Landlord and tenant — Landlord and Tenant Act 1988 — Application to assign and to sublet — Whether consent unreasonably withheld — Whether landlord can rely at trial on reasons first put in affidavits — Whether landlord can withhold consent to subletting where proposed rent less than market value
The plaintiff
tenant held a lease of commercial premises, sublet as shops, for a term of 150
years from December 23 1993 at a yearly rent of £100; the defendant was the
landlord. In June 1996 the tenant sought consent to assign the lease to P, and
to effect a subletting of one of the units to A. The landlord was informed that
the sale of the lease was part of the sale of a portfolio of properties for
£25m to P. In the course of the correspondence, the landlord’s agent sought
details of the proposed transaction, in particular the price attributable to
the premises. A letter before action was sent on behalf of the tenant on
November 26 1996 requesting consent to the assignment by November 29. The
landlord’s agent responded by asking for details of the proposed assignee and
further information about a proposed underlessee of the vacant unit. In
proceedings by the tenant under RSC Ord 14 for summary judgment, the master
decided that the landlord had unreasonably withheld consent to the assignment,
but there was an arguable defence to the tenant’s claim that the landlord had
unreasonably withheld consent to the underletting.
entitled to ask for all relevant information as to the nature and details of
the assignment and as to the substance of the assignee. It is for the landlord
to put to the assignor the questions on which information is sought. The
landlord must formulate his questions and put them clearly and explicitly to the
tenant. Under the Landlord and Tenant Act 1988, in judging whether it is
reasonable for the landlord to withhold consent, the question must 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
proceed on the footing that the assignment would not constitute breach of a
covenant not to assign without consent. The landlord had unreasonably withheld
consent to the assignment. The landlord was not entitled to withhold consent to
the subletting on the ground that this would be at a rent less than the market rent;
withholding such consent, on the ground that the proposed subletting at a rent
less than the market value would be detrimental to future rent levels of the
landlord’s other shops, represented an attempt to obtain a collateral
advantage.
The following
cases are referred to in this report.
Bickel v Duke of Westminster [1977] QB 517; [1976] 3 WLR 805;
[1976] 3 All ER 801; (1976) 34 P&CR 22; [1977] 1 EGLR 27; [1977] EGD 134;
241 EG 387, CA
Bromley
Park Garden Estates Ltd v Moss [1982] 1 WLR
1019; [1982] 2 All ER 890; (1982) 44 P&CR 266; [1983] 1 EGLR 65; [1983] EGD
492; 266 EG 1189, CA
City
Hotels Group Ltd v Total Property Investments
Ltd [1985] 1 EGLR 253
Houlder
Bros & Co Ltd v Gibbs [1925] Ch 575, CA
International
Drilling Fluids Ltd v Louisville Investments
(Uxbridge) Ltd [1986] Ch 513; [1986] 2 WLR 581; [1986] 1 All ER 321; (1985)
51 P&CR 187; [1986] 1 EGLR 39; (1986) 277 EG 62, CA
Premier
Confectionery (London) Co Ltd v London
Commercial Sale Rooms Ltd [1933] Ch 904
West
Layton Ltd v Ford [1979] QB 593; [1979] 3
WLR 14; [1979] 2 All ER 657; (1979) 38 P&CR 304; sub nom West Layton
v Joseph [1979] 1 EGLR 59; [1979] EGD 383; 250 EG 345, CA
Woolworth
(FW) plc v Charlwood Alliance Properties Ltd
[1987] 1 EGLR 53; (1987) 282 EG 585
This was an
appeal by the plaintiff tenant, Norwich Union Life Insurance Society, and a
cross-appeal by the respondent landlord, Shopmoor Ltd, from a decision of
Master Barratt on an application by the plaintiff under RSC Ord 14 for summary
judgment.
Amanda Tipples
(instructed by the solicitor to Norwich Union Group) appeared for the tenant;
Kirk Reynolds QC and Ann McAllister (instructed by Wake Smith & Co)
represented the landlord.
Giving
judgment, SIR RICHARD SCOTT V-C said: This is an appeal against
an order made by Master Barratt on February 21 1998 on an Ord 14 application
for summary judgment in a landlord and tenant matter.
