Right to Manage: FirstPort Property Services Ltd v Settlers Court RTM Company and others
Qualifying tenants have often sought to push the definition of “premises” to its absolute limit, claiming management rights over as much of the land surrounding a self-contained block as possible.
The areas of an estate that are not contained within or connected to the building itself but are utilised by the tenants of the building are collectively known as “appurtenant property” and include areas such as car parking spaces, gardens and detached garages.
In the case of FirstPort Property Services Ltd v Settlers Court RTM Company and others [2022] UKSC 1 the Supreme Court was required to consider the extent of “premises” under the Commonhold and Leasehold Reform Act 2002 and, in particular, to what appurtenant property the right to manage extends. Here, the qualifying tenants were seeking the right to manage a self-contained block of flats situated on a residential estate comprising several other blocks. The tenants had rights to access the estate’s communal areas within the estate and an obligation to pay an estate service charge to FirstPort (which managed the estate) for services on the estate, including maintenance of the communal areas. However, to try to remove their obligation to pay the estate service charge the tenants’ right to manage claim also extended to a sharing of the management of numerous areas and services shared with the other blocks in the estate, including communal gardens, accessways and parking control systems amongst other things.
The tenants of Settlers Court relied on the case of Gala Unity Ltd v Ariadne Road RTM Company Ltd [2012] EWCA Civ 1372 in which the Court of Appeal held that “appurtenant property” for the purposes of a right to manage claim, is not required to be exclusively appurtenant to the self-contained building to which the claim relates. The Supreme Court unanimously held that Gala Unity should be overruled on the basis that the 2002 Act makes no provision for management by an RTM company of shared estate facilities. The tenants of Settlers Court were therefore not entitled to exercise their right to manage over any appurtenant property used in common with the other blocks on the estate.
In reaching this decision, the Supreme Court considered that if the scope of the statutory right to manage was extended in this way, it would produce outcomes that were both “absurd and unworkable” not least because the lessees of flats in the other blocks on the estate would have shared estate services provided by an RTM company with which they had no formal legal relationship.
It is without doubt that the Supreme Court’s decision in FirstPort has provided much needed clarity regarding the scope of the right to manage within residential estates. As such, it has been welcomed by all parties involved in estate management together with the Law Commission who did in fact recommend the overruling of Gala Unity in their 2019 consultation paper titled: Leasehold home ownership: exercising the right to manage.
Landlords can now be assured that, when faced with a right to manage claim, they will no longer face a battle regarding the wider management of the estate or, indeed, the potential mismanagement of the wider estate by the incoming RTM Company. The ruling is perhaps less attractive to qualifying tenants who often seek to exercise their right to manage simply as a mechanism for reducing their service charge liability. Whilst the power struggle between landlords and tenants will persist, the ruling in FirstPort does at least allow landlords to retain some power over the management of their residential estates.
Posted:
