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 – Appellant freeholder appealing – Respondent cross-appealing – Whether RTM claim limited to smallest qualifying part of building – Appeal dismissed – Cross-appeal allowed.
The appellant was the freehold owner of a property known as 36 Eveline Road, Mitcham which comprised four flats each let on a long lease. The property stood at one end of a terrace and had the appearance of a pair of semi-detached houses. The respondent was a company formed to acquire the right to manage the property pursuant to the Commonhold and Leasehold Reform Act 2002.
The First-tier Tribunal (FTT) decided that the respondent was entitled to acquire the right to manage the property. It accepted that the property initially comprised two terraced houses but since the grant of planning permission for four flats, it had been known by the single address of 36 Eveline Road, and was therefore a single building.
The appellant appealed contending that the RTM claim had to be limited to the smallest qualifying part of the building. In this case, each of the two adjacent houses in the terrace separately fulfilled the “self-contained part of the building” limb of the qualifying premises test in section 72(3) of the 2002 Act and the terrace as a whole fulfilled the “self-contained building” limb because, taken as a whole, the terrace was structurally detached from any other building. Accordingly, separate RTM claims should have been made in respect of each of the parts.
The respondent cross-appealed contending that the whole property was a self-contained building or self-contained part of a building, within the meaning of section 72. If the property constituted a set of qualifying premises, it did not matter if the property also contained, within itself, parts of the property which were also qualifying premises.
The appeal and cross appeal were heard by way of a review of the FTT’s decision, with a view to a rehearing.
Held: The appeal was dismissed. The cross-appeal was allowed.
(1) The tests set out in section 72 for the two categories of qualifying premises, namely self-contained buildings and self-contained parts of buildings, were physical tests. They depended upon the structure of the relevant premises and, in the case of self-contained parts of buildings, upon the ability to carry out independent redevelopment of that part and upon the nature of the services provided to that part.
The FTT did not apply those physical tests but made reference to the address of the property and to what was said to have been the appellant’s treatment of the property. The FTT failed to apply to the property the test in section 72.
Bearing in mind that the Upper Tribunal (UT) was engaged in a review of the FTT decision and not a rehearing, the reasoning of the FTT could not be upheld and fell to be set aside. That cleared the way for the rehearing of the application in the UT.
(2) For the purposes of section 72 neither the property nor the parts could qualify as a self-contained building, within section 72 as they were not structurally detached. The terrace as a whole was “a self-contained building” and satisfied the qualifying premises test. If therefore the property fell within section 72, it could only be as a self-contained part of a building, namely the terrace.
Premises comprised a self-contained part of a building if they satisfied the requirements in section 72(3(a), (b) and (c) (the division criteria). There was nothing to exclude from section 72(3) a self-contained part of a building which itself contained a self-contained part or self-contained parts of the same building.
In the present case, the property satisfied the division criteria. It was vertically divided from the remainder of the building of which it comprised part, namely the terrace. The property was capable of redevelopment independently from the remainder of the terrace. The services provided to the property were sufficiently independent of the remainder of the terrace to satisfy the requirements of section 72(4). None of the exceptions in schedule 6 applied to the property.
(3) It was common ground that the respondent could not, in the present case, acquire the right to manage in respect of more than one set of premises. If the property could qualify as a single set of premises for the purposes of section 72, as in this case, it was hard to see why the property should then be disqualified because it also comprised two sets of premises, namely the parts, to which section 72 also applied: Ninety Broomfield Road RTM Co v Triplerose Ltd [2015] EWCA Civ 282; [2015] EGLR 51 distinguished.
Parliament had chosen to allow tenants, by the formation of RTM companies, to make RTM claims in respect of buildings or parts of buildings. The relevant premises included self-contained parts of buildings, without parliament having drawn a distinction between: (i) a self-contained part of a building which itself contains a self-contained part or self-contained parts of the same building; and (ii) a self-contained part of a building which could not be so sub-divided.
(4) A self-contained part of a building, as defined in section 72, included both a self-contained part of that building which did not include a self-contained part or parts of the same building; and a self-contained part of that building which did include a self-contained part or parts of the same building.
In the present case, the respondent was entitled to make the RTM claim in relation to the property, notwithstanding that the property was comprised of two parts, which were each also self-contained parts of the terrace within the meaning of section 72.
There was nothing within section 72 to suggest that the right attached only to the smallest possible self-contained part. If parliament had intended to oblige tenants to claim the smallest part of the building to satisfy the requirements of section 72(3) it would have said so: 41-60 Albert Palace Mansions (Freehold) Ltd v Craftrule Ltd [2011] EWCA Civ 185 considered.
Given that the FTT decision had to be set aside, it followed that the appeal fell to be dismissed and the cross appeal allowed. So far as the RTM application was concerned, the respondent was entitled to a determination that it was, on the relevant date, entitled to acquire the right to manage the property.
Justin Bates (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