The litigation
concerns property in Sheffield, situated in a street which I understand is a
street of shops called The Moor. In a lease dated December 23 1993 Sheffield
City Council, who I believe are freeholders, demised the property known as
Rockingham House, nos 32 to 54 (even numbers), The Moor, to Norwich Union Life
Insurance Society. It seems to be the case, although I have no details of this,
that the corporation, as well as owning Rockingham House, owned other
properties in The Moor. Be that as it may, Rockingham House was demised to
Norwich Union for a term of 150 years from the date of the lease at a yearly
rent of £100. It would be expected that a substantial premium was therefore
paid. The premium was £460,000.
The lease
contained a number of tenant’s covenants that are relevant to this litigation.
The covenants are in clause 2 of the lease. Subclause (2) required the lessee,
Norwich Union, to pay all existing and future rates, taxes, etc. Subclause (6)
was a user covenant:
(6) Not
without the previous consent in writing of the Council which consent shall not
be unreasonably withheld or delayed to use any part of the buildings erected on
the demised property for any purpose or purposes other than as a saleshop
department store restaurant assembly rooms work-rooms and workshops (the user
of such workrooms and workshops to be limited to such purposes as are ancillary
to the business carried on on the premises) staff living accommodation (but
comprising reasonable accommodation only to such employees of the Lessee or its
tenants or other occupiers of the demised property as shall be necessarily
resident upon the premises for the purposes of the Lessees or its tenants or
other occupiers of the demised property businesses) offices and garage for the
parking only of vehicles …
There was,
however, a proviso that the ground floor of the building should not be used
except as a sales shop and department store. Subclause (15) imposed repairing
obligations on the lessee. The covenant was:
(15) To keep
the demised property and all services within the demised property in good and
substantial repair (including the replacement of any part thereof where
necessary) and decorative condition throughout the said term to the reasonable
satisfaction of the Council.
There was, in
addition, an obligation to pay a proportionate part of various other repair
costs that might have to be incurred for the benefit both of the demised
property and of other neighbouring properties. There was a covenant obliging
the lessee to take appropriate steps to abate nuisances. There was a covenant
requiring the lessee to pay the proper and reasonable administrative charges of
the property services manager for considering and dealing with any application
for consent, approval or authority.
The most
important of these covenants is that relating to assignments. The covenant is
to be found in subclause (9)(b) which provided:
(b) Not at
any time during the last seven years of the said term to transfer assign
underlet or part with the possession of the demised property or any part thereof
and not at any time during the remainder of the said term to transfer assign
underlet or part with the possession of the demised property or any part
thereof without the previous consent in writing of the Council such consent not
to be unreasonably withheld or delayed.
In April 1996
Norwich Union wrote to Sheffield Corporation informing the corporation that
Norwich Union had entered into a conditional contract for the sale of the
leasehold interest in Rockingham House. The letter sought the council’s consent,
pursuant to clause 2(9)(b) of the lease, for the assignment of the lease to a
proposed assignee named as ‘the Pelmore LP’. Pelmore LP was identified as a
limited partnership registered in the State of Delaware, USA, whose registered
place of business in the UK was 20 Conduit Street, London W1.
The ensuing
correspondence led to the corporation informing Norwich Union that the
corporation had granted a lease of the property to a company, the defendant to
this action, Shopmoor Ltd. Shopmoor Ltd had become, vis-à-vis Norwich
Union, the landlord under the 1993 lease. The corporation said also that they
had asked the agents for Shopmoor Ltd to deal with Norwich Union’s request for
consent to the assignment.
The
correspondence to which I have referred led, naturally, to correspondence
between Norwich Union and the agents acting for Shopmoor Ltd. Those agents were
a firm called Lambert Smith Hampton. The partner dealing with the matter was a
Mr Bryan.
The first
communication between Norwich Union and Mr Bryan appears to have been by
telephone, but on June 19 1996 Mr Bryan wrote to Norwich Union, referred to the
telephone conversation and said that he looked forward to:
hearing from
you further with full details of the proposed transaction so that I may then
take my clients instructions.
For all
relevant purposes, therefore, it seems to me, Norwich Union’s request for
Shopmoor Ltd’s consent to the assignment may be taken to have been made in
about mid-June 1996.
In a letter of
June 21 Mr Bryan wrote more fully to Norwich Union. He referred again to his
telephone conversation and said:
I am sure you
will agree there is a need for more information in respect of the proposed
transaction.
