FirstPort Property Services Ltd v Settlers Court RTM Company Ltd & Ors

Factual and Procedural Background

Company A managed a large residential development known as “The Estate,” consisting of several blocks of flats and freehold houses. One block, “Building X,” contains long-leasehold flats whose tenants formed Company B, an RTM company, and on 8 November 2014 successfully acquired the statutory right to manage Building X under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”).

The dispute concerns which entity is entitled to manage—and fund—the communal estate facilities used by every occupier on The Estate (roads, gardens, river wall, security systems, concierge services, etc.). Company A continued to provide those services and levy estate-wide service charges. Company B asserted that, following its acquisition of the right to manage Building X, it was entitled to participate in (or take over) management of the shared facilities and to collect the relevant proportion of the cost from Building X leaseholders.

Both the First-tier Tribunal and the Upper Tribunal felt bound by the Court of Appeal decision in Gala Unity to conclude that Company B shared management rights over the estate facilities. A leapfrog appeal was brought directly to the Supreme Court to determine whether Gala Unity was correctly decided.

Legal Issues Presented

1. Does the statutory “right to manage” granted by the 2002 Act extend beyond the self-contained building claimed by an RTM company to encompass estate-wide communal facilities used in common with occupiers of other buildings?
2. Was the Court of Appeal decision in Gala Unity Ltd v Ariadne Road RTM Co Ltd correctly decided, or should it be overruled?

Arguments of the Parties

Company A’s Arguments

• The 2002 Act confers an exclusive management right limited to the individual building (and any facilities used exclusively by that building’s tenants). It does not create shared management of wider estate facilities.
• Focusing solely on the term “appurtenant property” in Gala Unity ignored the overall statutory purpose, which is to give a single-building RTM company autonomy over its own block, not joint control of a multi-building estate.
• Including shared facilities leads to absurd and unworkable consequences: (a) duplication of management, (b) inability to recover full costs, and (c) disenfranchisement of tenants in other blocks who have no relationship with the RTM company.
• Parliament’s Consultation Paper (para 88) expressly contemplated that estate facilities would remain with the landlord/manager and that the RTM company would manage only its block.
• The Court of Appeal’s broad interpretation of “appurtenant property” was wrong; historic authority shows the term is confined to nearby physical property within a building’s curtilage and does not include easements or shared estate land.

Company B’s Arguments

• The right to manage covers “management functions relating to the premises.” “Relating to” should be read broadly to include management of property over which occupants of the block have rights, even if shared.
• Section 96 transfers to the RTM company every management function the landlord or a third-party manager has under the leases of flats in the block; that necessarily includes management of common estate facilities.
• Practical difficulties can be resolved by agreements under section 97(2); if parties fail to agree, an application could be made for appointment of a manager under the Landlord and Tenant Act 1987.
• Carving out estate facilities would defeat tenants’ aims: they would still be forced to pay charges to and deal with a landlord whose services they considered unsatisfactory.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Statutory Language and Structure. Sections 96–97 define the RTM company’s functions as those “relating to” the premises. Reading those provisions in context shows Parliament intended the RTM company to perform functions it can discharge exclusively without interfering with rights of tenants in other buildings.

2. Self-contained Premises Requirement. Section 72 confines qualifying premises to a structurally detached building (or vertical part) with services capable of independent provision. This points away from conferring rights over multi-building estate facilities.

3. Exclusivity and Lack of Sharing Mechanism. Section 97(2) grants the RTM company the right to perform its management functions to the exclusion of the landlord or any third-party manager unless an agreement is reached. The Act provides no machinery compelling or regulating shared management; interpreting it to require such sharing would create an unlegislated, cumbersome regime.

4. Protection of Third-Party Tenants. Tenants in other blocks are strangers to the RTM company and are neither notified of, nor represented in, RTM proceedings. Stripping them of contractual rights to insist on the landlord’s management of estate facilities would be a drastic and unintended consequence.

5. Meaning of “Appurtenant Property.” The Court adopted a narrow, physical reading of the term—garages, yards, outhouses, etc., within the curtilage and for exclusive use of the building’s occupants. It does not encompass shared estate land or easements.

6. Consultation Paper Evidence. Parliamentary preparatory materials (Consultation Paper Cm 4843, para 88) expressly state that, where a block is part of a wider estate, management of common facilities was to remain as allocated under the lease. While not determinative, this confirmed the Court’s interpretation.

7. Absurdity of Alternative Construction. Extending RTM rights to estate facilities would (a) leave both Company A and Company B unable to recover full costs, (b) generate daily operational conflicts, and (c) force reliance on the 1987 Act’s discretionary manager-appointment jurisdiction—an implausible legislative intention.

8. Precedent Re-evaluation. Gala Unity relied heavily on reasoning appropriate to the discretionary 1987 Act regime and on concessions not made here. Its outcome conflicts with the statutory scheme and produces practical absurdities; it must therefore be overruled.

Holding and Implications

APPEAL ALLOWED. The Supreme Court holds that the statutory right to manage under Chapter 1 of Part 2 of the 2002 Act extends only to the self-contained building (or part) claimed by the RTM company and any exclusive appurtenant physical property. It does not include shared estate facilities.

Implications: Company A retains sole responsibility for, and may recover the full cost of, managing estate-wide communal areas. Company B’s functions are confined to Building X. The decision overrules Gala Unity, removing the precedent for RTM companies claiming shared facilities and restoring clarity to multi-block estate management. No new procedural mechanism is introduced; existing leases continue to govern management of communal areas.