Consent to Assignment Unreasonably Withheld
The landlord had refused a proposed assignment of office premises from a tenant who had occupied the premises as its permanent offices, to a tenant who proposed to use the premises as serviced offices – that is, for short-term rent to others. The lease provided that the only permitted use of the premises was as offices.
Held: The court distinguished between an assignment to a tenant who proposed to use the premises for a purpose which was not prohibited by the lease, and, as in the case before it, in which the assignee proposed to use the premises for the only purpose permitted by the lease. Because the assignee proposed to use the premises for the only purpose permitted by the lease, the court considered that the landlord was unreasonable in refusing consent, in part because the detriment to the assignor was extreme and disproportionate to that which would be suffered by the landlord if consent was granted.
Balcombe LJ distilled seven general principles from his review of the earlier cases: ‘1 The purpose of a covenant against assignment without the consent of the landlord, such consent not to be unreasonably withheld, is to protect the lessor from having his premises used or occupied in an undesirable way, or by an undesirable tenant or assignee.
2 A landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease.
3 The onus of proving that consent has been unreasonably withheld is on the tenant.
4 It is not necessary for the landlord to prove that the conclusions which led him to refuse consent were justified if they were conclusions which might be reached by a reasonable man in the circumstances.
5 It may be reasonable for the landlord to refuse his consent to an assignment on the ground of the purpose for which the proposed assignee intends to use the premises, even though that purpose is not forbidden by the lease.
6 Although there is a tension in the earlier authorities, the better view is that it is permissible to have regard to the consequences to the tenant if consent to the proposed assignment is withheld.
7 Subject to the preceding propositions, it is in each case a question of fact, depending upon all the circumstances, whether the landlord’s consent to an assignment is being unreasonably withheld.’
Judges:
Balcombe LJ
Citations:
[1986] Ch 513, [1985] EWCA Civ 3, [1986] 1 EGLR 39, [1985] EWCA Civ 11
Links:
Jurisdiction:
England and Wales
Citing:
Cited – West Layton Ltd v Ford; West Layton Ltd v Joseph and Another CA 12-Feb-1979
When considering whether to consent to an assignment of a lease, a landlord need consider only his own interests. . .
Cited – Bromley Park Garden Estates Ltd v Moss CA 1982
When considering whether to give consent to an assignment of a lease, the landlord need consider only his own interests.
Slade LJ said: ‘I find it rather more surprising that, when the landlords came subsequently to question the validity of . .
Cited – Houlder Brothers and Co Ltd v Gibbs CA 1925
The landlord owned two adjoining commercial properties. The tenant of one proposed to assign the lease to the tenant of the adjoining property. The landlord refused consent on the ground that if the assignment went ahead, it was likely that the . .
Cited – Bickel v Duke of Westminster CA 1977
The freeholder had refused consent to an assignment of the head lease of a house to a lady who, if she had become tenant under the head lease for five years, would have been entitled to buy the freehold from the Estate. The existing tenant was a . .
Cited – Shanly v Ward CA 1913
A tenant challenged his landlord’s refusal of consent to an assignment.
Held: The refusal was reasonable. The onus of proving that consent has been unreasonably withheld is on the tenant. It was not enough to show that other lessors might have . .
Cited by:
Reviewed – Ashworth Frazer Limited v Gloucester City Council HL 8-Nov-2001
A lease contained a covenant against assignment without the Landlord’s consent, such consent not to be unreasonably withheld. The tenant asserted, pace Killick, that the landlord could not refuse consent on the grounds that the proposed tenant might . .
Cited – Design Progression Limited v Thurloe Properties Limited ChD 25-Feb-2004
The tenant applied for a licence to assign. The landlord failed to reply, anticipating that delay would allow it to generate a better lease renewal.
Held: The delay was unreasonable and a breach of the landlord’s statutory duty, and was an act . .
Cited – Sargeant, and Sargeant v Macepark (Whittlebury) Limited ChD 8-Jun-2004
The landlord granted the tenant a licence to make alterations to the property, but imposed conditions on the use to be made of the resulting premises. The tenant objected.
Held: The landlord was entitled when granting consent to take into . .
Explained – Ashworth Frazer Ltd v Gloucester City Council CA 3-Feb-2000
A landlord could not refuse to consent to an assignment because of a belief, even if reasonably based, that the intended use by the prospective assignee would be a breach of covenant under the lease. That did not mean that a landlord could not after . .
Cited – Sportoffer Ltd v Erewash Borough Council ChD 17-Mar-1999
The landlords were the local authority, and operated a municipal leisure centre. The tenants were the tenants of a squash club and applied for consent to a change of use to use as a leisure centre. The landlords objected on the ground that the . .
Cited – NCR Ltd v Riverland Portfolio No.1 Ltd ChD 16-Jul-2004
The tenant complained that the landlord had unreasonably delayed approval of a proposed underletting.
Held: The court had to bear in mind that the consent was to an underlease, and that therefore there was no privity between the landlord and . .
Applied – Orlando Investments v Grosvenor Estate Belgravia 1989
The lease contained a tenant’s covenant to repair, and not to assign without the landlord’s consent, such consent not to be unreasonably withheld. T, himself an assignee, and therefore not liable on the covenant after assignment, sought consent from . .
Cited – Norwich Union Life Insurance Society v Shopmoor Ltd ChD 10-Apr-1997
The tenants had applied for a licence to assign the property. The landlords had prevaricated, and the judge found their delay unreasonable and that it amounted to an unreasonable withholding of consent. They now appealed.
Held: The 1988 Act . .
Cited – Landlord Protect Ltd v St Anselm Development Company Ltd CA 20-Feb-2009
Guarantee beyond term was unreasonable
The tenant objected that the landlord’s conditional consent to an assignment was unreasonable. The purchaser was a dormant company which had never traded. The clause referred to ‘a respectable and responsible assignee or sub-tenant’. The tenant had . .
Cited – No1 West India Quay (Residential) Ltd v East Tower Apartments Ltd ChD 6-Oct-2016
Consent to assignment – delay
Tenants under long residential leases challenged the refusal of the landlord to consent to particular assignments of apartments. The leases contained provisions saying that such consent was not to be unreasonably withheld. The landlord now appealed . .
Cited – No1 West India Quay (Residential) Ltd v East Tower Apartments Ltd ChD 6-Oct-2016
Consent to assignment – delay
Tenants under long residential leases challenged the refusal of the landlord to consent to particular assignments of apartments. The leases contained provisions saying that such consent was not to be unreasonably withheld. The landlord now appealed . .
Cited – Sequent Nominees Ltd (Formerly Rotrust Nominees Ltd) v Hautford Ltd SC 30-Oct-2019
The tenant promised in the lease not to apply for any planning permission without the consent of the landlord, not to be unreasonably withheld. The tenant wished to apply for planning permission for a change of use of part of the demised premises, . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Leading Case
Updated: 24 April 2022; Ref: scu.187990