I would
therefore be grateful if you could let me have full details as to precisely who
the purchaser is and the terms of the transaction especially bearing in mind
your reference to the condition of the letting of the ex Nightingales shop.
I should
explain that last reference. I have already mentioned that the proposed
assignment to Pelmore LP was conditional. The condition was the letting by
Norwich Union of a part of the demised premises, the part described in this
letter from Mr Bryan as ‘the ex Nightingales shop’. It was no 54 The Moor.
In response to
the letter of June 21, to which I have just referred, Norwich Union gave some
details to Mr Bryan. In the letter of June 24, the author, Mr Coles, said:
The Society
has entered into a conditional contract to dispose of its interest in
Rockingham House to The Pelmore LP, a limited partnership registered in the
State of Delaware, USA pursuant to The Delaware Revised Uniform Limited
Partnership Act …
Then a
reference is given:
acting by
Pelmore GP LLC, a limited liability company formed under The Delaware Limited
Liability Company Act …
A reference to
that Act is then given:
whose
registered office is c/o 1013, Centre Road, Wilmington, County of New Castle,
Delaware …
Then a
Delaware postal reference is given:
and whose
registered place of business in the UK is 20 Conduit Street, London, W1R 9TU.
The Contract
is conditional upon the Society achieving a letting of the Nightingale’s unit
upon current market terms, and Robin Smith of Messrs Smith Price is the
Society’s letting agent.
Rockingham
House forms part of the portfolio of 13 properties being sold to The Pelmore
LP, and completion has already taken place in respect of 11 of those
properties. The total consideration to be paid by the Purchaser is in the
region of £25m. The Society is of the opinion that the Purchaser is well able
to observe the obligations of the Lessee contained in the lease dated 23rd
December 1993.
If you
require any further information, please do not hesitate to contact John
Watkins, or if in respect of the letting of the Nightingale’s unit, Robin
Smith.
Accordingly,
the Society seeks your client’s consent to the proposed assignment pursuant to
Clause 2(9)(b) of the Lease dated 23rd December 1993.
I would draw
particular attention to the offer in that letter to provide any further
information that Mr Bryan might seek.
The
correspondence continued between Mr Bryan, writing on behalf of Lambert Smith
Hampton, and Norwich Union officers. By a letter of July 4 1996 Norwich Union
sent Mr Bryan a schedule detailing Norwich Union’s subtenants of Rockingham
House and giving a little further information about the reason why the
Nightingale unit had become vacant. There had, apparently, been a disclaimer by
liquidators. Details were given in regard to other sublettings about which some
questions had been asked by Mr Bryan. Finally, the Norwich Union letter said:
Completion of
the sale of the Society’s Headlease is conditional upon obtaining an acceptable
letting of the former Nightingales unit or proving liability of the former
tenants under privity of contract. As you are aware, the sale forms part of a
much larger portfolio of properties, totalling some £25M. Unfortunately I am
unable to give you an individual breakdown of the purchase price relating to
this individual transaction as it is confidential to the parties concerned. Whilst
I can appreciate that our application for your Client’s consent is an
opportunity for a wider information-gathering exercise, the sale price is not
relevant to your Client’s assessment of Pelmore LP as a future tenant paying a
ground rent of £100 per annum.
I draw
attention to that passage, because it indicates that Mr Bryan had been pressing
to be told what apportionment of the total £25m price had been attributed to
Rockingham House, and that Norwich Union had refused, at this stage at least,
to provide that information. The response from Mr Bryan, dated July 9, said
that his instructions were clear:
there is an
absolute need to receive full details of the proposed transaction before my
clients can consider the application any further.
The details of
the proposed transaction that he had requested, and had not been given, related
to the apportionment of the £25m price so as to indicate what was being
attributed to Rockingham House.
Mr Kirk
Reynolds QC, counsel for Shopmoor before me, has submitted that, in asking to
receive full details of the proposed transaction, Mr Bryan was asking not
simply for details of the proposed transaction, but was asking, and should have
been understood to have been asking, also for details of the financial worth of
the proposed assignee. I am unable to read that letter in that sense. If Mr
Bryan wanted details of the financial status of the proposed assignee, he could
easily have so asked. The question could have been shortly, simply and clearly
put. The matter that he was concerned about, he did put shortly and clearly. He
was concerned to receive full details of the proposed transaction which, in the
context of the correspondence, meant he wanted to know what price had been
attributed to Rockingham House.
