Development – Management powers – Withholding of consent — Claimant company purchasing freehold from defendants’ estate – Defendants retaining management powers over property – Claimant seeking to carry out renovations – Dispute arising over proposed piling works – Defendant sending conditional approval letter – Whether defendants approving piling in principle – Whether defendants unreasonably refusing consent – Claim dismissed
The claimant was a Guernsey company, the shares in which were held under a pension trust arrangement for P. In December 2009, the claimant purchased a long lease of the property with a view to modernising it and subsequently renting it to P as a home for him and his family. In December 2010, the claimant purchased the freehold from the defendants under legislation initially enacted in the Leasehold Reform Act 1967, which made provision for the retention of management powers by a common landlord (the defendants) of an estate area for the common benefit of properties within that area. The statutory purpose of an estate management scheme was set out in section 19(1) of the 1967 Act as “to maintain adequate standards of appearance and amenity and regulate redevelopment in the area in the event of tenants acquiring the landlord’s interest in their house and premises”.
In March 2011, architects acting on behalf of the claimant contacted the defendants, enclosing drawings showing work that the claimant proposed to carry out at the property, for the purpose of ascertaining the likelihood of consent being granted. The estate responded that it would not consent to the construction of a basement under the property that had formed part of those proposals (option A) but indicated that it was likely to favourably consider proposals which did not include a basement (option B).
In February 2012, the defendants wrote a conditional approval letter to the claimants, subject to condition precedent 5(a) which stated that structural drawings would have to be provided to the defendants, and that the defendants would be required to comply with each condition precedent before the project could proceed. The defendants contended that piling was inherently disruptive and unnecessary. In July 2012, the claimant commenced proceedings, seeking declarations that the defendants had unreasonably refused, withheld or delayed consent to carry out the works, in particular the piling, and a declaration that, in the absence of consent in writing, the claimant was entitled to carry out the works.
Held: The claim was dismissed.
(1) On the proper construction of the correspondence between the parties, the conditional approval letter gave approval to seven identified items of work but left any matters relating to structural engineering to be approved by the defendants’ structural engineer under condition precedent 5(a) and therefore gave no approval as to how those items of work were to be dealt with from a structural point of view. The letter made no reference to piling as an element of work. In the absence of any express reference to piling within the conditional approval letter, any question of whether piling was going to be consented to depended on it being approved by the defendants under the provisions of condition precedent 5(a). Accordingly, the claimant could not rely on the conditional approval letter as giving approval in principle to piling.
(2) Consent could be reasonably withheld if the good reason was sufficient and not otherwise vitiated. An estate manager acted reasonably in having regard only to the interests of the estate unless there was some disproportion between the benefit to the estate and the detriment to the applicant so that it was unreasonable for the consent to be withheld: Iqbal v Thakrar [2004] 3 EGLR 21; and Dulwich Estate v Baptiste [2007] EWHC 410, [2007] PLSCS 32 applied.
(3) In the present case, the central reason for withholding consent was the inherently disruptive process of piling when it was unnecessary as part of the structural engineering works for the approved Option B works which was a good reason. The fact that the claimant’s intention in relation to piling only came to the attention of the defendants at a late stage did not affect that. It was not central to the reasoning and was not reflective of the wrong mental attitude or an animus against the claimant. It reflected the fact that the claimant was to blame for not making the intention of the piling clear, which on the authorities was necessary for the decision of whether or not to give consent. Accordingly, by reason of the reasonable withholding of consent by the defendants, the claimant was not entitled to carry out piling works as part of the Option B works: British Bakeries (Midlands) Ltd v Michael Testler & Co Ltd [1986] 1 EGLR 64; Governors of Alleyns’s College of God’s Gift at Dulwich v Williams [1994] 1 EGLR 112; Iqbal v Thakrar; and Dulwich Estate v Baptiste considered.
Christopher Pymont QC and Gabrielle Higgins (instructed by Stephenson Harwood LLP) appeared for the claimant; Guy Featherstonehaugh QC and Adam Rosenthal (instructed by Boodle Hatfield) appeared for the defendants.
Eileen O’Grady, barrister