Upper Tribunal (Lands Chamber)
Appellant: CQN RTM (Right to Manage) Ltd
(Represented by Mr Philip Rainey QC under the instructions of Watson Farley & Williams LLP)
Vs
Respondents: Brad Quay North Block Freehold Ltd
(Represented by Mr Jonathan Upton under the instructions of Ashley Wilson Solicitors LLP)
Before His Honour Judge Hodge QC
On
15th May 2018
I. Facts:
The tenants residing at Central Quay North, Broad Quay, Bristol BS1 4AU and 8 Marsh Street, Bristol, BS1 4AX, presented the relevant notice claiming the right to manage the premises found at the aforementioned addresses. The appellant served the notice under Chapter 1 of Part 2 of the Commonhold and Leasehold Act 2002, stating that they are eligible to exercise their rights in relation to management of the premises. The respondents, Brad Quay North Block Freehold Ltd, presented a counter-notice emphasising that the appellant had no right to manage on the basis that the premises does not classify as a self-contained building or part of a building. The counter-notice is alleging that the appellant is not entitled to do so due to s.72(1)(a) of the Commonhold and Leasehold Agreement 2002.
The premises in question is part of a site that underwent redevelopment between 2004 to 2009, during which existing buildings were demolished on the site with the exception of the Tower Block. The latter is regarded as a central ‘concrete frame building which was retained, re-clad, extensively refurbished, extended and is now the Radisson Hotel’ . In the process of redevelopment, new buildings were constructed to the north and south sides of the central Tower Block. The premises specific to this case are the new building that was constructed on the northern side of the Tower Block. The First Tier Tribunal established that the premises included ‘a small basement, two ground floor commercial units and residential flats on the 1st to 7th floors.’ An entrance on to the premises is found on Broad Quay and has access to the 95 private residential apartments known as ‘Central Quay North’. Another entrance is found on 8 Marsh Street, which provides access to 30 social/public housing flats.
The premises also include a ramp, accessible from Marsh Street, leading into an underground parking garage which is predominantly under the Tower Block and the southern new building. Nonetheless the FTT drew the inference that concrete pillars supported the ramp that forms part of the premises. Additionally, the residents are not granted access to the underground parking garage. The basement area consists of a water storage tank and pump.
II. Statutory Provisions
The appellant served the notice, claiming the right to manage the premises, under Chapter 1 of Part 2 of the 2002 Act.
This can also be regarded as s.71(1)(2) of the Commonhold and Leasehold Act 2002. This section makes ‘provisions for the acquisition and exercise of rights in relation to the management of premises to which this Chapter applies by a company’ provided that the RTM (right to manage) company meets a certain criterion. In this case the criterion is in regard to if the premises are denoted as a self-contained building, a separate entity from the rest of the redeveloped site, which is owned and managed by the respondents.
The respondents served the counter-claim, stating that the appellant is not eligible to be an RTM company, as the premises are not defined to be a separate entity citing s.72(1)(a) of the 2002 Act. Having served this counter-claim, the respondents allege that the premises is not a self-contained building, therefore the appellant is not permitted to exercise the right to manage the premises. S.72 goes on to define the term ‘self-contained building’ as a building which is structurally detached.
III. Issue
• First Tier Tribunal’s Decisions
The issue in the first instance was to distinguish whether the characteristics of the ramp can be defined as ‘structurally detached’ under the s.72(1)(a).
First Tier Tribunal (FTT) was placed under a legal quandary as to apply the wording of the statue to the facts to the case. The issue pertained to s.72 of the 2002 Act as to deem whether the premises would classify as a self-contained building. The Tribunal held that distinguishing whether the premises are self-contained was a ‘mixed matter of fact and law’ . The court, upon analysis, reach a conclusion that the premises go beyond ‘mere touching’, therefore the issue shifts to the degree of connection between the Tower Block and the premises. The conclusion is then the matter of fact as to whether the connection can be defined as ‘structural’.
