PP 2012/143

The Commonhold and Leasehold Reform Act 2002 enables qualifying leaseholders of flats to manage their buildings using a right to manage company established specifically for that purpose. The legislation applies to premises that consist of a self-contained building, or part of a building, with or without appurtenant property. A building is self-contained if it is structurally detached. A part of a building is self-contained if it has, or can be provided with, separate services, and if it is vertically divided from the rest of the building and would be capable of independent redevelopment: section 72. The statute defines appurtenant property as meaning “any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the building or part or flat”: section 112. In Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372 the buildings that the tenants sought to manage were structurally detached. The issue for the Court of Appeal was: to what other parts, if any, of the managed estate did the tenants’ right to manage extend? Should the expression “appurtenant property” be construed as relating to land that serves only the buildings that tenants are seeking to manage, or does the expression include land that serves other buildings on a development as well? The landlord focused on the practical difficulties of shared management responsibility. If the parties were to share responsibility for managing the same area, there was the potential for, at best, wasteful duplication of effort and, at worst, conflict (for example, as to when and what maintenance was required). It argued that the buildings were not “self-contained” because they were unable to function independently without the use of the areas shared in common with the tenants of other buildings on the development. It also suggested that the expression “appurtenant property” applies only to areas that are “self-contained”, in the sense that they are used exclusively by the “self-contained building” in question. The Court of Appeal understood the landlord’s wish to manage the development as a whole. Nonetheless, the court ruled that the blocks were structurally detached and that there was no justification for imposing a further requirement that they must be able to function independently without needing to make use of any shared communal areas. Nothing in the in Act suggested that appurtenant property is limited to property that is exclusively appurtenant to a “right to manage” building and the court should be slow to infer that Parliament intended to impose qualifications that are not in the legislation. The fact that the occupiers of houses on the development enjoyed the use of the same access road, bin areas and gardens did not mean that these areas were not appurtenant to the blocks of flats that the tenants were seeking to manage themselves. Consequently, the court upheld the tenants’ claim. The case is the first right to manage case to have reached the Court of Appeal and has important implications for developments up and down the country. It will be interesting to see whether the landlord takes the case further or whether the parties can agree to manage the development in a way that leaves neither out of pocket.   Allyson Colby, property law consultant