Lessors’ conditional consent to assignment by lessee–Lessee fulfils conditions, and enters into contract to assign lease of baker’s shop–Lessors later discover that intended assignee has been convicted of offences under Food Hygiene Regulations–Whether lessors are entitled to revoke consent to assignment–Held that, the lessee not being at fault, the consent to assign could not be revoked and was effective
By this
summons the plaintiff, Henry Edward Mitten, of 29 Fisher Close, Hythe, Kent,
the lessee under a lease dated June 30 1971 of a bakery shop at 300 Cheriton
Road, Folkestone, sought against his lessors, Ronald Bruce Fagg and Mabel Pearl
Fagg, of 300 Cheriton Road aforesaid, declaration as follows:
1 That on the true
construction of the lease and of a letter dated March 29 1977, a licence to
assign the premises to one Peter Hampton had been granted;
2 Alternatively, that on
the true construction of the lease and in the events which had happened, the
defendants’ refusal to grant a licence to assign the lease to Peter Hampton was
unreasonable;
3 That, notwithstanding
the refusal of a licence to assign, the plaintiff, without any licence from the
defendants, was entitled to assign the lease to Peter Hampton.
The defendants
entered no appearance to the proceedings, but their solicitors had, in
correspondence, produced a newspaper report purporting to show that one Peter
Hampton had pleaded guilty to 39 counts under the Food Hygiene Regulations in
respect of a bakery shop operated by him elsewhere. It was not contended by the
plaintiff that the report was incorrect, or that the person therein referred to
was not the intended assignee.
The question
for the court was whether, on discovering this fact after permission to assign
had become unconditional, the landlord; were entitled to withdraw such
permission.
Louis Schaffer
(instructed by Robson & Co, of Hythe, Kent) appeared for the plaintiff. The
defendants did not appear and were not represented.
Giving
judgment, GOULDING J said that it was one of those cases which caused the court
some anxiety, where a plaintiff sought declaratory relief and the defendant did
not appear. It was not like a simple money claim, where the defendant’s default
was taken as sufficient proof of the plaintiff’s claim. Where, as here, the
court was asked to make a declaration of rights, it was its practice to do so
only on positive proof of the plaintiff’s right, even though the defendant
might take no steps to protect himself. Unless perfectly plain, such cases
inevitably imposed a difficult task on the judge.
The
controversy in this case arose out of the lease of a lock-up shop at 300
Cheriton Road, Folkestone, which, his Lordship was told, was a baker’s shop. A
lease, dated July 30 1971, was made between the defendants as landlords and the
plaintiff as tenant for seven years from Lady Day 1971. That term had expired,
but the tenancy continued for the time being under the Landlord and Tenant Act
1954. Clause 12(b) of the lease prohibited assignment of the premises without
the landlords’ written consent, such consent not to be unreasonably withheld in
the case of an assignee shown to be responsible and respectable.
The plaintiff
made a request to the defendants for permission to assign his tenancy to one
Peter Hampton. The letter containing the request was not before his Lordship,
but it appeared to have been sent in February or early March 1977. On March 17
1977 the first defendant wrote a letter to the plaintiff’s solicitors. He
raised a number of questions, one of them about a damaged or defective blind,
and a second about damage to the forecourt, in respect of which the plaintiff
had made a claim against his insurers which had not yet been paid. The first
defendant said in the letter that he would be away for the following two weeks,
and had instructed his wife, the second defendant, to deal with any
correspondence. On March 29 the second defendant wrote to the plaintiff’s
solicitors saying she had had a telephone call from the plaintiff asking if she
and her husband would agree to an assignment that week. She said in the letter
that she would like confirmation that Mr Mitten was prepared to contribute one
third of the cost of replacing the shop blind and, as insurers had agreed to
pay the cost of repairs to the forecourt less £100, to pay £100 in respect of
this, plus arrears of rent. The plaintiff’s solicitors replied that their
client was prepared to contribute one third of the cost of replacing the blind,
and was also prepared to pay the £100, which they suggested should be taken
from the money held by the defendants under the terms of the lease. They asked
the defendants to forward a draft licence to assign.