The next
letter from Norwich Union related to the underletting. In a letter of October
16 1996, that is, over three months after the previous letter, Norwich Union
addressed that subject. There is some evidence in the affidavits before the
court explaining why that three-month delay occurred. The explanation put
forward by Mr Bryan is that in a discussion with one of the officials acting
for Norwich Union, it was agreed that until the underletting had been arranged,
there was no point in pursuing the request for consent to the assignment,
because the assignment was conditional on the underletting. So, Shopmoor Ltd
took no further step during those three months in deciding what it was going to
do about the application for consent to the assignment. The ball was, so to
speak, in Norwich Union’s court to make final arrangements for the
underletting, at which point it would be in a position not simply to continue
to press its request for consent to the assignment, but also to seek consent to
the proposed underletting. The underletting would have to be completed if the
assignment was to be completed, so both consents would be necessary.
In the letter
of October 16, the author, Mr Coles, gave details of the proposed underletting.
He said:
the Society
have now agreed a letting of the former Nightingale’s unit … to Arc Retail
Management Limited … for a term of 10 years at a commencing rental of …Year 1 —
£95,000 …
Then the rents
for years two, three, four and five, with increasing rents in each of those
years, are specified. The letter said there would be an upwards-only rent
review at the end of the fifth year. It said that the tenant would receive a
rent-free period of nine months and was to lodge with the society a rent
deposit equivalent to six months’ rent with the society. The letter said the
premises were to be used as Class A1(a), that is to say ordinary retail
premises for the sale of ladies’ fashions and ancillary items:
or for such
other [retail] use as the Society may consent to, such consent not to be
unreasonably withheld.
The letter
said that the parties were working towards providing the tenant with occupation
of the premises by no later than October 31, and, accordingly, the letter
sought consent pursuant to clause 2(9)(b) of the lease for the proposed
underletting to ARC Retail Management Ltd. The letter then referred, again, to
the completion of the assignment to Pelmore LP. It referred to the rent payable
under the headlease as being for a nominal amount, that is to say the £100 pa,
referred to the continuing liability that Norwich Union would have as original
lessees and said:
I can see no
reason why your Clients should continue to delay the giving of consent.
The letter
said that Mr Coles looked forward to:
hearing from
you at your earliest opportunity that your Clients will consent to both the
letting and the assignment.
By his letter
of response on October 23, Mr Bryan raised questions about costs and fees. He
asked for confirmation that Norwich Union would be responsible for: paying his
firm’s fees of £250 plus VAT; the solicitors’ fees, also put at £250 plus VAT;
and the fees of his client’s building surveyors on a time-chart basis of £79
per hour, plus VAT and expenses. He said:
Once I
receive approval to the above I will then write to you seeking whatever further
information is required.
Finally, he
referred to the previous correspondence regarding consent to the assignment and
said:
I did ask for
full details of the proposed transaction …
That could, in
my judgment, only be read as a reference to his request to be told the
apportioned price to be attributed to Rockingham House. He ended by saying:
I take the
view that until that information is forthcoming my clients are not under any
obligation to commence consideration of the application.
The letter of
October 23 was the first in which the question of fees had been mentioned. The
position regarding fees and costs when a landlord’s consent to assignment is
sought is that, under a section of the Landlord and Tenant Act 1927, the
landlord is permitted to require the tenant seeking consent to pay a reasonable
sum towards the landlord’s costs of considering the application.
The last
paragraph of Mr Bryan’s letter of October 23 referred again to the ‘full
details of the proposed transaction’. As I have already said, in the context of
this correspondence I read that reference as relating to Mr Bryan’s requirement
to be told the part of the overall price of £25m that had been attributed to
this particular property, Rockingham House.
Mr Reynolds,
for Shopmoor, has accepted, rightly in my opinion, that a landlord whose
consent is sought to a proposed assignment is not entitled to be told the price
at which the transaction is taking place. It must follow that this insistence
by Mr Bryan to be told the apportioned price before consent was given was not a
reasonable requirement.
Norwich
Union’s response of the 24th, however, did give Mr Bryan the apportioned price
that had been sought. The letter said that the apportionment in respect of
Rockingham House was £3.7m, but made the point again that the transaction was
conditional in that it was subject to the reletting of the Nightingale unit at
no 54 The Moor. The letter informed Mr Bryan that:
The Society
has no further information it can give regarding the Assignee and I request
that your Clients now give full consideration to the assignment and give their
consent.
