Assethold Limited v Eveline Road RTM Company Limited

The right to manage under Part 2 Chapter 1 of the Commonhold and Leasehold Reform Act 2002 may be claimed for premises satisfying section 72 even where those premises contain smaller units that also satisfy the definition. The Act does not require the claim to identify the smallest qualifying unit. Schedule 6 paragraph 2, section 73(4) and section 81(3) contemplate nested qualifying premises and regulate competing ownership, companies and notices; they do not disqualify an outer unit owned by one person. The physical definition concerns structure, internal division and services. Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd cannot be extended from separate buildings to nested premises. The appeal was dismissed.

Assethold owned No 36, a property converted into four flats within two original terraced houses. The Eveline Road RTM company served a claim notice seeking the right to manage No 36 as a whole. No 36 and each original house could qualify as a self-contained part of the terrace under section 72 of the Commonhold and Leasehold Reform Act 2002. The First-tier Tribunal found for the RTM company. The Upper Tribunal remade the decision on different grounds, reported at [2023] UKUT 26 (LC) and [2023] HLR 33. The central issue was whether two RTM companies and separate claims were required.

The Court of Appeal dismissed the appeal. Lewison LJ gave the leading judgment; Phillips LJ agreed with his reasoning and Andrews LJ agreed with both judgments.

1. The definition in section 72 of the Commonhold and Leasehold Reform Act 2002 involves a purely physical test. It concerns the structure of the built envelope, the internal structure and the separability of relevant services. No 36 was not structurally detached, but it was a self-contained part of the terrace.
2. Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd, [2016] 1 WLR 275, concerned whether one RTM company could manage more than one separate self-contained building or part. Its reasoning could not be extended to premises containing smaller qualifying premises. A judgment must be interpreted in context and cannot be treated as statutory text.
3. The statutory scheme contains strong indicators that Parliament contemplated nested premises. Schedule 6 paragraph 2 excludes premises where different persons own different self-contained parts. Section 73(4) prevents a second RTM company from arising in relation to premises containing or contained in existing premises. Section 81(3) prevents a subsequent claim notice while an earlier notice remains in force. These provisions regulate competing claims; they do not impose a smallest-unit requirement.
4. FirstPort Property Services Ltd v Settlers Court RTM Co Ltd, [2022] UKSC 1, concerned estate-wide shared services and did not directly govern the present issue. Its policy discussion was consistent with the conclusion because management of No 36 affected only its occupants. The reasoning in 41-60 Albert Mansions Ltd v Craftrule Ltd, [2011] EWCA Civ 185, concerning similar statutory provisions, was equally applicable.
5. The Upper Tribunal was right to find that No 36 was not disqualified merely because it contained smaller self-contained parts. The RTM company could claim the right to manage No 36 as a whole. The appeal was dismissed.

• Court of Appeal (Civil Division) — In [2024] EWCA Civ 187, dismissed Assethold’s appeal.
• Upper Tribunal (Lands Chamber) — In [2023] UKUT 26 (LC), also reported at [2023] HLR 33, remade the First-tier Tribunal’s decision and found that the RTM company was entitled to acquire the right to manage No 36.
• First-tier Tribunal — Determined the entitlement issue in favour of the RTM company, although the Upper Tribunal held that the original reasoning was legally incorrect.