Assethold Limited v Eveline Road RTM Company Limited

For the right to manage, a self-contained part of a building under section 72 of the Commonhold and Leasehold Reform Act 2002 need not be the smallest possible self-contained part. If the specified premises satisfy the statutory physical criteria, they may qualify even though they contain smaller parts which separately satisfy those criteria.

The prohibition on one RTM company acquiring the right to manage more than one set of premises does not add an unstated restriction to section 72. The statutory tests concern the physical character of the premises, including vertical division, independent redevelopment and relevant services.

Assethold Limited, the freeholder, appealed from a First-tier Tribunal decision that Eveline Road RTM Company Limited was entitled to acquire the right to manage four flats at 36 Eveline Road. The RTM company cross-appealed contingently.

The property formed part of a terrace and contained western and eastern parts. Both the property as a whole and each part satisfied the physical criteria for a self-contained part of the terrace. The central issue was whether the whole property could be qualifying premises where its constituent parts also qualified separately.

1. The First-tier Tribunal decision was set aside. It had not applied the physical tests in section 72 of the Commonhold and Leasehold Reform Act 2002. A single address, insurance arrangements and the freeholder’s asserted treatment of the property were not relevant substitutes for those tests. [36]–[42]

2. The appeal was dismissed and the cross-appeal allowed. The RTM company was entitled, on the relevant date, to acquire the right to manage the property. [114]–[118]

3. Section 72(3) contains no requirement that a self-contained part of a building must be incapable of further subdivision into smaller self-contained parts. Where the specified part satisfies the statutory criteria, it remains qualifying premises even if it includes smaller parts that also satisfy them. Adding an indivisibility requirement would impermissibly rewrite the section. [72]–[76]

4. Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd concerned one RTM company acquiring management of multiple separate sets of premises. It did not govern a claim concerning one self-contained part of a building merely because that part contains smaller self-contained parts. The practical risk that a minority may be subject to an unwanted RTM regime is inherent in the statutory scheme for any relevant building or part. [77]–[89]

5. The materially identical definition considered in 41-60 Albert Palace Mansions (Freehold) Ltd v Craftrule Ltd supported that construction. The references in sections 73(4) and 81(3) to premises containing or contained in other premises also presupposed that a qualifying self-contained part may contain another such part. [96]–[115]

• Upper Tribunal (Lands Chamber): dismissed Assethold’s appeal and allowed the RTM company’s cross-appeal. It set aside the First-tier Tribunal decision for flawed reasoning, but determined that the RTM company was entitled to acquire the right to manage.

• First-tier Tribunal (Property Chamber): on 19 May 2022 determined that the RTM company was entitled to acquire the right to manage. Its decision was set aside.