Supreme Court redefines “Appurtenant Parts” in Right to Manage claim

posted by daniel@lease-advice-bureau.co.uk
Date:  25/01/2023
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The Right to Manage legislation, as enacted under the Commonhold and Leasehold Reform Act 2002, enables groups of leaseholders to join together to claim the entitlement to take over the management of their building.
In many cases, this has worked very well for those thousands of leaseholders who have successfully done so.

However there has been one major criticism of this law in particular in relation to how it deals, arguably inadequately, for situations in which different blocks of flats share the usage of common areas between them. Such as parking spaces, gardens, outhouses, garages and various rights of way over such parts (referred to as “Appurtenant Parts”). The important questions is, “who is responsible for managing these joint areas?”

This difficulty comes from the law that states that only a single RTM Company, formed by those qualifying leaseholders from a building can only exercise the Right to Manage over one single self-contained building in conjunction with the appurtenant parts to which are enjoyed by the leaseholders of that building (as expressed within the terms of their leases). This was the subject matter of the case of Triplerose Ltd v Ninety Broomfield Road RTM Co Ltd.

This creates a potential problem where the separated RTM building is required to manage those areas, but the managers of other blocks of buildings also have those same obligations. In other words it creates a situation of “double management”. Who is carrying out these functions and from whom can they collect service charges for such expenditure?

This problem went to the Court of Appeal in the case of Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 137, and in that case, the court held that indeed the situation of double management was the outcome that accords with legislation, and the court suggested that these parties effectively work out between them how best to share management over these areas. This was understandably considered an unsatisfactory outcome by most practitioners, as there was nothing to compel parties to do so, nor any mechanism for dispute resolution.
However this subject matter has now been further tackled and clarified within the 2022 Supreme Court case of FirstPort Property Services Ltd (Appellant) v Settlers Court RTM Company and others (Respondents). The decision here confirmed that the Right to Manage is only concerned with a restrictive definition of the Building and Appurtenant Parts “enjoyed exclusively” by those leaseholders of the building in question. In other words areas that it can only manage on its own.
While this does assist in the crossover of management obligations with other managerial parties of other blocks.
The Judge, Lord Briggs, in the case, stated that appurtenant property can only be “Physical objects” – not intangible rights of way.

However, this outcome cause potential problems of their own.
How does one define exclusive appurtenant parts?
If all blocks exercise the Right to Manage, then there will be “RTM islands” and “communical seas” that are still managed by the original management company. There is also the question of access to the non-exclusive property, do those leaseholders lose access to areas they were entitled to, they after all can no longer receive service charge demands from the management company who has retained those parts, since their leases are managed exclusively by the RTM company.

It has been suggested that this outcome will likely result in further litigation in order to clarify some of these new points.

However the important take away for those seeking to exercise the Right to Manage for a building which shares appurtenant property with other blocks is that depending on the definition of exclusivity, they may not gain any control over such parts and furthermore could be disenfranchised from them.

It is worth noting that the decision in this case also has connotations for Collective Enfranchisement (purchase of the Freehold), since that process shares much of the qualifying criteria as the Right to Manage legislation.

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