Adriatic Land 3 Limited v Skyline Central One RTM Company Limited

The statutory right to manage under Chapter 1 of Part 2 to the Commonhold and Leasehold Reform Act 2002 applies to premises which satisfy the qualifying conditions in section 72 of the Act. The first of those conditions is that the premises must consist of a self-contained building or part of a building, with or without appurtenant property (section 72(1)(a), 2002 Act).

A building is a self-contained building if it is structurally detached (section 72(2), 2002 Act).

This appeal concerns a building which is agreed to be physically detached from any other structure but which the appellant, Adriatic Land 3 Ltd, nevertheless maintains is not a building in respect of which the right to manage is available because the right to use certain facilities in the building has been shared by the owners with the occupiers of a neighbouring building.

In Ninety Broomfield Road RTM Co Ltd v Triplerose Ltd [2015] EWCA Civ the Court of Appeal determined that the right to manage could not be claimed by an RTM company over more than one self-contained building or part of a building. In Settlers Court RTM Co Ltd v FirstPort Property Services Ltd [2022] UKSC 1, the Supreme Court held that the right to manage a self-contained building did not carry with it the right to share in the management of services provided for the use of all of the buildings on an estate (such as the cleaning or maintenance of estate roads and communal spaces).

In a decision made on 30 June 2025 the First-tier Tribunal, Property Chamber (the FTT) decided that the right to manage was available in respect of the building in this case and that it would be acquired by the respondent, Skyline Central One RTM Company Ltd, with effect from 1 October 2025. The FTT granted permission to appeal its own decision.

At the hearing of the appeal the appellant was represented by Ms Sophie Gibson and the RTM Company by Mr Winston Jacob. At the conclusion of the hearing I dismissed the appeal, and I informed the parties that I would give my reasons in writing at a later date. These are my reasons for dismissing the appeal.

The premises with which the appeal is concerned comprise a self-contained block of flats known as Skyline Central One which is located at 50 Goulden Street in Manchester. The block comprises ten storeys above ground level with two storeys of carparking below ground level. It is agreed that the carparking area extends beyond the ground floor footprint of the building, but nothing now turns on that.

Skyline Central One occupies the whole of the city block bounded by Goulden Street, Mason Street, Bendix Street and Rochdale Road and has no attachment to any neighbouring structure. The FTT inspected it and described it as structurally detached. There is no challenge to that finding of fact.

There are 122 flats in the building, all of which are let on long leases in conventional form. The earliest of the leases was granted in 2006, the year in which Skyline Central One was completed.

On the opposite side of Goulden Street from Skyline Central One stands another building, known as Skyline 2. Both buildings were constructed at about the same time but by different developers. Skyline Central One was constructed by the appellant’s predecessor in title, West Properties (UK) Ltd (West), while Skyline 2 was constructed by Wheatly Properties Ltd (Wheatly).

On 22 September 2006, before construction of the two buildings was complete, West and Wheatly entered into a Deed by which each granted rights over their own building for the benefit of the owners and occupiers from time to time of the other’s building. On subsequent changes of ownership further deeds have been entered into by the purchasers of the two buildings, binding them to comply with the obligations contained in the original Deed (as varied on the disposal of Skyline 2 in August 2013). The appellant is the current owner of Skyline Central One and entered into a deed of its own in January 2015, by which it agreed to comply with those obligations.

The rights granted by West to Wheatly and to the owners and occupiers of Skyline 2 by the 2006 Deed included the right to park up to 80 private motor vehicles (reduced to 37 in 2013) in the carpark beneath Skyline Central One, and the right to come and go over the property to gain access to the car park. In 2013 the facilities to which the owners and occupiers of Skyline 2 had access were extended to include a gymnasium, roof terrace, zen room, concierge, garden and leisure facilities which had been developed in Skyline Central One.

By clause 9 of the original Deed, West covenanted with Wheatly that it would maintain Skyline Central One in such state of repair and condition as to enable the rights to be exercised. In return, Wheatly covenanted with West that it would contribute a fair and reasonable proportion of the costs properly incurred by West in complying with its obligations in respect of the maintenance, repair and renewal of the car park. When additional facilities were added, this obligation was extended to require a similar contribution to their repair and maintenance.

Comparable rights were granted by the original Deed in favour of the owners and occupiers of Skyline Central One to use a gym and leisure facilities in Skyline 2 in return for a fair and reasonable contribution towards the costs of maintaining those facilities.

I was told that the contributions made by Wheatly’s successor to the cost of maintaining the leisure facilities and car park in Skyline Central One are about half of the total. The relevant sum is collected by Wheatly’s successor from the leaseholders of flats in Skyline 2 and paid over to the appellant. There is no direct contractual arrangement between the appellant and any of the leaseholders of flats in Skyline 2.

