ARMA Intervenes in Supreme Court Case

Posted by The Property Institute on 25th January 2022 -

Case Rules Leaseholders Exercising their Rights to Manage a Building Do Not Acquire the Right to Manage the Surrounding Estate

Since its introduction by the Commonhold and Leasehold Reform Act 2002, many leaseholders have acquired the right to manage their block. By acquiring the right to manage, leaseholders get the right to perform the “management functions” in place either of the landlord or any other person upon whom management rights are conferred under the terms of the leases of the flats.

But often a block of flats forms part of a wider estate, containing other blocks of flats or houses.  And there’s likely to be shared facilities or amenities. These so-called estate facilities will be managed either by a common landlord or other third party, and the associated costs recovered from lessees and owners within the estate.

An issue that (until now) has caused problems with the ongoing management of the estate facilities was what rights of management the RTM company has in relation to the estate facilities.

This was the issue under consideration by the Supreme Court in FirstPort Property Services Ltd v Settlers Court RTM Company Ltd and others. 

 

ARMA Intervention

Given the importance of this issue, ARMA were given permission to intervene in the appeal and were represented by Rupert Cohen (of Landmark Chambers) and Cassandra Zanelli (of Property Management Legal Services Limited). ARMA duly produced a witness statement from Dr Nigel Glen, CEO of ARMA, describing the real-world challenges arising from shared management responsibility which accompanied its written submissions. Its involvement as intervener was assisted by the responses received from ARMA members who explained some of the common challenges and difficulties they faced when managing estates where there are shared services (i.e., between the RTM block and other parts of the estate).

 

Ruling

The case reached the Supreme Court after the UT issued a leapfrog certificate for an appeal. The Supreme Court unanimously allowed the appeal and, in doing so, held that the 2012 Court of Appeal case known as Gala Unity was wrongly decided.

The Supreme Court found that the right to manage does not extend to the RTM company managing the shared estate facilities, which do not form part of the “premises” over which the RTM is exercisable. Gala Unity is now overruled.

 

What Does the Decision Mean for Agents?

This decision is welcome clarification on the dual management issue, and we now have a clear decision from the Supreme Court on who performs the estate facilities, and how the associated costs are recovered. The practical challenges of dual management were highlighted in the submissions made by ARMA, as intervener. Those submissions and the witness statement of Dr Nigel Glen, CEO of ARMA formed a core part of the Court’s reasoning and were commented on with approval in the judgment at paragraph 55.

It was also recognised that Gala Unity has stood as binding authority for several years, and that estate facilities in many estates may at present be being managed under sharing agreements made by RTM companies and others on the assumption that the law was as set out in that case. No further guidance was given by the Court as to what happens in these circumstances.

 

Access the judgement summary and watch videos of the hearings here.

Members can view a writeup of the case created by Cassandra Zanelli (of Property Management Legal Services Limited) and Rupert Cohen (of Landmark Chambers) here.