Mr Reynolds
submitted that it was clear from this letter that Norwich Union knew that
Shopmoor, through Mr Bryan, was worried about the financial status of the
assignee. I am not prepared to accept that that is a reasonable reading of this
letter or of the correspondence leading up to this letter. There is no
reference in any letter to the financial status of the proposed assignee. A
landlord with worries in that regard can reasonably, in my view, be expected to
make them explicitly clear. Whatever may have been in the mind of Mr Bryan when
writing the letters he wrote, and when reading the letters from Norwich Union,
I am not satisfied, on a fair and normal reading of this correspondence, that
the financial status of the proposed assignee was something he had in mind at
the time.
The letter of
the 24th made clear Norwich Union’s wish to have a decision on their
application for consent to the assignment given speedily. The response to that
letter, a letter of October 29 1996, from Mr Bryan, contains some comments on
fees, particularly in relation to the costs of Shopmoor’s building surveyors
who, Mr Bryan suggested, would need to consider any shopfitting works proposed
to be carried out by the tenant to whom Norwich Union proposed to sublet the
Nightingale unit. In the final paragraph of the letter, Mr Bryan asked for
information on the proposed works, or the lack of them, so that he could
arrange an inspection by the building surveyors.
As to the
assignment and consent to the assignment, he said he was unable to progress the
matter because the client, by which he meant the
The next letter, dated November 7, from Norwich Union expressed Norwich Union’s
agreement to cover Shopmoor’s surveyors’ reasonable fees, up to an agreed
maximum. The amount of the agreed maximum was never specified, but none the
less this letter, in my view, prevents the issue of costs from being a ground
upon which consent could reasonably have been withheld.
Norwich Union
then, by a letter of November 18, sent to Mr Bryan details of the shopfitting
proposals which had been received from the proposed subtenant of the
Nightingale unit, and asked for those to be considered. The letter said:
This should
therefore complete all the information required for your clients to assess the
proposals for this proposed sub-letting and as previously confirmed by Mr
Coles, we will of course underwrite your client’s reasonable and proper costs
in connection with this application.
There then
followed, on November 22, either a meeting or a telephone conversation (it is
not quite clear which) between the Norwich Union official dealing with the
matter and the Shopmoor executive, to whom I referred a moment ago, Mr Warren.
There is a note from the Norwich Union official recording what was said in the
course of this conversation, or meeting (as the case may be). It is apparent
from this note that Mr Warren had asked for further information regarding the
proposed subletting. The note reads:
I was very
surprised to learn that further information was still required on ARC in
connection with our application relating to this proposed sub-letting. In view
of the fact that the original proposal was sent to you in the middle of last
month and there has been further correspondence concerning fees, why wasn’t
this need for further information communicated to us earlier?
The fax
message went on to give information about other trading outlets from which ARC
traded and identified ARC’s landlords in respect of those outlets. The message
ended by saying:
Please
confirm by return that you now have sufficient information to process this
application without further delay.
On November
26, consent to the assignment and consent to the underletting still not having
been given, Norwich Union sent Shopmoor Ltd a letter before action. The letter
referred to the fact that the applications for consent had been made some
considerable time ago and that no decision on them had been communicated by
Shopmoor. It said:
we are of the
view you are withholding consent to assignment unreasonably and withholding
consent to underletting unreasonably.
The letter
said that unless the consents were given by 4pm on Friday November 29,
proceedings for declarations would be commenced. That letter before action
produced two letters in response from Mr Bryan, which are worth a certain
amount of attention. Each of these letters was dated November 28 and I will
take the letters in the order in which they appear in the bundle of documents
before me.
The first of
these letters said, in para 2:
2.
Information is still required from your company on the proposed underletting
and in this direction I can do no better than to enclose the following:
(i) My letter
to Mr Watkins of 26th November
(ii) My
letter to Mr Watkins of today’s date.
The latter
letter is the second letter of November 28, to which I shall be referring in a
moment. If one goes to the letter to Mr Watkins of November 26, one finds no
request for information in that letter. There is a reference to fees.
