The recent Supreme Court decision in FirstPort Property Services Ltd v Settlers Court RTM Company and others  UKSC 1 confirms that residential blocks with the right to manage are no longer responsible for providing estate services that affect other blocks on the estate, and are only responsible for their own block. In this insight we take a look at the case and the Court's decision, as well as five things you need to know.
FirstPort involved a block of flats known as Settlers Court on the Virginia Quay Estate in London. The leaseholders of Settlers Court had set up their own right to manage company, Settlers Court RTM Company (the "RTM"), which had taken over responsibility from the existing third-party management company, FirstPort Property Services Limited ("FirstPort").
There were other blocks on the estate, which all shared facilities and amenities with Settlers Court, including maintenance of communal areas, secure parking control systems, CCTV and an on-site concierge.
The RTM claimed that the leaseholders of Settlers Court were not liable to pay estate charges to FirstPort for these services, as the RTM was already responsible for providing wider estate services under the right to manage. FirstPort rejected this, arguing that it was solely responsible for providing estate services, as the right to manage does not extend beyond Settlers Court, where the right to manage had been exercised.
The Supreme Court found in favour of FirstPort, overturning the decision in Gala Unity Ltd v Ariadne Road RTM Co Ltd  EWCA Civ 1372, finding that the right to manage only related to their respective block, and did not extend to providing wider estate services enjoyed by other blocks.
Five Things You Need to Know
- Gala Unity is no longer good law: right to manage companies are no longer responsible for wider estate services and are merely responsible for managing their own block.
- Third-party management companies are solely responsible for managing the wider estate and are entitled to levy estate charges to all leaseholders of the estate, regardless of whether the leaseholders enjoy the right to manage.
- The decision solves the issue of 'dual management' created by Gala Unity: right to manage companies and third-party management companies no longer need to jointly agree who should manage which parts of the estate.
- Leaseholders of other blocks should no longer worry about right to manage companies, where there is no formal legal relationship, providing services to their block when they have no say in their affairs.
- Right to manage companies and third-party management companies should re-assess their current service offering: right to manage companies should consider scrapping wider estate services if leaseholders cannot set-off against the estate charges, and third-party management companies may need to increase their service offering as a result.
If you have any queries or want to find out more about our Property Litigation team, please contact Clive Chalkley.