Application by tenant for consent of landlord to sublet — Consent refused — Whether consent unreasonably withheld — Whether landlord in breach of statutory duty under Landlord and Tenant Act 1988 — High Court holding that landlord in breach of statutory duty — Judgment for tenant
The plaintiff was tenant of a three-floor office building known as St James’ House, Grosvenor Road, Twickenham, Middlesex. It held the premises under a lease dated January 21 1980 for a term of 59 years from August 12 1978, at an initial rent of £45,791 subject to five-yearly rent reviews. The defendant was a Jersey trust company, which acquired the freehold reversion on the lease in about December 1988. It employed an English company to manage the property which was fully authorised to deal with matters concerning the property on behalf of the defendant.
In July 1993 the plaintiff applied to the defendant for consent to sublet part of the property. Consent was not forthcoming by October 5 1993 and the plaintiff sought a declaration that the refusal of the defendant to consider the application for licence to underlet was unreasonable; and damages for breach of statutory duty under section 1, subsections (3), (4) and (6) of the Landlord and Tenant Act 1988.
Held The defendant was in breach of its statutory duty.
1. The defendant had failed to satisfy the court that it discharged the duties imposed on it under section 1 of the 1988 Act.
2. If a landlord had been furnished with sufficient particulars of the transaction, such as the “Heads of terms” agreed between parties to the transaction, then he would prima facie know the substance of the true nature of the transaction so as to be able to make a sensible decision on its merits under section 1(3)(a); although it might still be reasonable to impose a condition that his consent was subject to his further approval of the form of sublease: see Warren v Marketing Exchange for Africa Ltd [1988] 2 EGLR 247.
3. In this case the original application by the plaintiff described the proposed transaction sufficiently for a landlord’s purposes and any legitimate concern which the landlord might have about the terms of the underlease could be perfectly adequately met by means of a condition that it must approve the final form of sublease.
4. Even if on the true construction of section 1(3) a landlord was entitled to decline to consider a tenant’s application for consent unless he gave an undertaking to pay the costs of carrying out that consideration, that could only apply where the undertaking requested by the landlord was for a reasonable sum. On the facts of the present case the requests by the landlord for undertakings in costs were not reasonable although that was not deliberate: see section 1(4),(6).
5. It was clear from the wording of sections 1(3)(b)(i) and (4) that consent in section 1(3)(a) included a conditional consent.
6. Bearing in mind the fact that the transaction was a five-year subletting of part of the building, contracted out of Part II of the Landlord and Tenant Act 1954 and carved out of a lease with over 40 years to run, the defendant was in a position to give and ought reasonably to have given a conditional consent by August 8 1993 at the latest.
7. Moreover, the defendant had given to the plaintiff no notification of any decision contrary to section 1(6).
Jonathan Brock (instructed by Denton Hall) appeared for the plaintiff tenant; Kenneth Munroe (instructed by Hugh Cartwright & Amin) appeared for the defendant landlord.