The respondent is an RTM company established by the owners of flats in Skyline Central One with the intention of acquiring the right to manage. It gave notice of its claim under section 79 of the 2002 Act in October 2023. The appellant disputed that entitlement and questioned the extent to which the right to manage could be acquired over property in shared use following the decision of the Supreme Court in Settlers Court. The claim then proceeded to the FTT, which was satisfied that Skyline Central One is structurally detached and therefore a self-contained building within section 72(1), 2002 Act, and that the respondent is entitled to acquire the right to manage.

The FTT granted the appellant permission to appeal on five separate grounds, as follows:

When she opened the appeal, Ms Gibson invited me to consider grounds 1, 2 and 3 together as they all make essentially the same point. If I was against her on that point, ground 4 was unlikely to arise. As the appeal is now before this Tribunal, ground 5 will be of little consequence.

Ms Gibson summarised the proposition on which her submissions were based, namely, that it matters if the consequence of the acquisition of the right to manage is that an RTM company is unable to perform its functions because (she suggests) part of the cost of doing so is payable by third parties who have been granted rights to use the premises but with whom the RTM company will have no relationship. In those circumstances, the building over which rights have been granted to third parties should not be regarded as a self-contained building notwithstanding that it is otherwise structurally detached. To allow the right to manage to be obtained in those circumstances would, Ms Gibson suggested, be an absurd outcome.

Ms Gibson submitted that the key to the proper interpretation of section 72, 2002 Act, was the decision of the Supreme Court in Settlers Court, in which it was held that the right to manage is confined to ‘premises’ which the RTM company can manage on its own and that it does not extend to shared estate facilities used in common by members of the RTM company and tenants of other blocks on the same estate.

The problem with which Settlers Court was concerned was described by Lord Briggs (with whom Lord Sales, Lord Leggatt, Lord Burrows and Lady Rose agreed), at [2], as one typically arising “where the relevant building (whether a purpose-built block of flats or a house converted into flats) forms part of a larger estate containing other blocks or houses together with facilities or amenities which, under the relevant leasehold structure, are managed by a common landlord or other third party at the collective expense of the tenants of all the blocks or houses in the estate, and which are not exclusively used or enjoyed by the tenants of flats in the relevant building (“the estate facilities”).” The question was whether the 2002 Act conferred upon the RTM company any and if so what rights of management of the estate facilities.

Settlers Court was not concerned, directly at least, with a case where the relevant building itself includes facilities over which third parties have rights, although Lord Briggs emphasised, at [6], that the statutory scheme is “applicable to a very wide variety of different types of residential leasehold arrangements, both in terms of buildings and lease structures” and that the issue was not sensitive to the particular facts of that case. Nevertheless, the “estate facilities” over which the Settlers Court RTM company claimed joint management rights, were communal areas including accessways, gardens and grounds together with a river wall. They were not facilities within the Settlers Court building itself or within one of the other blocks of flats on the estate.

The RTM company in Settlers Court argued that the phrases “rights in relation to the management of premises” in section 71 and “management functions relating to the whole or any part of the premises” in section 96(1) should be widely construed, so as to include the management of property over which occupants of the premises enjoyed rights connected with the use of their flats, even if in common with the occupants of other blocks in the estate.

Lord Briggs began his analysis, at [34], by pointing out that the management functions conferred by the right to manage were identified in section 96(1), 2002 Act, as functions relating to the whole or any part of the premises (meaning the self-contained building or part of a building described in section 72(1)). The RTM company’s right to perform those functions was an exclusive right, exercisable by the company alone except to the extent that it agreed to share management with someone else. That unconstrained right would run into “insuperable problems” if those functions were construed to include management of shared estate facilities ([36]). The Act was not designed for the management of shared facilities and provided only for the RTM company to have obligations to the landlord and to the tenants of flats in the relevant premises, and not to third parties. He continued, at [38]-[40], as follows:

“38.

It may fairly be said that a fundamental purpose of the 2002 Act is to confer management rights and responsibilities on a body (the RTM company) which is accountable to and controlled by the very tenants who will be affected by the conduct of that management, through their right to be members of the RTM company, rather than by either the landlord or a third party manager which will have its own agenda. That works perfectly well if the right to manage is confined to the relevant building which contains the flats occupied by those tenants, together with any facilities which they use exclusively. But it produces the opposite effect if the RTM company’s rights extend to the management of estate facilities used by tenants who are complete strangers to the RTM company.

39.

