RTM Company Granted Right to Manage Property

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL [NAME] ([NAME]) Case reference HMCTS Code : CAM/00KB/LRM/2021/0003 P:PAPERREMOTE Property : 19-25 [NAME] & 48-54 [NAME], Bedford [POSTCODE] Applicant: [redacted]

19-25 [NAME] & 48-54 [APPELLANT] : [RESPONDENT] Respondent : [redacted] :

[COUNSEL] [COMPANY] of application : Application in relation to the denial of the Right to Manage Tribunal member(s) : Judge Wayte Date : 12 April 2022

DECISION

Covid-19 pandemic: description of hearing This has been a remote hearing on the papers which has been consented to by the parties. The form of remote hearing was P:PAPERREMOTE. A face-to-face hearing was not held because it was not necessary and all issues could be determined on paper. I have considered submissions made by both representatives in accordance with the directions. The order made is described below. (1) The tribunal determines that the applicant was on the relevant date entitled to acquire the right to manage the relevant property pursuant to section 84(5)(a) of the Commonhold and Leasehold

2 Reform Act 2002, and the applicant will acquire such right three months after this determination becomes final. (2) The tribunal also orders the respondent to pay the applicant £100 in respect of the application fee. The application 1. This was an application under section 84(3) of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) for a determination that, on the relevant date, the applicant [NAME]) company was entitled to acquire the RTM premises known as 19-25 [NAME] & 48-54 [NAME], Bedford [POSTCODE] (“the property”).

2. By a claim notice dated 6 August 2021, the applicant gave notice to the respondent that it intended to acquire the right to manage the property on 12 December 2021.

3. By counter-notice dated 7 September 2021, the respondent disputed the claim. Two objections were raised under the 2002 Act: firstly that the property did not comply with the definition of premises in section 72(1) and secondly that by reason of 73(2), that the Company was not a [COMPANY] as defined by that section. No further particulars were provided.

4. The [NAME] attempted to seek further information in order to avoid the costs of an application to the tribunal but in the absence of the respondent’s agreement, an application was made on 15 October 2021.

5. Directions were issued on 13 December 2021. In view of the objection as to the property, they stated that the Judge would decide whether an inspection and/or hearing was necessary having received the bundles. Dates were subsequently sought for an inspection in March or April but the respondent was apparently unable to attend before June 2022. In view of the delay, the tribunal decided to inspect the property without the parties on 5 April 2022. No request was received for a hearing and, in the light of the inspection, the tribunal decided one was unnecessary. The matter has therefore been determined on the basis of the written submissions filed in accordance with the directions.

6. The relevant provisions of the 2002 Act are set out in an annex to this decision. The respondent’s case 7. The respondent’s statement of case dated 4 January 2022 maintained both grounds of objection. In terms of whether the property qualified as premises under section 72(1) of the 2002 Act, it stated that “there is prima facie evidence that the premises constitute multiple buildings”. No explanation of that statement was provided but the next paragraph maintained that “as far as the respondent is aware, there is also a

3 vertical division between the [NAME] and [NAME] properties”, with separate entrances and car parks.

8. The respondent quoted the Court of Appeal decision of [COMPANY] v [COMPANY] [2015] EWCA Civ 282 as authority that the RTM only applies to a single block or self- contained part of a block and contended it was for the [COMPANY] to prove that the elements of its case were made out.

9. The second ground of objection referred to the identification of the premises in the articles of association and claim notice as extending past the premises contained in the freehold title. In particular, the description of 19-25 [NAME] & 48-54 [NAME] without distinguishing odd/even as per the title, included properties that were outside the ownership of the respondent. In the circumstances the respondent stated as the identification of the premises was ambiguous, the company had failed to meet section 73(2) of the 2002 Act.

10. The respondent’s bundle included a copy of the freehold title and plan, photographs of the property and a plan from a sample lease. The applicants’ reply 11. The applicant’s statement of case, prepared by [APPELLANT], was dated 26 January 2022. The background section referred to the correspondence before the application, with [NAME] requesting details of the respondent’s objections on 4 October 2021. No response was received and therefore the applicant was forced to issue proceedings to seek a determination from the tribunal.

