FirstPort Property Services Ltd v Settlers Court RTM Company Ltd and others

Under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002, an RTM company’s right to manage extends only to the relevant self-contained building or part and nearby physical appurtenant property which its occupants have the exclusive right to use.

The statutory right is exclusive and makes no provision for compulsory shared management of facilities used by occupants of several buildings. Those shared estate facilities therefore remain under the existing leasehold management arrangements unless the RTM company voluntarily agrees otherwise. “Appurtenant property” does not encompass easements or other incorporeal rights over shared estate facilities.

Settlers Court was one of ten blocks on a residential estate whose communal areas and services were managed by FirstPort under the leases. After acquiring the statutory right to manage Settlers Court, its RTM company claimed a right to participate in managing those shared estate facilities. FirstPort contended that its responsibility for the shared facilities remained unaffected.

The First-tier Tribunal and Upper Tribunal considered themselves bound by Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372. The Supreme Court heard a leapfrog appeal from the Upper Tribunal’s decision, [2019] UKUT 243 (LC). The central issue was whether Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 gives an RTM company any right to manage facilities shared with occupants outside its building.

1. The appeal was allowed unanimously. Lord Briggs gave the judgment, with which Lord Sales, Lord Leggatt, Lord Burrows and Lady Rose agreed. The statutory right to manage does not extend to shared estate facilities. Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372 was wrongly decided and overruled.

2. Sections 96 and 97 of the Commonhold and Leasehold Reform Act 2002 confer functions relating to the relevant premises and permit the RTM company to perform them to the exclusion of the landlord, third-party manager or statutory manager, unless the RTM company agrees otherwise. That exclusivity points to functions which a single-building RTM company can perform alone: managing the building and facilities used exclusively by its occupants. The Chapter creates no compulsory regime of shared management.

3. The Act’s context confirms that construction. Section 72 confines qualifying premises to a structurally detached building or an independently manageable vertical part. The claim-notice scheme neither notifies nor protects tenants in other buildings. Nor does the Act create reciprocal rights and obligations between an RTM company and those tenants, or machinery to allocate authority and cost among several managers.

4. “Appurtenant property” in sections 72(1)(a) and 112(1) means nearby physical property, such as a garage, outhouse, garden or yard, over which the relevant occupants have exclusive rights. In context, “appurtenances” is confined to corporeal property of the same kind. It does not include easements or other incorporeal rights over facilities shared across an estate. Section 73(4), which prevents overlapping RTM companies for the same premises, reinforces that conclusion.

5. The construction adopted in Gala Unity would produce an absurd and unworkable system. An RTM company could assume responsibility for all shared facilities while recovering only its building’s proportion of the cost, and the former manager could remain obliged to other tenants while losing part of its funding. The Act supplies no means to compel or structure an agreement among multiple managers. The discretionary jurisdiction under section 24 of the Landlord and Tenant Act 1987 does not cure that defect.

1. United Kingdom Supreme Court: Allowed FirstPort’s leapfrog appeal unanimously, overruled Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA Civ 1372, and held that the statutory right to manage did not extend to shared estate facilities.
2. Upper Tribunal (Lands Chamber): In [2019] UKUT 243 (LC), regarded itself as bound by Gala Unity to decide the issue for the respondents.
3. First-tier Tribunal: Regarded itself as bound by Gala Unity to decide the issue for the respondents.