During the Tribunal’s investigation, it is found that the premises and the Tower Block are built and composed of different materials with no load bearing walls, but the court finds that it is insufficient to amount to ‘structural detachment’. Nonetheless the Tribunal finds that the appellant’s claim fails.
The basis of the decision was that the buildings were connected to the degree that there is no discernible division between the two. The ‘integrated connection between the two buildings went beyond [mere touching] to amount to structural detachment’.
• Upper Tribunal’s Issue
The issue in regard to the appeal is whether the FTT’s determination can be affirmed and upheld, whether the connection between the premises and adjoining buildings amount to ‘structurally attached’, as the FTT found.
IV. Held – Ratio Decidendi
The Upper Tribunal (UT) reached the consensus of upholding the FTT’s decision, that the buildings were structurally detached. The appellants had claimed that the FTT had conducted an inadequate test as well as procedural defect in the making of the decision.
The court held that the statute ought to be given its natural meaning of ‘structural detachment’, and as to not pervade the statue with more a more befit meaning such as ‘having no load bearing connections’.
The UT interpreted ‘structural’ as ‘appertaining or relating to the essential or core fabric of the building’. With this definition, determining whether the buildings were ‘structurally attached’ was adjudicated an analytical 3-step process.
- Identifying the premises.
- Identify which part of the premises are attached to some other building.
- Form a view whether the nature and degree of that attachment can appropriately be described as ‘structural detachment’.
The UT affirmed that the FTT had conducted the correct legal test/visible inspection and it was an appropriate decision to classify the premises as ‘structurally attached’ to the adjoining buildings, on the basis of no visible division between them. The FTT was correct in finding the degree of attachment went beyond mere touching and ‘mere weathering issues’ which served as a point of reference in No.1 Deansgate Residential Ltd vs No.1 Deansgate RTM Co Ltd [2013] UKUT 580 (LC).
Part 2:
In the case of CQN RTM Company Limited v Broad Quay North Block Freehold Limited [2018] UKUT 183 (LC), a specific section of the Commonhold and Leasehold Act 2002 plays a critical role as the determining factor of the outcome. The pivotal section of the 2002 Act is s.72(1)(a), which provides the framework for which a Right to Manage (RTM) company is permitted to exercise their rights in relation to the management of the premises. The specifics related to this case are that in order for the RTM company to be established, the framework dictates that the premises should be denoted as a ‘self-contained building or part of a building, with or without appurtenant property’ . Therefore, the issue placed forth along this case was whether the premises in question would classify as being a self-contained building, prompting a need to elaborate on defining ‘self-contained’. S.72(2) of the Act particularizes on the term ‘self-contained building’ as being ‘structurally detached’. Thus, the appellant in the case would present evidence promoting ‘structural detachment’ of the premises whereas the respondents would argue that the connection between the premises and the rest of the redeveloped site amounts to ‘structural attachment’. The statute explicitly defines the notion meant by the term ‘self-contained’ as ‘structural detachment’, however the 2002 Act fails to present a definition of ‘structurally detached’, which is therefore open to interpretation. The pivotal aspect in the Tribunal’s decision process is the nature and degree of attachment between the premises and adjoining buildings. The statute, in this case, has presented a framework for determining the factors that renders the premises eligible to be managed by an RTM company.
The First Tier Tribunal (FTT) found that the respondents, Broad Quay North Block Freehold Ltd, had a central element to their opposition to the appellants claim which revolved around s.72(1)(a) of the 2002 Act. However, the interpretation of the exhaustive definition of ‘structural detachment’ would prove to be a ‘mixed matter of fact and law’ . The context of the case plays a crucial function as to which way the Tribunal will interpret the statute, in particular s.72(2). In the first instance, the FTT recognizes that s.72 provides a criterion to which an RTM must comply with in order to be able to exercise their right to handle management of the premises. The court specifically express that even though no load bearing walls are evident, and the premises are built from separate materials to the rest of the redeveloped site, it does not imply that nonetheless the buildings are structurally detached. The respondent’s corresponded claiming that the decorating façade of the rest of the redeveloped site is reflected upon the premises, however the FTT deemed this is insufficient to label ‘structural attachment’. The definition of the word ‘structural’ has then been adapted from its literal meaning into the specific scenario of this case.
