When an RTM Company acquires the right to manage a block, they take over responsibility for the performance of management functions in respect of that block. Management functions are functions in relation to services, repairs, maintenance, improvements, insurance and management. The Landlord is prevented from doing anything that the RTM Company is either required or empowered to do (except if the parties agree).
Often, leases reserve a right for a Landlord to develop neighbouring or adjoining property, despite the fact that this may affect the demised premises. A landlord’s right to develop its property is in conflict with the rights of a right to manage company to manage the building and perform those management functions.
This tension has recently been considered by the County Court in Francia Properties Limited v Aristou (Unreported). Reported by Cassandra Zanelli from Taylor and Emmet Solicitors.
In this County Court case, the Landlord sought a declaration from the Court that it was entitled to develop a new flat on the roof space of the building. The lessee of the current top floor flat objected, as did the RTM Company.
One of the issues considered by the County Court was whether the construction of the new flat would interfere with the management functions exercised by the RTM Company.
Decision of the County Court
The County Court agreed to grant declaratory relief in favour of the landlord.
It was agreed between the parties that the roof and roof space of the building were retained by the landlord.
The Court decided that in the absence of an express of implied prohibition, a Landlord is entitled to use its retained land as it pleases. The roof was part of the Landlord’s retained parts, and therefore the Landlord was entitled to develop it.
Although the roof and roof space formed part of the buildings over which the RTM Company exercised the management functions, the RTM legislation does not take away property rights from the Landlord.
Essentially, what the RTM Company was required to do was manage the roof of the building. Although this would be affected by the works needed to build the new flat (and would change the size of the building and therefore the responsibilities of the RTM Company), this was not an absolute bar to the works.
The tension between the Landlord’s right to develop and the RTM Company’s obligation to perform the management functions could be resolved by allowing the landlord to carry out the works so long as the Landlord took all reasonable steps to minimise the disturbance to the management functions of the RTM Company both during and after the works.
This decision (albeit at County Court level) provides some guidance on how the tension between a Landlord’s proprietary interests (and right to develop) and the rights of an RTM Company can be reconciled.
We understand that permission to appeal the decision has been granted!