OM Limited v New River Head RTM Company Ltd
Decision date: 28 October 2010
Neutral citation: [2010] UKUT 394 (LC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether £121,742.39 represented "accrued uncommitted service charges held by" OM Ltd on the date the RTM company acquired the right to manage, and whether the tribunal could award interest. The Upper Tribunal held that those sums were not amounts actually held by OM on acquisition and that s94 CA 2002 transfers only sums (cash/investments) actually held and any interest that had actually accrued on them; the LVT had no power to award additional or hypothetical interest. OM's appeal succeeded and the LVT's decision was quashed; the RTM company's appeal failed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The proper construction of s94(1)-(2) is that "held by him" refers to sums actually held by the landlord/manager on the acquisition date (for example cash in bank accounts or identifiable investments representing service charge monies), not sums merely receivable, previously paid out but later disallowed, or unmet claims against tenants; s94(2)(b) transfers only investments representing service charge sums and any income that has actually accrued on them and does not confer a tribunal power to award hypothetical or compensatory interest.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The tribunal observed obiter that in an extreme factual case "held by him" would include cash actually concealed by a dishonest manager (e.g. cash hidden rather than in a bank) such that factual inquiry under s94(3) remains necessary; it also noted practical difficulties if former contributing tenants must pursue individual restitution claims and criticised the contrary reasoning in Barrington Court LVT as legally wrong and unworkable.