In Re Town Investments Ltd Underlease: ChD 1954

The court considered a proposed underletting at a rent well below the current market rent, and in consideration of a substantial premium. It had been refused by the Landlord.
Held: The lessor had reasonably withheld consent. It was enough that the lessor has genuine, and not ‘unfounded’ concerns, on matters relevant to the value of his interest in the property, even if the prospect of those concerns being realised is small. Its ability to collect rent, and the value of the property, might be adversely affected in the future. Another concern was related to the lessor’s rights under the 1908 Act, which, when the head lessee’s rent was in arrear, would allow the lessor to require the underlessee to make future payments of rent direct to him. If the rent payable by the underlessee were less than the corresponding rent payable by the head lessee the lessor’s remedy under this section might not be wholly effective. Other concerns were the position which might arise on forfeiture of the headlease or on bankruptcy.
Dankwerts J said: ‘if a reasonable man in the [Respondent’s] position might regard the proposed transaction as damaging to his property interests, so that the [Respondent’s] view cannot said to be unfounded though some persons may take a different view he is not acting unreasonably in withholding his consent.’ and
‘I can apply these decisions to the present case. The dangers to the defendants from the defendants having to forfeit the plaintiff’s leases, owing to failure to perform its obligations by the plaintiff or his assigns, may be negligible. The situation in the event of bankruptcy of the plaintiff or an assign may present no real difficulty. But those who manage the defendant company think that notice under section 6 of the Law of Distress Amendment Act, 1908, might not produce sufficient rent to discharge the sums payable in respect of the rent under the plaintiff’s lease. They are apprehensive also that, if they wished to realize their investment in the lease of No. 28, Berkeley Square, by sale or to raise money on it by mortgage, the reduced rent payable by Mr Romain might prove an embarrassment in their dealings. I cannot say that such a view is unfounded . .’


Dankwerts J


[1954] 1 Ch 301


Law of Distress Amendment Act 1908


England and Wales


AdoptedShanly 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:

CitedPimms Ltd v Tallow Chandlers Company CA 1964
The landlord had refused its consent to an assignment of the remaining term of a lease to a development company, which desired to acquire the lease because of its nuisance value, and to use its interest as a basis for inducing the landlord to enter . .
Lists of cited by and citing cases may be incomplete.

Landlord and Tenant

Updated: 10 June 2022; Ref: scu.468828