Mr Bryan says
he thinks the question of fees has been left in a somewhat vague manner. But
there is no request for information. So, what he had in mind in referring to
his letter of November 26 is not clear to me. After referring to his letter to
Mr Watkins of November 28, which, as I have said, I will come to, Mr Bryan went
on to refer to the assignment. He said:
we do not
appear to have a formal application for this consent.
That was a
quite astonishing remark for him to have made. A formal application for consent
had been made as long ago as June and had been pressed for in the June and July
correspondence and in the correspondence in October and November. An inference
which might be drawn from Mr Bryan’s remark that there had been no formal
application for consent is that Mr Bryan had simply not bothered to reread the
earlier correspondence. His letter went on:
We have no
information whatsoever on the details of the proposed assignee, unusually
namely Pelmor [sic] LP. Shopmoor are entitled to know the nature of the
proposed assignee.
Now, that is
an extraordinary remark to make, bearing in mind that in the letter of June 24
1996, details of Pelmore LP had been given and Shopmoor had been told the
nature of the proposed assignee. As to this, Mr Reynolds repeated his
submission that what Mr Bryan was asking for were details of the financial
substance of Pelmore, but I repeat an observation I have already made. If
Shopmoor wanted details of the financial substance of Pelmore LP, there was no
problem in Mr Bryan formulating the question in clear and explicit terms. At no
stage had that been done.
In his
affidavit, sworn for the purposes of these proceedings, Mr Bryan has said, in
para 6:
It appeared
to me entirely reasonable for the Defendant to have detailed information about
the state of Pelmore’s finances so as to satisfy itself as to Pelmore’s good
character and standing.
Now, if a
question along those lines had been, at any stage, addressed by Mr Bryan to
Norwich Union, there is no reason to suppose that the question would not
immediately have been answered. But no question on those lines was ever
addressed to Norwich Union, and it is, to my mind, unsatisfactory for Mr Bryan
to seek, by an affidavit sworn on February 4 1997, to amend and clarify, to the
disadvantage of Norwich Union, the correspondence which had taken place over
the relevant months in 1996.
Turning to Mr
Bryan’s other letter of November 28 to Mr Watkins, the letter commences with a
reference to the meeting between Mr Warren and Mr Watkins on November 22 — the
meeting which led to the fax message to which I have already referred — and
then continues:
Mr Warren
reminds me that he mentioned to you when you met him on 22nd November that
further information is still required in respect of Arc Retail Management
Limited.
It will be
recalled that in the faxed message certain additional information was given
about ARC, in particular in connection with its trading outlets and the
identity of the landlords at some of those outlets. This letter of November 28
went on to identify the further information that was still required:
More
information as to who the tenant actually is, ie have you taken references out
and can you supply the registered address?
That seems to
me a rather odd item of information to be sought. Shopmoor knew who the tenant
actually was. It was ARC Retail Management Ltd. The reputation of ARC was not
something which had been previously raised. There is no suggestion that ARC was
thought to be undesirable in the sense of having a record of unsatisfactory
trading practices or anything of that character.
The second
item of ‘further information’ still required was ‘where currently trading’. But
that was information which had been given by Norwich Union in the faxed message
of November 22 to which I have referred. Here, again, it seems that Mr Bryan
had not looked back at the previous correspondence.
Third, the
letter asked for information about ‘precise user’. But details of the precise
user had been given in the original application for consent. The letter of
October 16 had said that the premises were to be used as:
class A1(a)
premises for the sale of ladies fashions and ancillary items or for such other
retail use as the Society may consent to …
The request
for more precise user seems to me to have been entirely misplaced. The final
item of further information that was requested was:
4. Further
information from you to allay our concerns that they operate as ‘temporary
traders’.
That, too, was
a matter which had not been specifically mentioned in any of the previous
letters. It may or may not have been something which Mr Warren mentioned to Mr
Watkins at their meeting on November 22. It is not referred to in Mr Watkins’
faxed message of that date and there is no evidence before me from Mr Warren.
It is a matter, however, which has been relied on by counsel to some extent and
it is a matter to which I shall therefore refer.
Mr Bryan’s
letter to Mr Watkins went on to make comments regarding other subtenants of
Rockingham House, but nothing, for present purposes, turns on that.
