Right to manage – Commonhold and Leasehold Reform Act 2002 – Building – Applications to acquire right to manage in respect of several self-contained buildings – Interpretation of section 72(1) of 2002 Act – Whether right to manage capable of being exercised by single RTM company in respect of more than one self-contained building – Issue determined in favour of RTM companies
Each of the four joined cases concerned an application by an RTM company to acquire the right to manage premises on behalf of the lessees of flats in those premises pursuant to Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. In each case, the relevant premises comprised two or more blocks of flats in a development that also included communal areas such as gardens and parking.
An issue arose as to whether a right to manage application could be made by a single RTM company in respect of more than one self-contained building, given that section 72(1) provided for the right to apply to premises comprising “a” self-contained building or part of a building. In the first two cases, the leasehold valuation tribunal (LVT) decided that it could not and dismissed the RTM company’s application accordingly. The LVT in the fourth case decided the contrary and allowed the application. Each of those decisions was the subject of an appeal by the losing party to the Upper Tribunal. In the third case, the RTM company’s application was transferred to the Upper Tribunal under r 25 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.
The issues before the Upper Tribunal were: (i) whether an RTM company could seek and acquire the right to manage in respect of more than one self-contained building; (ii) if so, whether it had to serve separate notices in respect of each self-contained building, each of which had to have the requisite number of qualifying tenants who were members of the company; and (iii) if not, and the RTM company could seek the right to manage a number of buildings in a single notice, how the requisite number of qualifying tenants and members of the company was to be identified and counted.
Held: The appeals by the RTM company in the first two cases were allowed; the application in the third case was remitted to the First-Tier Tribunal (Property Chamber) for determination in light of the Upper Tribunal’s decision; the appeal by the landlord in the fourth cases was dismissed.
(1) In cases where a number of different self-contained buildings had been managed together and shared appurtenant property, the legislative objective could be achieved only by giving a purposive construction to the statutory provisions. The main objective of the legislation, as set out in the draft bill and consultation paper that preceded it, was to grant to long leaseholders the right to take over the management of their building without having to prove fault or pay compensation. It was also intended that the procedures should be simple, that the allocation of responsibilities should be clear cut and that the body through which the leaseholders took on management should enjoy all necessary powers to properly discharge its function. As regards issue (i), section 72 of the 2002 Act did not define “premises” for all purposes. The purpose of the section, in limiting the type of premises to which the right to manage would apply to “a self-contained building or part of a building” as therein defined, was to describe the type of building to which the right applied; the legislative purpose was to define self-containment and the section did not limit the number of self-contained buildings or parts of self-contained buildings to which the right would apply. Read in context, the use of the word “a” was not determinative of, or of assistance in, a consideration of whether the right to manage could be exercised in respect of multiple “premises”.
None of the other statutory provisions militated against the exercise of the right by one RTM company in respect of multiple buildings. Although the phrase “building or buildings” had been used in other Acts when intending to confer rights over multiple buildings, the 2002 Act had to be considered in its own context: Gala Unity Ltd v Ariadne Road RTM Co Ltd [2011] UKUT 425 (LC); [2012] 1 EGLR 99 and [2012] EWCA Civ 1372; [2012] 3 EGLR 79; [2012] 50 EG 105 considered. So far as the 2002 Act required participation by a minimum number of qualifying tenants of flats, there was nothing to limit the number of sets of premises that could be included provided that the qualifying membership was achieved.
(2) As regards issues (ii) and (iii), each set of premises had to fulfil all the section 72 conditions. Therefore, in addition to being self-contained, it had also to contain two or more flats held by qualifying tenants and the total number of flats held by such tenants could be not less than two-thirds of the total number of flats contained in the premises. Qualification had to be achieved on a block-by-block basis. However, it was not necessary for an RTM company to serve a separate notice in respect of each set of premises. A single notice would suffice in respect of a number of properties. If a single notice was served, its content had to be sufficiently clear to establish eligibility in respect of each set of premises and had to comply with section 80. For that reason, the RTM company might prefer to serve separate notices simply for the sake of clarity.
(3) The ability of an RTM company to acquire the right in respect of a number of blocks would not give rise to problems as contended by the landlords. It would not result in the right to manage being acquired without the consent of qualifying tenants in the smaller blocks. As a result of section 79, unless a qualifying majority within a set of premises were members of the RTM company, it would not be able to exercise the right. The interests of tenants in different blocks would not be unduly diluted by the exercise of the right on multiple properties. Any RTM company would only be entitled to act in accordance with the leases for each set of premises. Where there were shared rights, the exercise of the right by one, rather than a number of, RTM companies would afford a practical solution to the management of an estate of self-contained buildings. The first limb of section 80(2) of the 2002 Act was satisfied by stating the address of the block and the claim notice did not need to specify whether it was made in respect of appurtenant property. A claim to acquire the right to manage was not invalided by the specification of premises that included shared appurtenant property rights that were already the subject of another RTM. The second RTM company was simply acquiring the residual management rights and obligations of the freeholder in respect of the shared property, those being the management rights contemplated by section 96. It was not acquiring rights held exclusively by the first RTM company but was rather acquiring the landlord’s shared rights. Although that might result in dual responsibility arising for the management of some of the appurtenant property, that was not of such consequence as to displace the effect of the statute: Gala Unity applied.
Andrew Drane (a director of Ninety Broomfield Road RTM Co Ltd) appeared for the appellant in the first case; Steven Woolf (instructed by Paul Robinson Solicitors LLP, of Westcliff on Sea) appeared for the appellant in the second case; Phil Perry appeared for the applicant in the third case; Oliver Radley-Gardner (instructed by P Chevalier & Co) appeared for the appellant in the fourth case; Justin Bates (instructed by Conway & Co, of Henley on Thames) appeared for the respondents in the first, second and third cases; Steven Woolf (instructed by Paul Robinson Solicitors LLP) appeared for the respondent in the fourth case.
Sally Dobson, barrister