12. The applicant stated that the question of whether or not premises in respect of which an RTM is claimed comprises a self-contained building is an issue of fact and degree, which depends on the nature and degree of any attachment between the subject building and any other adjoining structures – see the discussion at pages 89-106 of the Upper Tribunal decision in [NAME] v [COMPANY] [2014] UKUT 0006.

13. In this case, the applicant submitted that the eight flats at the property are all contained within the same footprint of the building under one continuous roof and the building is not attached, structurally or otherwise, to any other building. The property was therefore structurally detached and therefore, pursuant to section 72(2) is a self- contained building for the purposes of the 2002 Act. The submissions were supported by Google Earth photographs showing an aerial view and the view from [NAME] and [NAME] respectively.

14. In addition to that photographic evidence, the applicant relied on the leases which refer to eight flats, sharing all relevant services. The service charges themselves are split eight ways and treat the building containing the flats as a single building. The [NAME] have

4 issued demands in accordance with the leases which the applicant submitted provides evidence that the landlord also treats the property as a single self-contained building for the purposes of recovering expenditure. Copies of the demands were included in the bundle.

15. The respondent’s suggestion that 19-25 [NAME] and 46-54 [NAME] are two separate self-contained premises because they are vertically divided and have two separate entrances was wrong at law, misconceived and spurious. The test to determine whether a property is a self-contained building for the purposes of the 2002 Act is purely physical and the fact that a building might be able to be vertically divided immaterial.

16. Even if [NAME] and [NAME] were considered to be two separate self-contained premises, which was denied, the applicant relied on [APPELLANT] v 41-60 [APPELLANT] [2011] EWCA Civ 185 as establishing that properties which are separate self- contained premises could join together to acquire the freehold title, provided that the united structure was a self-contained building and that the relevant number of participators were involved. Although this decision concerned section 3 of the Leasehold Reform, Housing and Urban Development Act 1993, the wording mirrors that of section 72 of the 2002 Act. Here, there are 6 participators, the requisite majority of both the [NAME] and [NAME] flats and therefore the property would meet the [NAME] test.

17. On the argument under section 73(2), the applicant stated there was no ambiguity in the definition of the premises in the articles of association. The demands for payment of service charges used the same address without reference to odd and even numbers and the specific postcode was stated in the articles. There are no properties numbers 49, 51 or 53 [NAME] and the properties at 20, 22 and 24 are separate terraced houses with different postcodes.

18. Even if there was any ambiguity, which was denied, the applicant submitted that the definition must be interpreted to give it the meaning which is more consistent with the intention of the members of the applicant in incorporating the [COMPANY] – see [APPELLANT] v 51 [COMPANY] [2016] UKUT 0022. Clearly, the members did not intend the definition of the premises to include the three non-existent properties at 49, 51 and 52 [NAME] nor the three terraced houses at 20, 22 and 24 [NAME].

19. The directions permitted the respondent to reply to the applicant’s statement of case but no such document was received. The inspection 20. The tribunal attended the property at 3pm on Tuesday 5 April 2022. The RTM directors were there to allow access to the common parts, as requested. The property, which is arranged on two storeys, was built in

5 or about the 1990s and as shown by the photographs, has an unusual configuration, similar to the letter Z but on its side. However, it was clearly a single detached building, with a single roof structure, albeit with two entrances as is clear from the address. The tribunal were able to walk around the building on one side and see down the other side which is divided only by a timber fence at ground level. The meters for the services to [NAME] are in a cupboard on one side of the building and the meters for [NAME] in a similar cupboard on the opposite side. Any vertical division was not obvious from the outside or the common parts. The tribunal’s decision and reasons 21. In the circumstances, the tribunal is clear that there is no argument in respect of section 72(1). Even if the property can be vertically divided, the tribunal agrees with the applicant’s submissions that the premises would still meet the definition in section 72. [NAME] is clear that there is no requirement to reduce the building to its smallest self- contained part.

22. The tribunal agrees with the applicant that the respondent’s argument in respect of the identification of the premises in the articles is disingenuous, particularly given its agents’ use of the same address to demand service charges for the property. Even if there was any ambiguity, any doubt would be resolved in favour of the applicant following [NAME] v [ADDRESS].

23. The tribunal therefore determines that the applicant was on the relevant date entitled to acquire the right to manage the property.

