 72(1) (a) of the 2002 Act was a purely physical test. The definition was concerned only with the structure of the built envelope, its internal structure, and the separability of services.
Moreover, there were indications in the 2002 Act itself that parliament considered that premises which themselves satisfied the definition in section 72 could contain smaller premises which themselves also satisfied that definition.
Paragraph 2 of schedule 6 envisaged premises to which section 72 applied containing more than one self-contained part of a building. What excluded such premises from the Act was nothing to do with their physical configuration but turned on different ownership.
Parliament envisaged that if self-contained parts of a building were owned by the same person, they would be “premises” to which the Act applied with the consequence that a claim notice could be served in respect of all of them.
(3) Section 73(4) envisaged the theoretical possibility of two RTM companies: one in respect of “premises” and another in respect of premises “containing or contained in” the premises. It solved that problem by preventing the second company from being an RTM company. If the appellant’s argument were correct, then it would be impossible for premises to contain other premises which satisfied the definition.
Section 81(3) was to similar effect. It, too, envisaged two units of property, one within the other, each of which satisfied the definition of “premises”. But this time it solved the problem by preventing a second claim notice from being served, while the earlier claim notice continued in force.
If the earlier claim notice ceased to be in force, then there was nothing to prevent another claim notice from being served in relation to one or other of those units of property: 41-60 Albert Mansions Ltd v Craftrule Ltd [2011] EWCA Civ 185; [2011] 2 EGLR 35 applied.
(4) The Upper Tribunal was correct that there was nothing in the scheme of the RTM provisions in the 2002 Act which supported the argument that an RTM claim could not be made in respect of a self-contained part of a building which itself contained a self-contained part or self-contained parts of the same building. There were strong and clear indicators that pointed the other way.
Justin Bates and Katherine Traynor (instructed by Scott Cohen Solicitors) appeared for the appellant; Stan Gallagher (instructed by Direct Access) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Assethold Ltd v Eveline Road RTM Co Ltd
