the times | Monday February 21 2022 51
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The statutory right to manage lease-
hold property conferred on a right to
manage company was confined to
the relevant building and any nearby
physical property over which the
occupants of the relevant building
had exclusive rights. It did not extend
to additional facilities which were
shared with other buildings on the
same estate.
The Supreme Court so held in
allowing the leapfrog appeal of the
management company of the Virgin-
ia Quay Estate, FirstPort Property
Services Ltd, against the decision of
the Upper Tribunal (Lands Chamber)
(Upper Tribunal Judge McGrath)
([2019] UKUT 243 (LC)) which dis-
missed its appeal against the decision
of the First-tier Tribunal (Property
Chamber) that, in acquiring the right
to manage Settlers Court, a block on
the estate, the right to manage com-
pany, Settlers Court RTM Co Ltd and
its members, had acquired a right to
share in the management of the
estate services; that the terms on
which the cost of providing those ser-
vices were to be allocated was to be
resolved by agreement between the
two companies; and that, in the ab-
sence of any such agreement, no
estate charges were payable by the
lessees of the block to the manage-
ment company.
Simon Allison and Kimberley
Ziya for the management company;
Mark Loveday and Amanda Gour-
lay for the right to manage company.
The Association of Residential Man-
agement Agents Ltd intervened by
way of written submissions only. The
leaseholders did not appear and were
not represented.
Lord Briggs, with whom the other
members of the court agreed, said
that the appeal concerned the extent
of the “right to manage” conferred by
Chapter 1 of Part 2 of the Common-
hold and Leasehold Reform Act
2002.
In bare outline, the 2002 Act ena-
bled long leasehold tenants of resi-
dential flats to take over the manage-
ment of the building of which their
flats formed part through the medi-
um of a company (the RTM com-
pany) of which they were members,
in place either of the landlord or any
other person upon whom manage-
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Right to manage leasehold property applies
only when occupants have exclusive rights
ment rights were conferred under the
terms of the leases of the flats.
The problem with which the ap-
peal was concerned typically arose
where the relevant building (whether
a purpose-built block of flats or a
house converted into flats) formed
part of a larger estate containing
other blocks or houses together with
facilities or amenities which, under
the relevant leasehold structure,
were managed by a common land-
lord or other third party at the
collective expense of the tenants of
all the blocks or houses in the estate,
and which were not exclusively used
or enjoyed by the tenants of flats in
the relevant building (the estate
facilities).
The question was whether the
2002 Act conferred upon the RTM
company any, and if so, what rights of
management of the estate facilities.
The case was a leapfrog appeal
from the Upper Tribunal. Both it and
the First-tier Tribunal regarded
themselves as bound to decide the
question in favour of the RTM com-
pany and its members by the Court of
Appeal decision in Gala Unity Ltd v
Ariadne Road RTM Co Ltd ([2013] 1
WLR 988). It therefore fell to be
determined whether that case, which
had stood as binding authority for
just over nine years, had been cor-
rectly decided.
The appeal turned upon the true
construction of the relevant provi-
sions of the 2002 Act, which set up a
single “right to manage” scheme,
enforceable as of right, but applicable
to a wide variety of different types of
residential leasehold arrangements,
both in terms of buildings and lease
structures.
The parties were in dispute about
which of them had the responsibility
and the right to provide the estate
services, and the right to levy a pro-
portion of the estate charges on the
lessees of Settlers Court.
For the management company in
the present case, counsel submitted
that in focussing only on the meaning
of “appurtenant property” the Court
of Appeal in Gala Unity had lost sight
of the purpose and intent of Chapter
1 as a whole, which was to confer
exclusive management rights upon
RTM companies in relation to single
buildings or parts of buildings, nar-
rowly defined, and not to confer a
right to share the management of
estate facilities used in common by
the occupants of several buildings.
A fundamental purpose of the
2002 Act was to confer management
rights and responsibilities on a body
(the RTM company) which was ac-
countable to and controlled by the
very tenants who would be affectedby the conduct of that management,
through their right to be members of
the RTM company, rather than by
either the landlord or a third-party
manager which would have its own
agenda.
That worked perfectly well if the
right to manage was confined to the
relevant building which contained
the flats occupied by those tenants,
together with any facilities which
they used exclusively.
However, it produced the opposite
effect if the RTM company’s rights
extended to the management of
estate facilities used by tenants who
were complete strangers to the RTM
company.
Looked at strictly in the context of
the 2002 Act, the use of the term
“appurtenant property” pointed
away from the inclusion of shared
estate facilities in the subject matter
of the right to manage.