True it is that the phrase in section 96(1) “functions relating to” does not on its own spell out how close or tenuous that relationship has to be. Nor does the similar phrase in section 71(1), but that section is in my view purely introductory. To find out how close that relationship needs to be one must have regard to the whole of the Chapter to construe that key phrase purposively and in its context. That exercise reveals numerous signposts, all pointing to the need for a very close connection, sufficient to confine the right to manage to functions which the (necessarily) single building RTM company can properly perform on its own, for the benefit and under the supervision of those tenants who will be directly affected by that performance.

40.

The starting point lies in section 72, which imposes a much tighter qualification requirement in relation to premises than the equivalent provision in the 1987 Act. The premises must be self-contained. If they constitute a whole building it must be structurally detached. If part of a building that part must be divided vertically from the rest of the building, be capable of being independently redeveloped and have services which either are or could without interruption to the rest of the building be made independent. All these requirements point strongly towards confining the right to manage to separate premises within which the quality of the management provided by the RTM company affects only the occupants of that building or part of it.”

Ms Gibson submitted that the FTT had been mistaken in limiting its consideration of section 72(1) to the physical characteristics of Skyline Central One as there is an additional requirement for self-containment that the premises be capable of being managed independently such that “the quality of the management provided by the RTM company affects only the occupants of that building or part of it”. Settlers Court was authority that the right to manage cannot be acquired and section 72 is not satisfied if the premises contain shared estate facilities some users of which are strangers to the RTM company, irrespective of whether the facilities form part of the premises or are ‘appurtenant property’.

I do not accept this analysis of Settlers Court, or of section 72.

The difficulty for the RTM company in Settlers Court was to identify some basis on which the right could be extended to estate facilities located outside the premises themselves. Only management functions “relating to the whole or any part of the premises” were included within the scope of the functions capable of being acquired, so a wide interpretation of that phrase was essential, but the Act contained no provisions pointing to such an interpretation and no none of the machinery which would have been required to make it effective. No such difficulty of interpretation is encountered in relation to the management of facilities which are themselves parts of the premises. No matter that third parties may enjoy rights over a car park or swimming pool located within the premises, those facilities and the management functions associated with them clearly still relate to the premises; they could not be more closely related, since they form part of the premises.

The difficulty for Ms Gibson in this appeal is to find some basis for excluding premises which meet the description in section 72(1) from the scope of the right to manage. But section 72(1) is crystal clear in its description of the premises to which the right applies. They need only be a self-contained building or part of a building, with or without appurtenant property, and satisfy the requirements concerning qualifying tenants in sub-paragraphs (b) and (c). If so, the right applies.

The authorities preclude any attempt to narrow section 72(1) by reference to practical difficulties which might be encountered in managing a particular type of premises, or rights which might be enjoyed over them. As Lord Briggs said, at [5], the statutory scheme is “applicable to a very wide variety of different types of residential leasehold arrangements, both in terms of buildings and lease structures”. At [46] he characterised the qualifying conditions as “entirely physical”, as follows:

“…[I]t is instructive to observe the use which is made of the phrase “appurtenant property” in the operative parts of the Chapter. In section 72(1) it is used as part of the larger phrase “with or without appurtenant property” so as to make it clear, for example, that the fact that a building has an appurtenant outhouse or garage does not mean that it fails the requirement that it be self-contained. That is part of an entirely physical set of qualification requirements, not directed at all to the question what easements or other incorporeal rights may serve the building. It is indeed hard to imagine a building with flats served by no easements or other incorporeal rights at all (eg a right to light). So if “appurtenant property” was meant to include all easements and incorporeal rights serving the building it is hard to see how the drafter could have imagined a building without any appurtenant property. But this is plainly contemplated by section 72(1)(a) and makes sense only on the basis that the phrase was purely about physical objects.”

The same view was taken of the qualifying conditions by the Court of Appeal in Eveline Road RTM Co Ltd v Assethold Ltd [2024] EWCA Civ 187. There two adjoining houses in a terrace had been converted into four flats, two in each former house. The issue was whether the unit comprising both houses qualified for the right to manage or whether there was a principle that premises which satisfied the definition of “self-contained building or part of a building” would nevertheless be prevented from qualifying if they contained smaller premises which also satisfied that definition. The Court of Appeal could find no such prohibition in section 72(1). Lewison LJ, who gave the only reasoned judgment, found no assistancein Triplerose, which had concerned a different issue, and he did not accept that property which satisfied the definition of “premises” could be disqualified by some other unstated consideration from being premises to which the right to manage applies. At [36] he echoed what Lord Briggs had said in Settlers Court:

“Whether premises satisfy the definition of "self-contained building or part of a building" is a purely physical test. The definition is concerned only with the structure of the built envelope, its internal structure, and the separability of services.”

