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Important decision for RTM companies: Avon Ground Rents Ltd v 51 Earls Court Square RTM Co Ltd

Mon 25 Jan 2016

Important decision for RTM companies: Avon Ground Rents Ltd v 51 Earls Court Square RTM Co Ltd

Avon Ground Rents Ltd v 51 Earls Court Square RTM Co Ltd

The Upper Tribunal (Lands Chamber) has held that, in order for a company to be a Right to Manage company within the meaning of the Commonhold and Leasehold Reform Act 2002 (‘the 2002 Act’), its Articles of Association must confer power to manage "premises" as defined in s.72 of the 2002 Act.

According to Section 73 of the 2002 Act, a company is an RTM company if it is a private company limited by guarantee and 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.

The appellant in this case was the freeholder of a building known as 51 Earls Court Square which contained 13 flats. The leaseholders sought to acquire the right to manage. However, the freeholder denied that the respondent was a RTM company because its Articles of Association stated that its object was to manage "Flat 1-15, 51 Earls Court Square". The freeholder argued that was not "premises" to which the right to manage applied merely flats within such premises.

The First-Tier Tribunal (Property Chamber) found for the RTM company but granted permission to appeal on the basis that there had been conflicting decisions at first instance on the degree of precision required in the Articles of Association.

HELD:

The Upper Tribunal dismissed the appeal. Whilst "Flat 1-15" was not premises strictly within Section 72 of the 2002 Act, if the articles were assessed from the perspective of the "reasonable reader", it was clear they referred to the premises containing the flats.

For further information & advice on right to manage please contact Yashmin Mistry of JPC Law:

Direct Email: YMistry@jpclaw.co.uk

Direct Dial:    020 7644 7294 

 

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