Decision Nº LRX 66 2015. Upper Tribunal (Lands Chamber), 14-01-2016 , [2016] UKUT 0022 (LC)
| Jurisdiction | UK Non-devolved |
| Judge | Martin Rodger QC, Deputy President |
| Neutral Citation | [2016] UKUT 0022 (LC) |
| Date | 14 January 2016 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRX 66 2015 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2016] UKUT 0022 (LC)
UTLC Case Number: LRX/66/2015
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LANDLORD AND TENANT – RIGHT TO MANAGE – description of premises in company’s articles of association – whether a self-contained building – whether an RTM company - interpretation of articles – Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 - appeal dismissed
IN THE MATTER OF AN APPEAL AGAINST A DECISION OF THE
FIRST-TIER TRIBUNAL (PROPERTY CHAMBER)
and
51 EARLS COURT SQUARE RTM COMPANY LIMITED
Respondent
Re: 51 Earls Court Square,
London
SW5 9DG
Before: Martin Rodger QC, Deputy President
Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL
on
11 January 2016
Justin Bates, instructed by Scott Cohen, Solicitors, for the appellant
Mark Loveday, instructed under the Direct Public Access Scheme for the respondent
© CROWN COPYRIGHT 2016
The following cases are referred to in this decision:
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896
G & S Brough Limited v Salvage Wharf Ltd [2009] EWCA Civ 21
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The sole issue raised by this appeal is whether the respondent, 51 Earls Court Square RTM Company Limited (“the Company”), is an RTM company for the purpose of Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002. If it is an RTM company it is now common ground that the Company is entitled to acquire the right to manage the building at 51 Earls Court Square from which it derives its name (“the Building”). If it is not, then a claim to acquire the right to manage the Building which the Company made on 8 January 2015 was of no effect.
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The appellant, Avon Ground Rents Limited, owns the freehold interest in the Building. It originally resisted the Company’s claim to acquire the right to manage on a number of grounds, but only one is now maintained. That is that the premises identified in the Company’s articles of association as the premises of which it is its object to acquire and exercise the right to manage, are not the Building, but are only part of the Building, namely that part described in the articles as “Flat 1-13, 51 Earls Court Square, London SW5 9DG”. Those premises, the appellant contends, are not a self-contained building or part of a building satisfying the qualifying conditions for Chapter 1, but are simply a collection of individual flats in respect of which the statutory regime for the acquisition of the right to manage cannot apply.
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By a decision given on 22 April 2015 the First-tier Tribunal (Property Chamber) found that the Company was an RTM company and that it would acquire the right to manage in accordance with its claim notice. The Tribunal recognised that the contrary view was arguable and granted permission to appeal.
The relevant facts
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The relevant facts are not in dispute and can be very briefly stated. Earls Court Square is a garden square in the Borough of Kensington and Chelsea. On its western side is a terrace of late Victorian houses, many of which had been converted into blocks of flats. At the northern end of that terrace, at No.51, stands the Building, a self-contained building divided into 13 flats each of which is let for a term of 125 years from 25 December 1983.
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The Company was incorporated on 5 December 2004. There were 17 subscribers to its memorandum of association, each of whom was a qualifying tenant (alone or jointly with other subscribers) of one of the flats in the Building. All 13 flats had at least one qualifying tenant who was a subscriber.
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The Company’s articles of association are in the model form prescribed by the RTM Companies (Model Articles) Regulations 2009. By regulation 2(1) the articles of association of an RTM company take the model form, article 1(1) of which comprises a list of defined expressions. These included a definition of “the Premises” as meaning simply “[name and address]” indicating that it is for the company, when it is formed and adopts its articles, to supply the missing details and so define the premises in relation to which it is intended to be an RTM company.
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In the Company’s articles the critical definition has been completed so that “the Premises” means “Flat 1-13, 51 Earls Court Square, London SW5 9DG”. Article 2 records that the name of the Company is 51 Earls Court Square, RTM Company Ltd.
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I was also referred to the Company’s objects as they are defined in article 4 and to some of the specific powers conferred by article 5. These provide as follows:
“4. The objects for which the Company is established are to acquire and exercise in accordance with the 2002 Act the right to manage the Premises.
5. These objects shall not be restrictively construed but the widest interpretation shall be given to them. In furtherance of the objects, but not otherwise, the Company shall have power to do all such things as may be authorised or required to be done by a RTM Company by and under the 2002 Act, and in particular (but without derogation from the generality of the foregoing) –
(a) To prepare, make, pursue or withdraw a claim to acquire the right to manage the Premises;
(b) To exercise management functions under leases of the whole or any part of the Premises in accordance with sections 96 and 97 of the 2002 Act;
….
(y) To monitor and determine for the purpose of voting or for any other purpose, the physical dimensions of the Premises and any part or parts of the Premises and to take or obtain any appropriate measurements.”
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On 8 January 2015 the Company served a claim notice informing the appellant of its claim to acquire the right to manage the Building, which it identified in the claim notice as “51 Earls Court Square …” and referred to as “the premises”. The appellant then served a counter notice challenging the Company’s right to manage the Building and in due course the dispute came before the First-tier Tribunal.
The First-tier Tribunal’s decision
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The First-tier Tribunal noted in its decision that nobody had been misled or prejudiced by the description of the premises in the Company’s articles as “Flat 1-13, 51 Earls Court Square”, but it did not consider that an absence of prejudice was something to which any weight could be given. The sole question was whether the Company was an RTM company or not, which the tribunal considered turned on whether the premises identified in the Company’s articles were premises to which section 73 of the 2002 Act applied i.e. that they were a self-contained building. The tribunal nevertheless agreed with the submission made by Mr Loveday that when the Company was formed it was necessary for it to describe the premises only in general terms; at the point of formation only the members of the company were interested in its articles, so “loose terminology” was not fatal. The need for precision came later, when the Company claimed to be entitled to interfere with the proprietary rights of persons who were not its members. That point was not reached until the Company served it claim notice on those currently responsible for the management of the premises, including the freeholder. In this case there was no doubt that, at that point, the Company had claimed the right to manage the whole of the Building which it identified in its claim notice as 51 Earls Court Square. The tribunal concluded that “giving the articles a wide interpretation” they did allow the Company to claim the right to manage the whole of the Building. The Company had therefore been formed to manage premises to which the 2002 Act applied and was an RTM Company.
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The First-tier Tribunal referred to similar issues having arisen in other cases, and at the hearing of the appeal I was shown three first-tier decisions in which articles of association had identified premises over which the right to manage was claimed by listing the flats within the relevant building rather than by giving the name and address of the building (as the model form contemplates). Some tribunals have applied a more stringent approach than others when faced with this issue, but a common theme has been the practical importance of the articles of association of an RTM company...
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