24. Therefore, in accordance with section 90(4), the acquisition date is the date three months after this determination becomes final. According to section 84(7): “(7) A determination on an application under subsection (3) becomes final— (a) if not appealed against, at the end of the period for bringing an appeal, or (b) if appealed against, at the time when the appeal (or any further appeal) is disposed of.” 25. Given the weak arguments made by the respondent and their failure to engage with the [NAME] prior to the application being made, the tribunal considers that this is an appropriate case to exercise the tribunal’s discretion under Rule 13(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013 to order the respondent to reimburse the application fees of £100.

Name: Judge Wayte Date: 12 April 2022

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Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) ([NAME]) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal ([NAME]), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28-day time limit, such application must include a request for an extension of time and the reason for not complying with the 28-day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal ([NAME]).

7 Annex: Commonhold and Leasehold Reform Act 2002 (excerpts) 72 Premises to which Chapter applies (1) This Chapter applies to premises if— (a) they consist of a self-contained building or part of a building, with or without appurtenant property, (b) they contain two or more flats held by qualifying tenants, and (c) the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises. (2) A building is a self-contained building if it is structurally detached. (3) A part of a building is a self-contained part of the building if— (a) it constitutes a vertical division of the building, (b) the structure of the building is such that it could be redeveloped independently of the rest of the building, and (c) subsection (4) applies in relation to it. (4) This subsection applies in relation to a part of a building if the relevant services provided for occupiers of it— (a) are provided independently of the relevant services provided for occupiers of the rest of the building, or (b) could be so provided without involving the carrying out of works likely to result in a significant interruption in the provision of any relevant services for occupiers of the rest of the building. (5) Relevant services are services provided by means of pipes, cables or other fixed installations. (6) Schedule 6 (premises excepted from this Chapter) has effect.

73RTM companies (1)This section specifies what is a [COMPANY]. (2)A company is a [COMPANY] in relation to premises if— (a)it is a private company limited by guarantee, and (b)its articles of association state that its object, or one of its objects, is the acquisition and exercise of the right to manage the premises.

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FIRST-TIER TRIBUNAL [NAME] ([NAME]) Case reference : CAM/00KB/LRM/2021/0003 HMCTS code (paper, video, audio) : P:PAPERREMOTE Property : 19-25 [NAME] & 48-54 [NAME], Bedford [POSTCODE] Applicant : [redacted] : [RESPONDENT] Respondent : [redacted] : [COUNSEL] [COMPANY] of application : Application for permission to appeal Tribunal member(s) : Judge Wayte Date of decision : 7 June 2022

DECISION REFUSING PERMISSION TO APPEAL

Covid-19 pandemic: description of determination This has been a determination on the papers A face-to-face hearing was not held because no-one requested one and all issues could be determined on paper in accordance with the usual practice for dealing with applications for permission to appeal.

DECISION OF THE TRIBUNAL 1. The tribunal has considered the respondent’s request for permission to appeal dated 10 May 2022 and determines that:

2 (a) it will not review its decision; and (b) permission be refused.

2. In accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007 and rule 21 of the Tribunal Procedure (Upper Tribunal) ([NAME]) Rules 2010, the respondent may make further application for permission to appeal to the Upper Tribunal ([NAME]). Such application must be made in writing and received by the Upper Tribunal ([NAME]) no later than 14 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for permission to appeal.

3. Where possible, you should send your further application for permission to appeal by email to [EMAIL], as this will enable the Upper Tribunal ([NAME]) to deal with it more efficiently.

4. Alternatively, the Upper Tribunal ([NAME]) may be contacted at: 5th [ADDRESS] [POSTCODE] (tel: [PHONE]).

REASONS FOR THE

DECISION 5. The test for whether to grant permission to appeal is whether there is a realistic prospect of success.

6. In the present case, the tribunal does not consider that any ground of appeal has a realistic prospect of success.

7. For the benefit of the parties and the Upper Tribunal ([NAME]), the tribunal records below its comments on the grounds of appeal and any procedural points raised, adopting where appropriate the paragraph numbering of the original request for permission. References in square brackets are to those paragraphs in the main body of the original tribunal decision.

