Louise Clark reviews a High Court ruling on the reasonableness of a landlord’s withholding of consent.
Key points
- An application for consent to alterations can continue up to the issue of proceedings
- The question is whether a refusal of consent is reasonable: not all reasons need be reasonable
In Messenex Property Investments Ltd v Lanark Square Ltd [2024] EWHC 89 (Ch); [2024] PLSCS 20, the High Court considered an application for landlord’s consent for alterations which covered a period of almost three years, where consent was withheld rather than refused, right up to the issue of proceedings.
Development proposals
Messenex was the long leasehold tenant of Marina Point, Lanark Square, a four-storey mixed-use building, excluding the basement car park, on the Isle of Dogs, London, E14. Lanark was the freehold owner of the wider estate and also intermediate leasehold owner of
Marina Point.
The lease prevented the erection of any “additional or new building or structure of any kind” on the premises and any alterations to the main structure, external appearance or layout, without the landlord’s prior written consent, which was not to be unreasonably withheld or delayed. It also contained a covenant against overloading the floors, roofs or structure in any manner which would cause undue strain or interference.
Messenex wanted to add three floors to the building to create nine flats and to convert the ground-floor offices to five residential units, for which it had obtained planning permissions. It sought landlord’s consent for the rooftop works by letter of 26 May 2020 and for the ground floor works by e-mail of 24 June 2020.
Lanark sent Messenex a document setting out the further information it would require to consider both applications for consent which included a requirement for preliminary drawings to be submitted for approval before proceeding with final architectural and structural working drawings. A complete set of drawings for the entirety of the works was to be submitted six weeks prior to completion of the works.
Undertakings for legal, architects’ and surveyors’ fees were sought and provided and negotiations on the form of draft licences commenced in October 2020. All major points appeared to have been agreed by December 2021. In February 2022, Lanark sought structural engineers’ drawings for the rooftop works and was told they would follow the grant of consent. In early May 2022, Messenex held signed engrossed licences for both sets of works.
An issue then arose concerning the proposed use of basement car parking spaces as a site compound, which required a separate licence. Messenex agreed to provide a further undertaking for costs on conditions which included that the licences were completed within 14 days, which Lanark rejected. Messenex also refused to pay outstanding service charges as a precondition to completion of both licences.
In March 2023, Messenex sought declarations that Lanark was unreasonably withholding consent.
The law
Section 19(2) of the Landlord and Tenant Act 1927 implies into all leases containing a covenant not to carry out alterations without the landlord’s consent, a proviso that consent to improvements will not be unreasonably withheld or delayed. It was agreed that both the rooftop and ground floor works were improvements for the purposes of the 1927 Act and there was no argument that consent had been unreasonably delayed.
The legislation does not prescribe any particular form or degree of formality for an application for consent but it must be clear to the landlord that a request for consent to particular works has been made and requires a response.
The court accepted Messenex’s argument that the request contained in its application was a continuing one, the nature and scope of which the court should determine by reference to the circumstances and information provided up to the issue of proceedings.
Lanark’s reasons
The landlord’s reasons must be those relied on, to be identified via subjective enquiry as to what was in the landlord’s mind. Whether those reasons were reasonable involves an objective enquiry by the court (Iqbal v Thakrar [2004] 3 EGLR 21). Lanark was required to demonstrate its refusal was reasonable, not that all its reasons were reasonable (No 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2018] EWCA Civ 250; [2018] EGLR 16).
1. Messenex was asked to provide structural engineer’s drawings for the rooftop works but failed to do so: reasonable. The structural integrity of the building was a legitimate concern for Lanark. It was also reasonable – given the interrelationship between the rooftop and ground-floor works – for Lanark to treat them as a package. Messenex’s failure to provide drawings for the substantial rooftop works entitled Lanark to refuse consent to the entire project.
2. The works involved trespass on Lanark’s retained property: unreasonable. While it was not unreasonable for the landlord to consider the effect of the works on its adjoining property, the question of additional rights had been resolved by the date engrossments were circulated. Making the grant of consent conditional on payment of the service charges – a separate dispute – was also unreasonable.
3. Messenex failed to provide unconditional undertakings for Lanark’s reasonable costs of the applications: potentially reasonable. The court had no evidence to allocate the costs between the proposed works and the additional rights. Messenex had provided unconditional cost undertakings at various stages and had not suggested that the sum requested was unreasonable.
4. Lack of clarity in Messenex’s proposals: unreasonable. By the time engrossments of the licences were circulated in February 2022, both parties were clear as to the nature and scope of the proposed works: subsequent negotiations did not affect the position.
The judge then asked himself whether Lanark’s decision to withhold consent was reasonable and concluded that it was, particularly as to the structural issues.
Louise Clark is a property law consultant and mediator
