Introduction

The case of Fencott Ltd v. Lyttelton Court RTM Company Ltd ([2014] UKUT 27 (LC)) was adjudicated by the Upper Tribunal (Lands Chamber) on January 28, 2014. This case examines the application of the Commonhold and Leasehold Reform Act 2002 (the "2002 Act") in determining whether a single Right to Manage (RTM) company can exercise management rights over multiple self-contained buildings within a residential estate. The appellant, Fencott Ltd, owned the reversionary head-leasehold interest in Lyttelton Court and contested the decisions that allowed multiple RTM companies to manage individual blocks within the same estate.

Summary of the Judgment

The Upper Tribunal overturned the Leasehold Valuation Tribunal's (LVT) decision, which had allowed separate RTM companies to manage individual blocks within Lyttelton Court. The Upper Tribunal concluded that under the 2002 Act, specifically sections 72 and 73(4), a single RTM company could not validly acquire the right to manage more than one self-contained building within the same estate when an estate-wide RTM company has already been formed. The Tribunal emphasized that the prior formation of an estate RTM company precluded the establishment of separate RTM companies for individual blocks, effectively maintaining the appellant's control over the estate's management.

Analysis

Precedents Cited

The judgment extensively referenced previous cases to shape its legal reasoning:

• Ninety Broomfield Road RTM Company Ltd v Triplerose Ltd [2013] UKUT 606 (LC): This case affirmed that a single RTM company may manage multiple self-contained buildings, provided certain conditions under the 2002 Act are met.
• Gala Unity Ltd v Ariadne Road RTM Company Ltd [2011] UKUT 425 (LC); [2012] EWCA Civ 1372: The Court of Appeal upheld the Tribunal's decision allowing an RTM company to manage multiple buildings, highlighting a pragmatic and purposive interpretation of the 2002 Act.
• Long Acre Securities v Karet [2004] 2 EGLR 121 and Craftrule Ltd v 41-60 Albert Place Mansions (Freehold) Limited [2011] EWCA Civ 185: These cases dealt with collective enfranchisement under different legislation but were considered not directly applicable to the current RTM context.
• Assethold Ltd v 15 Yonge Park RTM Co Ltd [2011] UKUT 379 (LC) and Dorset Healthcare NHS Trust v MH [2009] UKUT 4 (AAC): These cases provided additional context on the Tribunal's approach to statutory interpretation and the binding nature of prior decisions.

Legal Reasoning

The Tribunal's reasoning hinged on the interpretation of sections 72 and 73(4) of the 2002 Act:

• Section 72 defines "premises" eligible for RTM as self-contained buildings or parts of buildings that are structurally detached and meet certain criteria regarding tenant occupancy.
• Section 73(4) stipulates that a company cannot be an RTM company for premises if another company is already an RTM company for those premises or any premises containing or contained within them.

The Tribunal interpreted these sections to mean that while in principle, an RTM company could manage multiple buildings, the presence of an existing estate-wide RTM company prevents the formation of separate RTM companies for individual blocks. The reasoning was that multiple RTM companies managing interconnected premises could lead to overlapping responsibilities and administrative conflicts, which the Act aims to avoid.

Moreover, the Tribunal addressed the concerns raised by the respondents regarding procedural anomalies and the potential for landlords to manipulate RTM procedures to retain control. However, the Tribunal found these arguments unconvincing, emphasizing the clear statutory language and the lack of intent to restrict RTM companies to single buildings.

Impact

This judgment clarifies the limitations imposed by the 2002 Act on RTM companies, particularly regarding their capacity to manage multiple structures within the same estate. By reinforcing that an estate-wide RTM company precludes the formation of separate RTM entities for individual buildings, the decision aims to streamline management structures and prevent administrative conflicts. However, it also highlights potential issues where the formation of an estate-wide RTM company could inadvertently block tenants of individual blocks from managing their own buildings, raising questions about the balance between collective management and individual autonomy.

Complex Concepts Simplified

Right to Manage (RTM) Company

An RTM company is a tenant-formed entity that gains legal authority to manage the residential property without requiring landlord consent. Established under the 2002 Act, RTM companies can take over management responsibilities typically held by landlords.

Self-contained Building

A self-contained building refers to a structure that is structurally detached and can function independently of adjoining buildings. Under the 2002 Act, such buildings qualify as premises eligible for RTM provisions.

Section 73(4) of the 2002 Act

This section prevents multiple RTM companies from managing the same premises or any premises that contain or are contained within them. Essentially, if one RTM company manages a particular building, another company cannot manage that building or its parts.

Appurtenant Property

These are properties that are accessory to the main premises, such as parking areas, gardens, and access roads. The management of appurtenant property can be a point of contention when multiple RTM companies are involved.

Conclusion

The judgment in Fencott Ltd v. Lyttelton Court RTM Company Ltd reinforces the statutory limitations on RTM companies as outlined in the Commonhold and Leasehold Reform Act 2002. By ruling that an estate-wide RTM company precludes the establishment of separate RTM entities for individual buildings within the same estate, the Tribunal aimed to prevent administrative conflicts and ensure clear management structures. However, the decision also underscores the need for careful consideration of how RTM provisions are applied to balance collective management with individual tenant autonomy. This case sets a precedent that influences future RTM applications, particularly in estates comprising multiple self-contained buildings.