It follows that there is no room in section 72(1) for the introduction of additional considerations, beyond the purely physical, to limit the right to manage to only some self-contained buildings or parts of buildings which otherwise fall squarely within it. There is force in Ms Gibson’s submission that some of the difficulties arising out of the sharing of facilities identified in Settlers Court may be encountered in arrangements such as are found at the two Skyline buildings. The RTM company will have no contractual relationship with the occupants of the neighbouring building who have rights to park in its car park and use its gym and other facilities. New payment arrangements for the maintenance and use of those facilities may have to be negotiated or the RTM company may have to reach agreement with the appellant for it to continue to manage them, as section 97(2) allows. Lord Briggs contemplated such arrangements in Settlers Court, at [42], where he said of section 97(2):

“An equally compelling signpost lies in what the Chapter does not contain, but would be expected to contain, if the right to manage premises was intended to include shared estate facilities. Whereas the Chapter is careful and precise in the way in which it restructures the leasehold relationship between the landlord, the third party manager and the tenants of flats within the relevant building so as to admit the RTM company into a workable framework of mutual covenants, it is silent as to how the RTM company is to be retro-fitted into the relationships constituted by leases of flats in other buildings within a multi-block estate. At its highest section 97(2) might enable the RTM company to share management with the landlord or third party manager by agreement, but there is no machinery or means of recourse to the tribunal whereby, in default of agreement, the sharing of the management of the estate facilities rendered inevitable by the First Respondent’s construction is to be structured. And section 97(2) is by no means necessarily there for that purpose. Rather, it sensibly contemplates latitude for the RTM company to allow the landlord or third party manager to continue to perform some management function within the building (or the other facilities used exclusively by the tenants of the relevant building) in place of the RTM company. An example might be a tenants’ car park where only some of the spaces were reserved for tenants of the relevant building. It would make obvious sense for the RTM company to agree to allow the landlord or third party manager to continue to manage the car park as a whole.”

This passage juxtaposes problems created by “shared estate facilities”, by which Lord Briggs means parts of the wider estate, not included within the premises themselves (see [2]), and facilities “within the building (or the other facilities used exclusively by the tenants of the relevant building)”. The difficulties created if shared estate facilities were brought within the scope of the right would arise in part because more than one person would be responsible for managing those facilities. The absence of machinery to deal with that situation was a powerful pointer to the exclusion of shared estate facilities from the scope of the right. The problem of shared management responsibility does not arise where the shared facilities are within the premises themselves. In that situation the landlord is deprived of its functions by section 96(2) and the RTM company has a choice whether “to allow the landlord or third party manager to continue to perform some management function within the building”, such as to manage a tenants’ car park where only some of the spaces are reserved for tenants of the relevant building. Had Lord Briggs regarded third party rights to use facilities within the building as fatal to the availability of the right to manage, he would not have envisaged section 97(2) as having a role in overcoming some of the problems third party rights may give rise to.

Ms Gibson also relied on observation which I made in The Courtyard RTM Co Ltd v Rockwell (FC103) Ltd and others [2025] UKUT 39 (LC) at [76] in support of her case. But The Courtyard was about the meaning of self-containment and whether an undivided space the use of which was shared between different buildings and which extended beneath them could be divided up and treated as forming part of each building. That is not an issue here and nothing said in The Courtyard addresses the problem in this case. I intend no disrespect to Ms Gibson or her skilful argument by abstaining from commenting on other decisions of the Tribunal to which she referred. None addresses the relevant issue and, even if they did, the guidance given by the Supreme Court and the Court of Appeal that the qualifying conditions are purely physical trumps anything said at this level about management of premises as a discrete unit.

For these reasons I am not persuaded by the first three grounds of appeal.

Under her fourth ground of appeal Ms Gibson submitted that the FTT should have determined that the shared facilities prevented the acquisition of the right to manage. As ground 4 was consequential and as I am satisfied that the appeal on grounds 1, 2 and 3 must be dismissed, I need say nothing further about it.

Ground 5 was a complaint that the FTT’s decision did not demonstrate that it had properly considered Ms Gibson’s submissions and did not cite some of the authorities on which she relied or address her arguments on them. There is no obligation on the FTT or any other court or tribunal to refer to every argument deployed or to address every authority relied on. The FTT’s decision explained why it was satisfied that Skyline Central One is a self-contained building. It was unnecessary for it to say more.

I have already made an order dismissing the appeal. In accordance with section 90(4), 2002 Act the acquisition date for the right to manage will be the date which is three months after this decision becomes final.