Assethold Ltd v Eveline Road RTM Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Phillips,Lady Justice Andrews |
| Judgment Date | 04 March 2024 |
| Neutral Citation | [2024] EWCA Civ 187 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000644 |
[2024] EWCA Civ 187
Lord Justice Lewison
Lord Justice Phillips
and
Lady Justice Andrews
Case No: CA-2023-000644
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
MR JUSTICE EDWIN JOHNSON, THE PRESIDENT
Royal Courts of Justice
Strand, London, WC2A 2LL
Justin Bates and Katherine Traynor (instructed by Scott Cohen Solicitors) for the Appellant
Stan Gallagher (instructed by Direct Access) for the Respondent
Hearing date: 27/02/2024
Approved Judgment
This judgment was handed down remotely at 10.30am on 04/03/2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
36 Eveline Road, Mitcham (“No 36”) was originally two terraced houses. They have been converted into four flats, two of which are contained in each of the original terraced houses. The lessees of the four flats have established a right to manage company (the “RTM company”) with a view to acquiring the right to manage (the “RTM”) the four flats. Although No 36 is not itself structurally detached (since it shares a party wall with No 38), it falls within the definition of “premises” in section 72 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”). But each of the original terraced houses also falls within that definition. The question posed by this appeal is whether the RTM company is entitled to acquire No 36 as a whole; or whether two RTM companies must be formed, and separate claims made in respect of each original terraced house.
The Upper Tribunal (Edwin Johnson J, President) answered that question in the RTM company's favour; but granted permission to appeal. His decision is at [2023] UKUT 26 (LC), [2023] HLR 33.
At the conclusion of the hearing, we announced that the appeal would be dismissed, for reasons to be given in writing. These are my reasons for joining in that decision.
The legislative framework
The RTM was created by Part 2 Chapter 1 of the 2002 Act as a fault-free way to enable lessees of flats holding under long leases to manage the buildings containing those flats. Before that time, it had been necessary to apply to the court for the appointment of a manager, but that usually required the lessees to show some kind of default by the landlord in performing his obligations. It was recognised to be a burdensome, expensive and cumbersome procedure, which the RTM was designed to replace.
Section 71 of the 2002 Act states that it provides for the acquisition and exercise of the RTM “premises to which this Chapter applies”. The right must be exercised by an RTM company (I eschew the unpronounceable statutory phrase “a RTM company”).
Section 72 defines the premises to which the RTM applies. It relevantly provides:
“(1) This Chapter applies 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 contained in the premises.
(2) A building is a self-contained building if it is structurally detached.
(3) A part of a building is a self-contained part of the building if—
(a) it constitutes a vertical division of the building,
(b) the structure of the building is such that it could be redeveloped independently of the rest of the building, and
(c) subsection (4) applies in relation to it.
(4) This subsection applies in relation to a part of a building if the relevant services provided for occupiers of it—
(a) are provided independently of the relevant services provided for occupiers of the rest of the building, or
(b) could be so provided without involving the carrying out of works likely to result in a significant interruption in the provision of any relevant services for occupiers of the rest of the building.”
Schedule 6 provides for the exclusion of premises from the RTM. Schedule 6 para 2 provides:
“Where different persons own the freehold of different parts of premises falling within section 72(1), this Chapter does not apply to the premises if any of those parts is a self-contained part of a building.”
Section 73 specifies what is an RTM company. Section 73 (4) provides that:
“… a company is not a RTM company in relation to premises if another company is already a RTM company in relation to the premises or to any premises containing or contained in the premises.”
Section 74 deals with the articles of association of an RTM company. Their detailed contents are prescribed by regulations. The regulations define “Premises” by reference to an address; and article 4 states that the object for which the RTM company is established is to manage “the Premises”.
