Important Court of appeal judgment on Right to Manage for multiple buildings within an estate.
There have been several cases concerning whether an RTM company can claim RTM for more than one building in an estate.
The LVT and UT had variously decided the matter but the Court of Appeal have now made a decision in the case of Triplerose Ltd v 90 Broomfield Road RTM Company Limited  EWCA Civ 282.
In this case the RTM company had claimed RTM over more than one block within an estate. The landlord disputed that this could be done. The LVT found for the Landlord. On appeal to the Upper Tribunal a decision was made in favour of the RTM Company as the UT determined that s72 of the Commonhold and Leasehold Reform Act 2002 (“the Act”) did not preclude RTM being claimed for multiple buildings so long as each satisfied the criteria independently (ie was self-contained, had the requisite majority of qualifying tenants etc).
However the Court of Appeal have overturned that decision and determined that s 72 which refers to a “self contained building or part of a building” is singular and so a single RTM company can only claim RTM for one block.
The Court considered that there are compelling reasons why this should be the case:
- The purpose of RTM is to give the leaseholders of flats the right to take control of the management of their building. Where an RTM company claimed RTM over an estate comprising more than one building and where the blocks were of different sizes, it would be possible for members within the larger block to hold a majority and bind the smaller block by making decisions that benefitted only the larger block or that were against the wishes of the leaseholders of the smaller block.
- There is express provision in the Act that an RTM company will cease to be an RTM company if it purchases the freehold of the building. It would appear that it is the intention of parliament that enfranchisement should remain an option for the leaseholders claiming RTM. However, if an RTM company was permitted to claim RTM over more than one building then enfranchisement of a single building would not discharge the RTM and so the purchase of the freehold would not return the management to the leaseholders of the single block.
- There has been concern that permitting multiple premises to be included in an RTM claim could result in a landlord setting up an RTM company comprising all his premises all over the country with the aim of preventing the leaseholders from claiming RTM as the existence of RTM for a set of premises precludes another RTM company claiming RTM over the same set of premises (s 73 (4) of the Act)
Therefore if leaseholders within an estate want to claim RTM they will need a separate RTM company for each building and a separate RTM claim for each building.
Unfortunately in this case the Court of Appeal did not make any decision on how an estate with multiple buildings and multiple RTM companies should be run in practice. With appurtenant property such as roads and car parks being used by more than one block the issue of dual responsibility for shared facilities arises.
The same issue was discussed in the Gala Unity case  EWCA Civ 1372 and the Court of Appeal determined that, where more than one party has an obligation to maintain the same property the charges incurred would not be “reasonably incurred” as defined in s.19 (1) of the Landlord and Tenant Act 1985 unless the parties reached an agreement that made economic sense, i.e. the tenants of both blocks should not be paying for the area to be maintained twice.
When successful in an RTM claim, the RTM company would need to reach agreement on how shared facilities will be maintained. There is of course the option that the RTM companies within an estate could all appoint the same managing agent to manage the estate as a whole which may benefit all the RTM companies, if all the parties agree.