Right to manage – Commonhold and Leasehold Reform Act 2002 – Respondent RTM company seeking right to manage two blocks of flats within development owned by appellant – Whether those two buildings each “self-contained” within meaning of section 71(1)(a) and 72(2) – LVT determining that right to manage established in relation to buildings plus common parts for which service charge payable under leases of flats – Whether those common parts comprising “appurtenant property” – Appeal dismissed
The appellant owned the freehold of a development that comprised two blocks of flats, one containing two flats and the other containing 10, plus two freestanding “coach houses” consisting of first-floor flats with parking spaces beneath. The lease of each flat included the use of a carport or parking space and the right to use common parts including roads, footpaths and visitor car-parking spaces, with service charges payable for those facilities. The respondent RTM company served two notices on the appellant, under section 79 of the Commonhold and Leasehold Reform Act 2002, seeking to acquire the right to manage the two blocks of flats on behalf of the qualifying tenants of the flats. By its counternotices, the appellant asserted that the respondent was not entitled to manage either block because neither constituted “premises” for the purposes of the Act. It contended that, owing to the existence of the carports under the coach houses and the shared access road and visitor parking spaces, the buildings were not self-contained as required by section 72(1)(a).
The respondent applied to the leasehold valuation tribunal (LVT) for a declaration, under section 84, that it was entitled to acquire the right to manage. Granting the declaration, the LVT determined that the blocks fell within the description of a self-contained building with appurtenant property, within section 72(1)(a), and that the respondent should have control of all the matters for which service charges were payable under the leases including the maintenance of the common areas. It considered that, while there might initially be some duplication of service provision where facilities were shared with the coach houses, the coach house lessees could apply to the LVT for variation of their leases, or for a decision as to reasonableness of service charges, to provide for them to pay a lesser service charge in view of the fact that most of the maintenance was being undertaken and paid for by the RTM company rather than the appellant’s manager. The appellant appealed.
Held: The appeal was dismissed.
By section 71(1)(a), a claim notice could only be served in relation to premises that consisted of a self-contained building or part of a building, “with or without appurtenant property”. Each of the respondent’s claim notices identified one of the blocks of flats as the relevant premises for the purposes of the right-to-manage claim. Each of those buildings was self-contained since it was “structurally detached” within the meaning of section 72(2); accordingly, the respondent was on the relevant date entitled to acquire the right to manage them. The words “with or without appurtenant property” in section 71(1)(a) meant that, if the self-contained building had appurtenant property, then “the premises” for the purposes of the Act consisted of the building plus the appurtenant property. The effect of a valid notice was to extend the right to manage to any property appurtenant to the building or part of a building. Accordingly, the right to manage in the instant case extended to the two blocks of flats and to appurtenant property, namely property that was appurtenant to a flat within the block.
The appurtenant property attaching to each flat under the relevant lease comprised a carport or parking space, which was included in the demise, plus the various incorporeal rights of way and other rights granted by the lease. Although the latter rights were not exclusive to the particular flat, but were shared with other flats, including those not contained in either of the two blocks in respect of which the claim notices were served, there was nothing in the statutory wording to suggest that “appurtenant property” should be construed as relating to land that appertained exclusively to the premises. The right to manage could extend to the maintenance of land over which tenants had incorporeal rights: Cawsand Fort Management Ltd v Stafford [2007] 1 EGLR 85; [2007] 05 EG 308 applied. Although the inclusion of such land in the right to manage could conflict with the rights of the coach house tenants, and of the landlord and any management company, in relation to that land, the potential for such conflict was an insufficient reason for imposing a restriction on the meaning of section 71(1)(a).
It followed that, under section 96(2), the respondent would succeed to the duties of the landlord and management company under the leases of flats in the two blocks in relation to the services to be provided under those leases. It would owe those duties to the appellant landlord as well as to the tenants. By section 97(4), the tenants’ liability for service charges was to the respondent RTM company, and the landlord and management company were not entitled under any of those leases to carry out such services. The landlord was still required and entitled to provide those services under the leases of the coach houses, and the tenants of the coach houses were still liable to pay the landlord the service charge as provided by their leases. However, if the landlord continued to provide services in relation to those parts of the estate that the respondent was obliged to maintain, the cost of such services would not be reasonably incurred and could be disallowed under section 19(1) of the Landlord and Tenant Act 1985. It made sense for the estate to be managed as a single whole and it was to be hoped that the respondent, the appellant and the management company could reach agreement on how that was to be achieved.
Mr B McGurk, director of the appellant, appeared for the appellant; Ms E Cameron-Daum, company secretary of the respondent, appeared for the respondent.
Sally Dobson, barrister