The definition in section 112 was
stated to be for the purposes of Chap-
ter 1 of Part 2 of the 2002 Act. It listed
any: “garage, outhouse, garden, yard
or appurtenances belonging to, or
usually enjoyed with, the building or
part or flat”. All the items listed, apart
from the general reference to appur-
tenances, were physical, corporeal
objects.
An additional problem with treat-
ing the shared right to use estate facil-
ities as “appurtenant property”, and
therefore as part of the relevant
premises, arose from section 73(4).
It prohibited a second (in time)
RTM company from managing
premises if there was already another
RTM company in relation to those
premises or any premises contained
in them.
Such a construction would appear
to prevent any other blocks (after the
first) from becoming subject to the
right to manage, since all the blocks
would have the shared use of the
same estate facilities as part of their
premises. By contrast a construction
which limited the premises to the rel-
evant building together with appur-
tenant property in the exclusive use
of the occupants of that building
would cause no such difficulty.
That analysis of the meaning and
effect of “appurtenant property” in
the 2002 Act ran counter to the cen-
tral thrust of the decision of both the
specialist Upper Tribunal and the
Court of Appeal in Gala Unity. But his
Lordship was convinced that their
analysis had been wrong.
It was well established that the
court would lean against a construc-
tion of legislation which produced
absurd or unworkable results, if there
was an available alternative con-
struction which did not do so.A construction of the 2002 Act
which either conferred sole manage-
ment of estate facilities on the RTM
company with a right to manage one
block or, on a more realistic view,
forced the RTM company and the
former manager (landlord, third
party or manager under the Land-
lord and Tenant Act 1987) or the
RTM companies managing other
blocks into a shared management
relationship was both absurd and
unworkable.
By contrast a right to manage the
premises, which extended only to the
relevant building, and to facilities ex-
clusively used by its occupying ten-
ants, avoided all, or almost all, of
those difficulties.
It followed that the right to man-
age scheme in Chapter 1 of Part 2 of
the 2002 Act made no provision with-
in the statutory right to manage for
management by the RTM company
of shared estate facilities.
It was concerned only with man-
agement of the relevant premises,
that was the relevant building or part
of a building, together with appurte-
nant property (if any) which meant
nearby physical property over which
the occupants of the relevant build-
ing (or part) had exclusive rights.
The right to manage was an exclu-
sive right in the RTM company to
manage the relevant premises, and
no provision was made in Chapter 1
for any shared management of any-
thing, save only where the RTM com-
pany chose to agree otherwise.
The Gala Unity case had been
wrongly decided and should be over-
ruled.
Solicitors: Firstport Ltd Legal Ser-
vices, Luton; Lazarev Cleaver LLP.Supreme Court
Published February 21, 2022
Settlers Court RTM Co Ltd and
others v FirstPort Property
Services Ltd
Lord Briggs, Lord Sales, Lord Leggatt, Lord
Burrows and Lady Rose
[2022] UKSC 1
Judgment January 12, 2022
St James’s Palace
19th February, 2022
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CR-2021-002327
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY
COURTS
OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES
LIST (ChD)
IN THE MATTER OF
EDGE PERFORMANCE VCT PUBLIC
LIMITED COMPANY
AND
IN THE MATTER OF
THE COMPANIES ACT 2006
NOTICE IS HEREBY GIVEN that a Claim
Form was on the 2 February 2022
issued in Her Majesty's High Court of
Justice seeking the confirmation of the
cancellation of the share premium
account and capital redemption reserve
of the above-named Company.
AND NOTICE IS FURTHER GIVEN that
the said Claim Form is directed to be
heard before an ICC Judge at the
Companies Court at The Rolls Building,
7 Rolls Buildings, Fetter Lane, London,
EC4A 1NL at 10.30 am on Tuesday, 8
March 2022, remotely, via Microsoft
Teams.
ANY Creditor or Shareholder of the
Company wishing to oppose the making
of an Order for the confirmation of the
said cancellation of share premium
account and capital redemption reserve
should appear at the time of hearing in
person or by Counsel for that purpose.
Any such Creditor or Shareholder is
requested to give at least 24 hours’
advance notice to the Company’s
solicitors in order that arrangements
may be made for such Creditor or
Shareholder to attend the hearing via
video-link or other remote means.
A copy of the said Claim Form will be
furnished to any such person requiring
the same by the undermentioned
Solicitors on payment of the regulated
charge for the same.
Dated this 21st day of February 2022
Lester Aldridge LLP
Russell House, Oxford Road,
Bournemouth, BH8 8EX
Solicitors for the above-named
Company