8. The respondent originally objected to the application for the [NAME]) the property on two grounds. The Grounds for Appeal take issue with the decision dated 12 April 2022 in only one respect, the dismissal of the respondent’s ground of objection which stated that “there is prima facie evidence that the premises constitute multiple buildings”. The respondent relied on the Court of Appeal decision in [COMPANY] v [NAME] Co [COMPANY] [2015] EWCA Civ 282 “which held that the RTM only applies to a single block or self- contained part of a block” (Respondent’s Statement of Case paragraphs 7 and 11).

9. As stated in the decision, the tribunal inspected the property and came to the conclusion that it was a single detached building [paragraph 20]. The tribunal was not satisfied that the property was vertically divided but referred to the Court of Appeal decision in [COMPANY] v 41-60

3 [NAME] ([COMPANY] [2011] EWCA Civ 185 concerning the interpretation of identically worded provisions in the Leasehold Reform, Housing and Urban Development Act 1993, when deciding that as a matter of statutory construction even if the property was so divided, it would still meet the statutory test set out in section 72 of the 2002 Act [paragraph 21].

10. The respondent’s Grounds of Appeal develop their argument as to the application of [NAME], relying on Lady Justice Gloster’s conclusion in paragraph 62 which states “Accordingly in my view it is not open to an [COMPANY] to acquire the right to manage more than one self- contained building or part of a building.” They say that means that the RTM in this case is restricted to only part of the property as the vertical division means that it is more than one self-contained part. They also argue that [NAME] is limited to the 1993 Act.

11. Firstly, it was for the respondent to establish that the property was vertically divided. They failed to discharge that burden, merely arguing that there was “prima facie evidence” and pointing to one of the lease plans, which was of limited assistance. Having inspected the property, I came to the conclusion that it was a single detached building which met the definition in section 72(1) of the 2002 Act. It is important to note that section 72(2) states that “a building is a self-contained building if it is structurally detached”.

12. In any event, I do not accept that their interpretation of [NAME] is correct. That decision considered three appeals, all involving estates of separate blocks where the RTM had been upheld in relation to more than one block. The conclusion of Lady Justice Gloster, which merely reflects the statutory wording, has to be read with that context in mind. This decision involves a single detached block of flats. Secondly, Lady Justice Gloster accepted that support can be derived from the 1993 Act. In paragraph 59 of her judgment she states that “the qualifying conditions are otherwise identical”. In particular, section 3, which uses the same wording for “premises” as section 72 of the 2002 Act.

13. The [NAME] decision is also referenced in [NAME]’ text on Service Charges and Management (5th Edition) at paragraph 23-15 with the conclusion that: “It follows that the right to manage might be sought globally for a contiguous series of non-detached buildings such as a row of mansion blocks, so long as the whole may reasonably be called one “building” and so long as all parts are in the same freehold ownership”. This case is much simpler, involving a single detached building owned by the respondent. If [NAME] and [NAME] are contradictory, which is not accepted, this case is not in my view the one to test that hypothesis.

Name: Judge Wayte

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DECISION REFUSING PERMISSION TO APPEAL

REASONS FOR THE

Name: Judge Wayte

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FIRST-TIER TRIBUNAL [NAME] ([NAME]) Case reference : CAM/00KB/LRM/2021/0003 HMCTS code (paper, video, audio) : P:PAPERREMOTE Property : 19-25 [NAME] & 48-54 [NAME], Bedford [POSTCODE] Applicant : [redacted] : [RESPONDENT] Respondent : [redacted] : [RESPONDENT] of application : Application for permission to appeal Tribunal member(s) : Judge Wayte Date of decision : 7 June 2022

DECISION REFUSING PERMISSION TO APPEAL

REASONS FOR THE

Name: Judge Wayte

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FIRST-TIER TRIBUNAL [NAME] ([NAME]) Case reference : CAM/00KB/LRM/2021/0003 HMCTS code (paper, video, audio) : P:PAPERREMOTE Property : 19-25 [NAME] & 48-54 [NAME], Bedford [POSTCODE] Applicant : [redacted] : [RESPONDENT] Respondent : [redacted] : [COUNSEL] [RESPONDENT] of application : Application for permission to appeal Tribunal member(s) : Judge Wayte Date of decision : 6 October 2022

DECISION REFUSING PERMISSION TO APPEAL

DECISION OF THE TRIBUNAL 1. The tribunal has considered the respondent’s request for permission to appeal dated 16 September 2022 and determines that:

REASONS FOR THE

7. For the benefit of the parties and the Upper Tribunal ([NAME]), the tribunal records below its comments on the grounds of appeal and any procedural points raised, adopting where appropriate the paragraph numbering of the original request for permission.

