Port Property Services Ltd v Settlers Court RTM Company Ltd and others [2022] UKSC 1 (12 January 2022)

The Supreme Court considered whether the right to manage under the Commonhold and Leasehold Reform Act 2002 extends to shared estate facilities used by occupants of multiple buildings. The Court held it does not, overruling Gala Unity. RTM companies can only manage their specific building and exclusively-used facilities.

Facts

The Virginia Quay Estate contained ten blocks of flats and terraced houses surrounded by communal areas including gardens, accessways, and a river wall. FirstPort Property Services Ltd was the management company responsible for managing all buildings and estate facilities throughout the Estate. Settlers Court RTM Company Ltd acquired the statutory right to manage Settlers Court block (containing 76 flats) under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002.

The dispute concerned whether the RTM company’s right to manage extended to the shared estate facilities used by all residents across the Estate, or was limited to the Settlers Court block itself. The Settlers Court lessees refused to pay their share of estate charges to FirstPort, claiming the RTM company had acquired management rights over the estate facilities.

Issues

Principal Issue

Whether the right to manage conferred by the 2002 Act extends to shared estate facilities used in common by occupants of multiple buildings within an estate, or is limited to the relevant building and facilities exclusively used by its occupants.

Subsidiary Issue

Whether the Court of Appeal’s decision in Gala Unity Ltd v Ariadne Road RTM Co Ltd was correctly decided.

Judgment

The Supreme Court unanimously allowed the appeal, holding that the right to manage does not extend to shared estate facilities. Lord Briggs delivered the judgment with which all other Justices agreed.

Lord Briggs concluded:

“I consider that the right to manage scheme in Chapter 1 of Part 2 of the 2002 Act makes no provision within the statutory right to manage for management by the RTM company of shared estate facilities. It is concerned only with management of the relevant premises, that is the relevant building or part of a building, together with appurtenant property (if any) which means nearby physical property over which the occupants of the relevant building (or part) have exclusive rights.”

The Court emphasised that section 97(2) of the 2002 Act gives the RTM company exclusive rights to perform management functions, with no obligation to share management with anyone. Lord Briggs stated:

“That is a very powerful pointer to a construction which confines the right to manage to that which the RTM company can manage on its own, namely the structure and facilities within the building or part of it constituting the relevant premises and, where they exist, those facilities outside it which are exclusively used by the occupants of the relevant premises.”

Key Reasoning

The Court identified several textual and purposive factors supporting its interpretation:

• The strict self-containment requirements in section 72 point towards confining management to separate premises
• The Chapter consistently uses phraseology describing the right to manage as relating to particular premises
• The Act contains no machinery for resolving disputes about shared management in default of agreement
• Tenants in other blocks would have no privity with the RTM company and no means to hold it accountable
• Other tenants receive no notice of the RTM company’s claim and have no opportunity to object

Regarding ‘appurtenant property’, Lord Briggs noted:

“The definition in section 112 is stated to be for the purposes of Chapter 1 of Part 2 of the 2002 Act. It lists any garage, outhouse, garden, yard or appurtenances belonging to, or usually enjoyed with, the building or part or flat. The first thing to note is that all the items listed, apart from the general reference to appurtenances, are physical, corporeal objects.”

Implications

This decision clarifies that RTM companies cannot assume responsibility for shared estate facilities, resolving uncertainty that had existed since Gala Unity in 2012. The ruling protects the interests of tenants in other buildings who would otherwise be affected by management decisions of an RTM company in which they have no membership or control.

The decision ensures that existing leasehold structures continue to govern estate facility management, with landlords or third-party managers retaining full cost recovery rights from all relevant tenants. This prevents the financially precarious position that would arise if RTM companies became responsible for services they could only partially fund.

The Court acknowledged that some sharing agreements may have been made in reliance on Gala Unity but held this was insufficient reason to perpetuate an interpretation contrary to the statute’s purpose.

Verdict: Appeal allowed. The Court held that the right to manage under the Commonhold and Leasehold Reform Act 2002 does not extend to shared estate facilities. Gala Unity Ltd v Ariadne Road RTM Co Ltd was overruled.

Source: Port Property Services Ltd v Settlers Court RTM Company Ltd and others [2022] UKSC 1 (12 January 2022)