The Upper Tribunal (UT), making the decision on the appeal, particularly defines ‘structural’ in a natural sense as ‘appertaining or relating to the essential or core fabric of the building’. Having formed a concise framework, the decision making is rendered as an analytical process. The UT ultimately found that the appellant’s claim fails as the integrated connection between the premises and adjacent buildings went beyond mere touching to amount to ‘structural attachment’. The interpretation of the statute by the UT presents the extent to which ‘structural detachment’ amounts, thus the statute itself serves as a general overview of the criterion required, however the interpretation is what implements the statute into the specific case. An issue associated with interpretation is the vast contrast in opinions and perspectives within the profession of law. The interpretation by one tribunal is likely to differ from another, this can potentially cause a procedural defect in reaching an adequate and fair decision.
On the other hand, statutory interpretation can be guided through judicial precedent, which is the principled ratio decidendi of a previous legal case, whom which share similarities in the facts and issues with the case in question. In common law, judges are bound by stare decisis as to have a unilateral consistency of principles to stimulate a more equal judiciary on a national scale.
The principle formed on No.1 Deansgate (Residential) Ltd v No.1 Deansgate RTM Co Ltd [2013] UKUT 580 (LC) in Manchester, led to the tribunal employing a vision divisibility test, which further became pertinent to the direct outcome of both the FTT’s and UT’s decision. This No.1 Deansgate precedent shed light on the matter that ‘weathering strips’ between two buildings, does not necessarily imply ‘structural attachment’.
Whilst the appellant’s appealed the decision made in the first instance, they referred to Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA CIV 1372 1WLR988 as it invoked the principle that a building can be ‘structurally detached’ even if it cannot function independently. It is possible that a ‘structurally detached’ to share common services and external facilities. Having the capability of referring to this case, the appellant has a more incorporated fairness than with just legislation.
The case of Albion Residential Ltd v Albion Riverside Residents RTM [2014] UKUT 6 (LC), was directly pertinent to the outcome of the UT’s decision. Having realised that the definitions of ‘building’ and ‘structural detachment’ is not embedded in the 2002 Act, the Albion case was used as a point of reference for the classification of a ‘self-contained building’. The pertinent aspect of the case was the test it applied as to how the classification is made. This case played a crucial role in the rationale placed forth by the UT as it employed the adapted test due to the similarity in context of the two cases.
Upon reviewing the facts of the case alongside the manner in which the statute was interpreted as well as the use of judicial precedents, the court had analytically embedded both aspects within the outcome of the case. The significant issue faced by the FTT and the UT was in regard to the interpretation of s.72(1)(a) and s.72(2), specifically defining the nature and degree of attachment that is considered ‘structural detachment’. The modus in which the statute is interpreted is the critical aspect directly leading to the outcome of the case. Judicial Precedents played an active role in reaching to a consensus on defining ‘structural detachment’, by employing the use of previous cases regarding RTMs. The Precedents, being legally binding, set forth the ability of the appellant to appeal the FTT’s decision as well as a test which was crucial in the decision of the UT.
Bibliography:
- Commonhold and Leasehold Reform Act 2002
- CQN RTM Company Limited v Broad Quay North Block Freehold Limited [2018] UKUT 183 (LC)
- Albion Residential Ltd v Albion Riverside Residents RTM [2014] UKUT 6 (LC)
- No.1 Deansgate (Residential) Ltd v No.1 Deansgate RTM Co Ltd [2013] UKUT 580 (LC)
- Gala Unity Ltd v Ariadne Road RTM Co Ltd [2012] EWCA CIV 1372 1WLR988