So far as his
Lordship knew, no draft licence was forwarded and there was no completion, but
what happened was that on April 13 contracts were exchanged for the assignment
of the premises between the plaintiff and Mr Hampton as purchaser. On May 7
1977, after some intermediate correspondence, Mr Fagg wrote to the plaintiff’s
solicitors: ‘I am advising my solicitors of your intended date of completion.
But there is still a question of damage to be settled. . . . I therefore expect
a cheque for £100 plus the arrears of rent now totalling £60 before the
assignment.’ The plaintiff in fact paid
£178 by his cheque dated May 16 made out to R Fagg, and had proved by his
affidavit that the £178 consisted of rent of £39 a month for two months, plus
the £100 referred to in the correspondence.
On May 24
solicitors acting for the defendants wrote to the plaintiff’s solicitors saying
that their clients were not prepared to consent to the assignment because of
information which they now had, and which ought previously to have been
disclosed to them, concerning the standing of Mr Hampton. They enclosed a
newspaper cutting which, because of the way it had been cut out, did not show
the name or date of the newspaper from which it was taken. It contained a
photograph, or at any rate a representation, of what purported
magistrates for contravention of the Food Hygiene Regulations 1970. It said
that one Peter Hampton pleaded guilty to 39 cases of such offences, and was
fined £40 for each offence, a total of £1,560. The allegations by the
prosecution were stated in some detail, with references to mouse droppings,
insects, saucepan encrusted with food, dirty floor, cobwebs in the baking tin,
etc. That conviction had not been proved before his Lordship, but the plaintiff
did not suggest that the newspaper report was wholly untrue, or that it did not
relate to the Mr Hampton to whom the plaintiff had contracted to grant an
assignment of the premises.
On that
material his Lordship had come to three preliminary conclusions: 1. That the
defendants gave a conditional consent to the assignment by the letter of March
29 1977 signed by Mrs Fagg, and that at the latest by May 23–the date of the
bank stamp on the plaintiff’s cheque–the conditions had been fully satisfied.
2. The plaintiff had no knowledge of the alleged conviction of Mr Hampton until
he received the enclosure in the letter of May 24, ie after the conditions in
the conditional consent had been complied with. The plaintiff so swore in his
affidavit and the defendants had not come to court to challenge it. 3. Assuming
the newspaper report to be correct and to relate to the purchaser of the
premises, and bearing in mind that, although the paper was not dated, the
conviction appeared from internal evidence to relate to some time within the
last year or two, it would not be unreasonable for the defendants to refuse
consent to the assignment of a baker’s shop to Mr Hampton.
The question,
therefore, on the basis of those preliminary conclusions, was whether the
defendants were entitled to withdraw consent on later discovery of a fact which
would have enabled them to withhold it if it had been known to them. No
authority on this question had been cited to his Lordship, and he knew of none,
so he had to do the best he could on principles. It seemed to him that a tenant
who sought a licence for an assignment was not under any duty himself to do any
more than the plaintiff did in such a case. In a letter of February 3 the
plaintiff’s solicitors gave the defendants the name of the intended assignee,
and four references provided by Mr Hampton, one being a bank and the others
being trade or professional referees. It was then for the defendants to make
such inquiries as they thought fit, including, of course, the right to ask the
assignor (the plaintiff) to seek further information himself on any specific
point where he could obtain it.
This, in his
Lordship’s view, was a case where something came to light after consent had
been given through no fault of the would-be assignor. It might be–and he was
careful to express no view at all in the absence of argument and cited
authority–that where a landlord had given consent to assign in ignorance of a
certain material fact, and discovered it before the intended assignor had in
any way altered his position on the strength of the consent, there was an
opportunity to withdraw it. His Lordship was not called upon to decide that,
because the plaintiff, having had the conditional consent of March 29,
proceeded to alter his position by making the required promise to contribute
one third of the cost of repairing the shop blind, and by paying £100 in
respect of the forecourt, as an agreed settlement of that question and, having
had those conditions and knowing that he was in course of fulfilling them, by entering
into a binding contract with Mr Hampton.
In those
circumstances, as the plaintiff was not himself at fault, it did not appear
that the defendants could withdraw their consent. Accordingly the plaintiff was
entitled to a declaration that on the true construction of the lease and the
letter dated March 29 1977, and in the events which had happened, a licence to
assign the premises had been granted.
The plaintiff
was granted an order for costs, not to include costs of or occasioned by an
earlier adjournment.
