Gala Unity Ltd v Ariadne Road RTM Company Ltd

Factual and Procedural Background

This is an appeal against a decision dated 25th October 2011 of the President of the Upper Tribunal (Lands Chamber) ("UT"), Judge Bartlett QC, dismissing the Appellant's appeal against a determination of a Leasehold Valuation Tribunal ("LVT") under section 84(3) of the Commonhold and Leasehold Reform Act 2002 ("the Act"). The LVT had determined that the Respondent was entitled to manage two premises in The City: a block containing two flats, numbers 10 and 12 Ariadne Road, and another block containing ten flats, numbers 14 to 32 (even) Ariadne Road, each with appurtenant property.

The Appellant is the freehold owner of land forming part of a modern development on the outskirts of The City. The President of the UT conducted a site inspection and described the land as comprising two blocks of flats, two free-standing coach houses (first-floor flats with parking underneath), estate roads surrounding the land, a brick-surfaced road providing access to the flats and coach houses, parking spaces, a free-standing dustbin store serving all flats, garden areas, grassed areas with trees, and a courtyard accessible only on foot.

The two coach houses were excluded from the right to manage (RTM) claim. The leases of the 14 flats were similar, each including a numbered car port or parking space demised to the lessee. The leases granted rights of way and use of estate common parts such as pavements, visitor parking, roads, landscaped areas, gardens, and refuse collection areas. The Appellant challenged whether the premises fell within the statutory definition of "self-contained building or part of a building" under section 72(1)(a) of the Act, which was the key issue before both the LVT and the UT.

Legal Issues Presented

1. Whether the two blocks of flats qualify as "self-contained buildings" under section 72(1)(a) of the Commonhold and Leasehold Reform Act 2002.
2. Whether the right to manage extends to appurtenant property that is enjoyed in common with other properties not subject to the RTM claim, or is limited to appurtenant property exclusively belonging to the self-contained buildings.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that the two blocks of flats, although structurally detached, were not "self-contained" because they could not function independently without shared appurtenances such as access roads, gardens, and bin stores.
• The Appellant accepted that the estate common parts were appurtenant property but argued that section 72(1)(a) should apply only to appurtenant property exclusively appertaining to the self-contained building.
• The Appellant emphasized practical difficulties and potential conflicts arising from shared management responsibilities between the Respondent and the existing management company if the RTM company were allowed to manage only parts of the estate.
• The Appellant urged an interpretation of the Act that would allow the RTM company to manage the entire estate as a whole rather than parts of it.

Respondent's Arguments

• The Respondent supported the President's decision and argued that the two blocks of flats are self-contained buildings as defined by the Act.
• The Respondent maintained that the right to manage extends to appurtenant property, including common areas enjoyed in conjunction with other properties, and that there is no requirement that appurtenant property be exclusively appertaining to the self-contained buildings.

Table of Precedents Cited

Court's Reasoning and Analysis

The court identified the sole issue as whether the two blocks of flats qualify as self-contained buildings and the extent of appurtenant property included within the right to manage. The court accepted the President's factual finding, after a site visit, that the blocks are structurally detached, meeting the statutory definition of "self-contained building" under section 72(2) of the Act. The Appellant's proposed additional requirement—that the building must function independently without shared facilities—was rejected as unsupported by the statutory language.

The court examined the definition of "appurtenant property" in section 112(1), which includes property "belonging to, or usually enjoyed with" the building or flat. The court noted that appurtenances such as gardens and yards are often enjoyed in common with other properties and that the statutory definition does not limit appurtenant property to that exclusively appertaining to the self-contained building. Consequently, the shared estate common parts fall within the scope of appurtenant property for the right to manage.

The court acknowledged the potential for duplicative management and conflict but found these practical concerns insufficient to justify imposing a restrictive interpretation on the statutory language. The court emphasized that parties may negotiate agreements to mitigate such difficulties and that statutory mechanisms exist to resolve disputes arising from dual responsibilities.

Holding and Implications

The court DISMISSED the appeal, affirming the decision of the President of the Upper Tribunal.

The effect of the decision is that the RTM company is entitled to manage the two blocks of flats as self-contained buildings and the appurtenant property, including shared common areas enjoyed in conjunction with other properties not subject to the RTM claim. While this may result in dual management responsibilities over some estate parts, the court held that the statutory language does not restrict the right to manage to exclusively appertaining property. No new precedent was set beyond confirming the statutory interpretation and reaffirming the approach to appurtenant property under the Act.