Ninety Broomfield Road RTM Co Ltd & Other linked cases

Summary

Despite having spent very large sums of money in purchasing their long leases, the control of the management, maintenance and insurance of the property very often remains in the hands of the landlord. It was in those circumstances that the Government introduced provisions, under the Commonhold and Leasehold Reform Act 2002 ("the Act") to allow leaseholders to take responsibility for the day to day management of the block in which they live (Right to Manage).

However in concerted attempts to hold onto their management powers and incomes, landlords have challenged right to manage applications on various basis. One such basis argued that a right to manage company may only seek to acquire the right to manage in respect of one self-contained building; making the application to manage more than one block on the same estate unlawful.

Decision

In what is now the leading decision in this area, the Upper Tribunal (Lands Chamber) has given clear guidance in favour of the leasees as to the application and mechanics of this legislation, finding in favour of all leaseholders around the country who wish to manage a number of blocks, without the interference of the landlord.

The arguments

The arguments can be fully digested by reading the judgment however in short the landlords argued on two fronts. First they advanced their submissions based on general applicable principles to the Right to Manage regime. The submissions highlighted the practical difficulties that could arise if one company managed numerous blocks. The argument went so far as to suggest that multiple management was potentially unworkable if an RTM Company wanted to manage a block on the other side of the country. The second theme advanced relied on a restrictive interpretation of the legislation. The contentions being that Section 72 of the Act only permits the right to manage to an individual building. Considerable reliance when advancing this submission was placed on the inclusion of the word "a" before self-contained building and the fact that the structure of the rest of the relevant part of the Act was consistent with managing only one building. To make good this submission the Judge was taken to the definition of "premises", the objects clause and the voting mechanism.

Steven Woolf was instructed on behalf of two of the RTM Companies. In his responses, he also relied on general principles but reminded the Tribunal as to the background purpose of the legislation; namely to place the power of control and management with the lessees not the lessor and that if the lessees voted to manage more than one block, they should be permitted to do so unless the legislation clearly wanted them not to. Where, as here there was an absence of clarity, the Tribunal was encouraged to make findings consistent with the underlying intent of the legislation to help not hinder independence and self-management. As for the idea that an RTM Company might seek to manage a block hundreds of miles away, he argued it was so unreal and unlikely a scenario that it could be dismissed as fanciful.

Steven's arguments continued by pointing to indicative wording in the legislation that could only lead to a conclusion that a RTM Company could manage more than one block. In particular Section 71(1) provides for this Chapter to make provision for acquisition and exercise of rights in relation to the management of premises and nothing in the definition of the word "premises" restricts the definition to a single building. Further a common sense approach to interpretation as opposed to a  restrictive approach was championed by suggesting that by adding the words "at least" before "a self-contained building" would ensure the original policy intention of the Government would be realised.

Judgment

In coming to her conclusions, the Judge followed the submissions advanced by the lessees. She rejected the emphasis on the word "a" and had regards to the fact that no part of Section 72 limited the number of self-contained buildings to which the right might apply and endorsed his approach to the legislation being to reduce rather than heighten the burden on lessees.

Conclusion

What this all means is that where a RTM Company wants to manage an estate with more than one block, it can and the steps it has to take to achieve that end goal are made easier by there not being any need to serve a multitude of notices.

Comment

This decision is a good decision for common sense in the management of leasehold properties and one that should be welcomed by tenants of long leases up and down the country.