Estate Services and RTM companies – a new approach announced by the Supreme Court.
Landlords and RTM companies who have struggled to reach agreement on shared estate services in accordance with the concepts established in the Gala Unity* case of 2012 will be happy with the decision of the Supreme Court in the Settlers Court** case in which judgment was given this month which brings certainty to shared services upon the acquisition of RTM.
The Supreme Court has determined that RTM extends only to the management of the building and such appurtenant property over which the occupants of the building have exclusive rights and not to estate services which are shared by the RTM company and other blocks. Those estate management functions are to remain under the control of the previous Manager who has the continuing power to recover those estate costs through the existing leases.
When the Gala Unity case was decided, the court advised RTM companies and Managers that they would need to work together to avoid duplication of estate services as they concluded that the RTM company would acquire the shared management functions in relation to their leaseholders but the previous manager would still owe a duty to the other parties on the estate to continue the services. The natural conclusion was an issue of recoverability for whichever party provided the services unless the parties could reach agreement.
The Supreme Court has now determined that Gala Unity was wrongly decided and so this new approach is not a change to the legislation itself, just how that is to be implemented.
The court acknowledged that because of the Gala Unity case, there are many estates where the RTM company and freeholder are working together to manage those shared spaces and those look set to go back to the control of the previous managers.
If this decision affects your existing site or you would like advice on whether property or services are “exclusively enjoyed” please contact Analise Broomhall to discuss this further on