In Francia Properties Limited v Aristou the Court considered the question of whether a landlord’s right to redevelop its property conflicted with the rights of an RTM Company to manage the building.
When a building exercises its right to manage under Section 96(2) of the Commonhold and Leasehold Reform Act 2002 (the “2002 Act) the “management functions” of the landlord under the flat leases become functions of the RTM Company.
The central question was whether the transfer of management functions displaced the landlord’s ability to redevelop the roof. The management of the roof had transferred to the RTM company under the legislation. The RTM company argued that the landlord was prohibited from developing by virtue of the legislation. However, the Court found that whilst the 2002 Act required the RTM Company to manage the roof it did not prevent the landlord from being able to carry out the works so long as the landlord took all reasonable steps to minimise the disturbance to the RTM Company’s management functions both during and after the works. It held that there was no evidence that parliament intended the RTM legislation to compromise a landlord’s property rights, particularly in circumstances where the legislation provides no mechanism to compensate a landlord.
The RTM legislation leaves a lot to be desired and it is often difficult to know where the boundaries lie between landlords and RTM companies. Whilst only a first instance decision, the decision provides useful guidance on how to address the tension between a landlord’s retained property interest and the rights of the RTM Company in the context of a development.