Section 75 defines who is a qualifying tenant. The RTM is exercised by the service of a claim notice: section 79. The RTM can only be claimed by an RTM company which satisfies section 79 (4) or (5). Where there are only two qualifying tenants of flats contained in the premises, both must be members of the RTM company: section 79 (4). In any other case, the membership of the RTM company must include a number of qualifying tenants of flats contained in the premises which is not less than half of those flats: section 79 (5).
The claim notice must “specify the premises and contain a statement of the grounds on which it is claimed that they are premises to which this Chapter applies”: section 80 (1). Section 81 (3) provides:
“Where any premises have been specified in a claim notice, no subsequent claim notice which specifies—
(a) the premises, or
(b) any premises containing or contained in the premises,
may be given so long as the earlier claim notice continues in force.”
A few more facts
No 36 is at the eastern end of a terrace of houses in Eveline Road. It comprises four flats: Flats A, B, C and D. Flats A and C are ground floor flats; and Flats B and D are first and second floor maisonettes. The western half of No 36 (which was one of the original terraced houses) consists of Flats A and B; while the eastern half (which was the other original terraced house) consists of Flats C and D.
The terrace as a whole is structurally detached. On its eastern side, No 36 is not structurally attached to anything. But on its western side, it shares a party wall with No 38. It is not, therefore, a self-contained building; but it is a self-contained part of the building.
The freehold is registered under three separate titles, but Assethold is the registered proprietor of each.
The RTM company gave notice of claim on 28 July 2021, identifying No 36 as the premises over which the RTM was claimed. Assethold served a counter-notice denying the RTM. On 19 October 2021 the RTM company applied to the FTT for a determination that it was entitled to acquire the RTM.
The FTT determined that issue in favour of the RTM company; but on a basis that the UT held was legally incorrect. Nevertheless, the UT remade the decision, and found in favour of the RTM company, but for different reasons.
In essence, the UT held:
i) Neither No 36 nor its constituent parts qualified as a self-contained building.
ii) The terrace as a whole was a self-contained building.
iii) No 36 satisfied the definition of a self-contained part of a building (i.e. the terrace); but so too did each of the original terraced houses.
iv) There was nothing in the 2002 Act which excluded from the RTM a self-contained part of a building which itself contained a self-contained part or parts of the same building.
v) Therefore, the RTM company was entitled to acquire the RTM in respect of No 36.
The arguments
Mr Justin Bates, for Assethold, argued that where a building or part of a building satisfies the definition of “premises” in section 72, but is itself capable of division into smaller parts which also satisfy that definition, then the RTM company must serve its claim notice in respect of the smallest part satisfying that definition.
He supported that argument by reference to the decision of this court in Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd [2015] EWCA Civ, [2016] 1 WLR 275; and the policy considerations that were discussed in that case.
In his skeleton argument Mr Stan Gallagher, for the RTM company, contended that the Upper Tribunal was correct for the reasons that it gave. We did not, however, find it necessary to hear his oral submissions.
Ninety Broomfield Road v Triplerose Ltd
The appeal in Triplerose was in fact a number of joined appeals heard together. The common feature of all the appeals was that the RTM company in each case claimed the right to manage more than one block of flats. In each of the appeals, each block of flats was a structurally detached building. In some of the appeals the right was claimed by separate claim notice served in relation to each block; and in others the right was claimed by a single composite claim notice. Gloster LJ defined the issue at [2]:
“The question which arises in these appeals is whether a RTM company can acquire the management of more than one set of premises as defined in section 72 of the Act.”
At [45] she said:
“Section 71 makes it clear that Chapter 1 of the Act makes provision for the acquisition of the right to manage only in relation to “premises to which this Chapter applies “and only by a company “which, in accordance with this Chapter may acquire and exercise those rights.” Section 72(1) makes it clear that Chapter 1 only applies to premises if they satisfy the three separate conditions set out in sub-paragraphs (a), (b) and (c) of section 72(1). Importantly for present purposes sub-paragraph (a) imposes the...
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