Right To Manage and shared access/facilities – an unsatisfactory “fudge?”
A landlord has been granted leave to appeal a decision of the Upper Tribunal (Lands Chamber) which was handed down in December 2011 concerning an apparent conflict of rights/responsibilities between tenants exercising the Right To Manage via an RTM Company and the landlord`s own duties. The case is Gala Unity Limited v Ariadne Road RTM Company Limited .
The dispute concerned an estate made up of two blocks of flats and two coach houses (which were themselves flats with parking spaces). The freehold of the whole estate was owned by the landlord, Gala Unity Limited. The leases used throughout the estate provided for various service charge elements including maintenance of the car parks, common parts, building structure etc.
The tenants of the two blocks of flats (excluding the coach houses) formed a RTM Company (Ariadne Road RTM Company Limited) and under the provisions of the Commonhold and Leasehold Reform Act 2002 ("the Act") served on the landlord a single notice claiming the Right To Manage the two blocks.
Some elements of the estate, such as the access roads, were shared and used by both the tenants of the blocks of flats, and the tenants in the two coach houses, and both groups of tenants of course had the right to expect that these access routes would be suitably maintained. Disputes having arisen over both the mechanism by which the Right To Manage was exercised, and the recoverability of service charges, the case ended up before the President of the Lands Tribunal.
In the President`s view, there was no difficulty with a single RTM Company serving a single notice to exercise the Right To Manage over two stand-alone buildings. The more difficult question, he felt, was how the obligations and resulting service charges should be dealt with in respect of those features of the estate which were shared between the "RTM tenants" and the coach house tenants.
His reasoning on this question, applying and considering the provisions of the Act, was as follows:
- Under s.72(1)(a) of the Act, the Right To Manage can be exercised over premises consisting of a self-contained building or part of a building, with or without "appurtenant property."
- It was not necessary for the RTM Company to specify in its claim notice what (if any) appurtenant property it intended to manage, since it would be a question of fact to establish what property was appurtenant to a building over which a successful RTM application had been made.
- Property is considered "appurtenant" if it is so to any flat in the building over which the right is exercised.
- In this case, that included e.g. rights of way over the access roads on the estate.
- It was not relevant that rights over these roads were shared with some non-RTM tenants in the coach houses and there was no basis to conclude that "appurtenant" property must be exclusively appurtenant to the building which is subject to the RTM
- All of this being so, the management responsibilities for these "shared appurtenancies" must now be split, with the RTM Company owing such duties to their tenants, and the landlord owing them to the other flats in the coach houses.
The President helpfully concluded "I would hope that agreement can be reached between the RTM company, the landlord and the management company on how that is to be achieved" since they could not both provide management to the same land and expect to recover service charges for it without s.19 of the Landlord and Tenant Act 1985 leading to a conclusion that such charges had been "unreasonably incurred."
Whilst the President`s logic and his application of the Act certainly seems sound, it does appear that the decision has left the parties with at least as many questions as answers and, in practical terms, in a position not substantially clearer than at the outset of the dispute.
As we noted at the start of the article, the landlord has sought and been granted leave to appeal the decision, but it might be said (and indeed is said by many commentators) that it is not the decision that is at fault so much as the difficult nature of the statutory provisions of the Act which formed the framework around which the President had to make his decision.
The Appeal is expected to be heard in mid-late 2012, and it will be interesting to see whether any greater practical clarity arises from the outcome. In the meantime, the position remains potentially uncertain and unhelpful for landlords of developments with a mix of Right To Manage and landlord-managed properties sharing some communal facilities.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.