8. The respondent seeks permission to appeal the decision dated 17 August 2022 whereby I made a rule 13(1)(b) costs order against them, having determined that they had acted unreasonably in defending the underlying [NAME]) application. That application was determined in the applicant’s favour on 12 April 2022 and if the respondent applies to the Upper Tribunal for permission for this appeal, that decision will provide relevant background.

9. In summary, the respondent objected to the RTM application on two grounds: firstly that “there is prima facie evidence that the premises constitute multiple buildings” and therefore did not meet the definition of premises in section 72(1) of the 2002 Act (“the vertical division objection”); and secondly, that the identification of the premises was ambiguous due to its description of 19-25 [NAME] & 48-54 [NAME] without adding the qualification of “odd” and “even” as per the title, in breach of section 73(2) of the 2002 Act.

3 10. Both objections were dismissed by the tribunal in the decision dated 12 April 2022 and an application was subsequently made for permission to appeal that decision in respect of the vertical division objection only, which was refused on 7 June 2022. As far as I am aware, no further application for permission to appeal has been made to the Upper Tribunal in respect of that decision.

11. There are two grounds of appeal in respect of the rule 13 costs decision. Ground 1 states that there was no evidential basis for the relevant findings, referring to paragraph 11 of the decision which stated that “knowingly running a defence that lacks substance and merit is capable of amounting to unreasonable behaviour in defending proceedings”. The complaint is that there is nothing in the RTM decision that amounts to a finding to support that claim.

12. The reasons for the rule 13 decision are in paragraphs 11-13. Paragraph 11 deals specifically with the objection in respect of the identification of the property. The RTM decision agreed with the applicant that this objection was “disingenuous” (paragraph 22), particularly given the [NAME] use of exactly the same description in their service charge demands. In their application for a rule 13 costs order, the applicant provided copies of several earlier FTT decisions involving the respondent making similarly unsuccessful arguments in respect of other properties owned by them. In these circumstances I consider that there is ample evidential basis for the finding that the respondent (or at least any reasonable respondent) would have been aware that this objection lacked substance or merit but still chose to pursue it in proceedings.

13. The second ground of appeal is that the FTT misunderstood the burden of proof in respect of the RTM decision. The respondent points to paragraph 11 of the decision refusing permission to appeal the RTM decision which refers to the respondent’s failure to establish that the property was vertically divided. The respondent accepts that the alleged failure to appreciate the proper application of the burden of proof makes no difference to the RTM decision but claims that I therefore approached the rule 13 decision on the wrong basis.

14. My findings as to the vertical division objection are in paragraph 12 of the rule 13 decision. That paragraph is clear that the unreasonable conduct was the failure of the respondent to comply with the overriding objective in rule 3(2)(a) of the Tribunal’s Procedure Rules to deal with the case in ways which are proportionate to the tribunal’s resources (and co-operate with the tribunal generally). In particular, pursuing the objection in such a vague way that the tribunal had to inspect the property to determine the case. As noted in the RTM decision, it was immediately obvious to the tribunal that the property was a single detached building and in those circumstances, if the respondent wanted to argue otherwise they needed to explain their case better. That is clearly a very different point to any misunderstanding of the burden of proof, which is denied.

4 15. Paragraph 13 of the rule 13 decision summarises the findings and refers back to the case of [COMPANY] v 83 [RESPONDENT] [2013] UKUT 598, which the respondent cited in support of their opposition to the Rule 13 application. While I doubted that the Deputy President was supportive of objections “which lack both substance and merit”, despite the comments in [66] of that case, it must be the case that a respondent with the knowledge and experience of [NAME] risks a rule 13 order being made against them if they pursue such objections in proceedings without due regard to the overriding objective and the tribunal’s resources.

Name: Judge Wayte