Mr Watkins, on
behalf of Norwich Union, answered Mr Bryan’s second letter of November 28 by a
letter of November 29. Mr Watkins told Mr Bryan that Norwich Union had not
taken out references, but had seen ARC’s latest accounts. He gave its
registered address. He said, as he was entitled to do, that his faxed message
of November 22 had given the details of where ARC was currently trading. He
reminded Mr Bryan that the use intended by ARC had been set out in the letter
of October 16. As to temporary trading, Mr Watkins said he could not give any
additional information, but pointed out that ARC was proposing to enter into a
10-year lease for the unit in question and that commitment under a 10-year
lease was hardly something that would be described as ‘temporary trading’. This
letter ended by saying:
Can you
please now confirm that your clients will be dealing with this matter without
further prevarication.
However, Mr
Watkins was too optimistic. By a letter of December4 Mr Bryan said that he
would like to see a copy of the latest ARC accounts and be told the reason why
Norwich Union had not taken out references. He said he had not previously seen
the fax of November 22 and said that he was not concerned with the standing of
ARC’s landlords at its various trading sites, but was more concerned with the
standing of the locations. He then referred to the user point and said that the
user suggested by the letter of October 16 was ‘far too wide in my opinion’.
Finally, Mr Bryan said that if the 10-year lease proposed to be granted to ARC
was the first long lease ARC had entered into, he thought that Norwich Union
should have taken references about ARC.
This letter
reads to me like the letter of an experienced prevaricator. It does not seem to
me that Mr Bryan was reasonably considering the question of whether his clients
had any ground for withholding consent, either to the assignment or to the
subletting. The final paragraph of his letter is one which raises the point
that, in the end, Mr Reynolds seeks to rely on. The paragraph says:
Now, turning
to the Body Care subletting …
That was
subletting of another part of Rockingham House:
which you
quite rightly say and I do apologise was set out in the schedule attached to
your letter of 4 July. Having looked at this schedule I see that it provides an
analysis of £63.00 per sq ft in terms of Zone A.
The very
point that concerned me was that why you are now seeking consent to a
subletting at a rental substantially less than that. Furthermore and of course
perhaps of more importance, the phased rental set out in Keith Coles’ letter of
16 October is substantially less than the rents passing and I can only
therefore reach the conclusion that I must recommend to my clients to turn down
your application for this subletting.
As far as the
assignment is concerned I did deal with that in my letter to Miss Leslie dated
28th November.
The November
28 letter that he had in mind was the first of the two November 28 letters to
which I have referred. But there is nothing in that letter about the
assignment.
Proceedings
were then commenced, affidavits were sworn on each side and Norwich Union,
taking the view that the matter was so clear as not to require a full trial,
applied under Ord 14 for summary judgment, both for a declaration that the
delay by Shopmoor Ltd, in dealing with the applications for consent to the
assignment and to the underletting, represented an unreasonable delay, and for
a declaration that, in the circumstances, Norwich Union was entitled to assign
the 1993 lease to Pelmore LP and to sublet the unit in question to the proposed
tenant, ARC Retail Management Ltd.
Master Barratt
took the view that there was no arguable defence to Norwich Union’s case
regarding consent to the proposed assignment, and he made the declaration
sought so far as the assignment was concerned. However, he took the view that
there was an arguable point available to Shopmoor Ltd so far as the
underletting to ARC was concerned. As to that, therefore, he refused to make
the declarations that had been sought and granted leave to defend.
Shopmoor Ltd
has appealed against the master’s order so far as the consent to assignment is
concerned. Norwich Union has appealed against the master’s order so far as
consent to the subletting is concerned. Those are the two appeals which have
been the subject of the hearing before me.
It is
convenient to take the two in turn. As to the assignment, Mr Reynolds submitted
that a landlord whose consent was requested to an assignment was entitled to
ask for all relevant information as to the nature of the assignment, details of
the assignment and as to the substance of the proposed assignee. I would readily
accept that that is so, but it is for the landlord to decide what information
to ask for. It is for the landlord to put to the proposed assignor, the
landlord’s tenant, the questions on which information is sought. Of course, in
many cases it will be obvious, to the tenant seeking the landlord’s consent,
what matters are likely to concern the landlord, and the tenant may anticipate
the landlord’s questions by sending a volume of information with the
application for consent itself; and that is no doubt usual and convenient.
However, in the last resort, it is for the landlord to decide what information
it needs before it can make up its mind what to do about the application for
the consent, and it is for the landlord to formulate its questions and put them
clearly and explicitly to the tenant with whom it is dealing.
