Shopmoor’s predecessors demised premises for 150 years at a yearly rent of andpound;100 on payment of a premium. A covenant provided that the tenant was not to assign or sublet without the landlord’s consent, not to be unreasonably withheld or delayed. In April 1996 Norwich Union contracted to sale of the lease, conditional on a subletting of part, and sought consent. Shopmoor requested particulars and, in particular, as to the terms of the conditional subletting. NU answered all the questions and again sought consent. After more correspondence in November Norwich Union wrote claiming that Shopmoor was withholding consent unreasonably, and threatened proceedings. On 4 December Shopmoor’s the agents told NU they would recommend refusal since the subletting would be at a rent substantially below market value. NU sought summary judgment, asking for declarations that the delay in giving consent was unreasonable under section 1(3) of the Act, and that it was entitled to assign and to sublet. Summary judgment was given. Shopmoor appealed.
Held: In deciding whether a landlord was reasonable in not giving consent to an assignment, this should be looked at as at the time when the ‘reasonable period’ for considering and replying to the application expired. If it was then unreasonable to refuse consent, it remained unreasonable to give consent whatever followed. ‘In my judgment, however, the Act of 1988 has altered the law in this respect. It has done so by necessary implication, although not explicitly. The landlord has a statutory duty to the tenant within a reasonable time to give consent, except in a case where it is reasonable not to give consent. In judging whether it is reasonable not to give consent, the position must, in my view, be tested by reference to the state of affairs at the expiry of the reasonable time. If at that time, the landlord has raised no point and there is no point outstanding which could constitute a reasonable ground for refusal of consent, then it seems to me that the landlord’s duty is positively, as expressed by section 1(3), to give consent. The question whether the case is one ‘Where it is reasonable not to give consent’ ought, in my judgment, to be tested by reference to the point at which the reasonable time for dealing with the application has expired. If at that point it cannot be shown that it is reasonable for the landlord not to give consent, then the statutory duty of the landlord is to give consent, the court can so declare and the tenant can, in my judgment, proceed on the footing that the assignment in question would not constitute breach of a covenant not to assign without consent. Accordingly, whether or not Judge Paul Baker QC was correct in his statement of the law in 1984, a similar statement now made would, in my judgment, be a correct statement of the law. There seems to me to be every reason of common sense why that should be so. It would enable there to be fair and sensible dealing between landlords and tenants. It would enable a state of certainly to be achieved at the earliest sensible moment. There seems to me to be no reason of convenience why the ability of the landlord to still keep in doubt the entitlement of the tenant to assign should survive any longer than the reasonable time which the landlord may need for considering the tenant’s application for consent.’ and ‘The Act creates a statutory duty requiring landlords to attend promptly to applications for consent to assignments, or underletting or parting with possession of premises comprised in a tenancy where there is a covenant not to do those things without consent.
It has done so by necessary implication, although not explicitly. The landlord has a statutory duty to the tenant within a reasonable time to give consent, except in a case where it is reasonable not to give consent. In judging whether it is reasonable not to give consent, the position must, in my view, be tested by reference to the state of affairs at the expiry of the reasonable time. If, at that time, the landlord has raised no point and there is no point outstanding which could constitute a reasonable ground for refusal of consent, then it seems to me to me that the landlord’s duty is positively, as expressed by section 1(3), to give consent. The question whether the case is one ‘Where it is reasonable not to give consent’ ought, in my judgment, to be tested by reference to the point at which the reasonable time for dealing with the application has expired. If at that time it cannot be shown that it is reasonable for the landlord not to give consent, then the statutory duty of the landlord is to give consent, the court can so declare and the tenant can, in my judgment proceed on the footing that the assignment in question would not constitute breach of a covenant not to assign without consent’
Judges:
Sir Richard Scott VC
Citations:
[1999] 1 WLR 531
Statutes:
Landlord and Tenant Act 1988 1 2
Jurisdiction:
England and Wales
Citing:
Cited – City Hotels Group Ltd v Total Property Investments Ltd 6-Jul-1984
The landlords had received a request for a consent to a proposed assignment of the lease. They did not, in terms, refused consent, but had not given it notwithstanding a considerable passage of time and lengthy correspondence. The court was asked . .
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 by:
Approved – Go West Ltd v Spigarolo and Another CA 31-Jan-2003
The tenant applied for a licence to assign the lease under section 1. The landlord refused consent, but the parties continued to negotiate. The tenant argued that the landlord’s continuation of negotiations showed the earlier counter-notice to have . .
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 – Aubergine Enterprises Limited v Lakewood International Limited CA 26-Feb-2002
A sought confirmation that it had successfully rescinded a contract for the purchase of a leasehold property from L. Either party was to be able to rescind, if consent to the assignment had not obtained before three days before completion. There . .
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 . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 05 April 2022; Ref: scu.179827
