Triplerose Ltd v Ninety Broomfield Road RTM Co Ltd [2015] EWCA Civ 282
This is a rare treat for our RTM fan (he knows who he is) – a decision of the Court of Appeal on the right to manage provisions in Commonhold and Leasehold Reform Act 2002. I must confess that the decision is several months old and I should have written it up long ago. I didn’t and we must all bravely deal with that and move on. This decision is, however, still important and worth noting.
There have been plenty of Upper Tribunal decisions on RTM (we covered the UT decision in this case with six others back in December 2013 – our note here, where your correspondent would like it noted that he suggested that there was “plenty for the Court of Appeal to tuck into”), but there has only been one previous excursion into this area by the Court of Appeal. That case, Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372 (our note), is quite the predecessor to Ninety Broomfield Road in that both cases concerned more than one block of flats seeking to exercise the right to manage together. And quite the oddity, too. The Court of Appeal in Ninety Broomfield Road has restored some sense to the application of RTM in multiple block cases. It is also plainly right (a seal of approval that will doubtless cheer the hearts of the Court of Appeal judges involved).
The right to manage provisions are said (by s.72(1)) to apply to premises if “(a) they consist of a self-contained building or part of a building, with or without appurtenant property, (b) they contain two or more flats held by qualifying tenants, and (c) the total number of flats held by such tenants is not less than two-thirds of the total number of flats in the premises.” The right is exerciseable by a RTM company. Membership of RTM companies is dealt with by s.74(1), which limits membership to “(a) qualifying tenants of flats contained in the premises, and (b) from the date on which it acquires the right to manage (… ‘the acquisition date’), landlords under leases of the whole or any part of the premises.”
The issue in these cases was how that all applied where a RTM company was seeking to exercise the right to manage over more than one building.
In Triplerose, the estate concerned was situated in Chelmsford. It was made up of two blocks of flats known as Farthing Court (an address crying out for urgent tippexing for maximum puerile LOLs), some parking spaces, garden areas and a cycle and bin store. One block of flats (which was known as Building A) contained six flats, the other (Building B) had nine flats. Leaseholders of both flats formed an RTM company. Five of the six in Building A and seven of the nine in Building B were members of the company.
In the joined case of Freehold Managers (Nominees) Ltd v Garner Court RTM Co Ltd, we are concerned with property in Tilbury. There were two blocks of flats and a communal car park. One Block (Block 1) had 48 flats, while the other (Block 2) had 20. An RTM company was formed. 26 of Block 1’s 48 leaseholders were members, as were 11 of Block 2’s 20 leaseholders.
The other joined case was Proxima GR Properties v Holybrook RTM Co Ltd (there was a fourth case before the UT, but that did not make it to the CoA). In Proxima, the reader is invited to consider an estate in Reading, made up of seven blocks of flats (known as Blocks A, B, C, D, E, F and Zebra G, containing a total of 200 flats) and 20 freehold houses. Again an RTM company was formed, which had 146 leaseholder members.
The UT found in favour of the RTM companies (although in Proxima the case would have to be remitted to the FTT(PC) to work out whether each of the blocks quailfied individually). The Court of Appeal overturned this in a judgment given by Gloster LJ, with which Patten LJ (who had sat on Gala Unity) and Sir David Keene agreed.
Gloster LJ held that the acquisition and exercise of the right to manage applies to a single self-contained building or part of a building, rather than to a number of blocks or self-contained buildings in an estate.
Section 74 was clear that if a company is an RTM company in relation to premises A, only qualifying tenants of premises A, and relevant landlords of premises A, are entitled to be members of that RTM company. It did not envisage that qualifying tenants of flats contained in premises B, and relevant landlords of premises B (from the acquisition date), were also entitled to be members of that same RTM company.
The Court of Appeal acknowledged the real practical problems that would arise if the right to manage could be exercised over a number of separate buildings within the same estate. For instance, where two blocks of different sizes were managed by one RTM company, it was likely that the members belonging to the larger block would dominate decisions referable also, or even solely, to the smaller block. There was also obvious potential for conflict of interest between the leaseholders of different blocks on a range of matters. It was significant that in those situations the right to manage could not be exercised against an existing RTM company so that leaseholders would be fixed with the choice of the RTM company for all time (see s.73(4)).
Gloster LJ concluded, at [62], that the relevant provisions of the 2002 Act “construed as a whole, in context, necessarily point to the conclusion that the words ‘the premises’ have the same meaning wherever they are used (save where otherwise expressly provided). That means that the references in s.72 to ‘premises’ are to a single self-contained building or part of the building, and that likewise references to ‘the premises’ or ‘premises’ or ‘any premises’ in ss.73, 74, 78 79 and other provisions of the Act are likewise references to a single self-contained building or part of the building.” She continued that this was “the only basis upon which the machinery for acquisition of the right to manage can operate. Accordingly in my view it is not open to an RTM company to acquire the right to manage more than one self-contained building or part of a building and the Upper Tribunal was wrong to reach the decision which it did.”
Since the Court of Appeal decision, the Upper Tribunal has allowed two appeals where the first instance tribunal had held that an RTM company could exercise the right over multiple blocks: Sinclair Gardens Investments (Kensington) Ltd v Darlaston Court RTM Ltd [2015] UKUT 277 (LC) and Sinclair Gardens Investments (Kensington) Ltd v The Maltings (Stanstead Abbots) Management Co Ltd [2015] UKUT 278 (LC).
Those decisions were simple enough for the UT. What, though, should be done in the rather more complicated situation where the right to manage has been claimed and acquired (and presumably exercised, possibly for years) by one RTM company over multiple blocks? I will let you ponder on that amongst yourselves.
I cannot leave this without adding a note of congratulations to long-time friend of the blog, Justin Bates, who has been banging on about this issue to anyone who cares, and many many people who don’t, for some time and has, as it turns out, been right all along.