Mr Reynolds
submitted that, in the present case, information had been requested by Shopmoor
Ltd about the financial substance of Pelmore LP that had not been provided by
Norwich Union. If that submission had been well founded, then it would be
impossible to say that Shopmoor Ltd had unreasonably withheld its consent to
the assignment, because it is common ground that no information about the
financial standing of Pelmore LP has been provided to Shopmoor Ltd. In my view,
however, Mr Reynolds is unable to point to any explicit request for that
information contained in any of the many letters that passed from his client’s
side to Norwich Union over the many months covered by the correspondence in
this case.
A question
which has exercised me in hearing this appeal is what the result of that state
of affairs should be. I would agree that, prima facie, a landlord is
entitled to be told something of the financial substance of a proposed
assignee, someone with whom the landlord will be coming into privity of estate
upon the completion of the assignment. I would agree that, if the landlord puts
such requests in reasonable terms, and the information is not forthcoming, the
landlord is entitled to withhold consent and the withholding could not, in
those circumstances, be described as unreasonable. In this case, however, as I
have said, no request for that information was ever put to Norwich Union.
Over a long
period covered by the correspondence, Norwich Union was not given to understand
that the absence of such information was an obstacle to the granting of consent
and, therefore, to the completion of the proposed assignment. The question is
whether the raising of such a point, when the matter comes before the court,
can enable the
supplying that information.
The point is
the subject of some judicial authority. In City Hotels Group Ltd v Total
Property Investments Ltd [1985] 1 EGLR 253 Judge Paul Baker QC, sitting as
a judge of this court, had to deal with a question whether landlords’ consent
to an assignment had been unreasonably withheld. The case was one in which the
landlords had not, in terms, refused consent, but had not given it
notwithstanding a considerable passage of time and lengthy correspondence. The
judge held that, in the circumstances, the landlords were unreasonably
withholding their consent, and he held, as a consequence, that the tenants were
entitled to proceed with the proposed assignment without the landlords’
consent. He dealt with the question whether the landlords could raise new
matters for the purpose of resisting the declaration, matters not raised at the
time when the correspondence was being conducted. At the end of his judgment,
at p257, he said:
It was not
until March 7 that a further requisition of information was sent along.
Then he cited
from the letter, and commented that the letter:
then goes on
to deal with matters which have been adumbrated in this court and which I have
commented upon. That was answered on March 30 by which time the writ had been
issued. It was issued the day after the letter of March 7. It had not been
served, but I think it was shortly to be served. Further correspondence follows
there. Looking at the matter when the writ was issued on March 8, it seems to
me that the landlords were then far too late to raise these inquiries. They had
had the information from the tenants which was submitted in December, and
completed by January, and this was a substantial transaction. The tenants were
entitled to have the matter dealt with expeditiously, having made their
application, and the landlords were supplied, as I find, with full information
about it. Had this letter of March 7 been sent within a reasonable time after
the letter of December and the accounts in January, had it been sent, say, in
place of the letter that has been sent about the accounts on January 24, it may
well be that one could readily find that the landlords were not being
unreasonable, applying the test in the Pimms case, in pressing for some
further assurances on the lines of this letter. But to leave it until March 7
before they finally formalised what is worrying them seems to be far too late.
Hence at the time of the writ on March 8 they were unreasonably withholding the
licence to assign, and therefore I propose to make the declarations that are
sought in this case.
So, the judge
took the view that, even if the request for information was, taken by itself, a
reasonable request that, had it been asked at the right time, the tenant could
have been expected to comply with, the landlord could not, once an unreasonably
long period had elapsed without that information having been requested, rely on
the absence of the information in order to resist a declaration that the tenant
was entitled, notwithstanding the absence of consent, to assign.
Whether that
approach represented the law at the time that the learned judge gave judgment
on July 6 1984 may be open to some question. In Bromley Park Garden Estates
Ltd v Moss [1982] 2 All ER 890* the Court of Appeal had had to
consider whether consent to an assignment had been unreasonably withheld. Slade
LJ in that case said, at p901h:
*Editor’s
note: Also reported at [1983] 1 EGLR 65; (1982) 266 EG 1189
I find it
rather more surprising that, when the landlords came subsequently to question
the validity of the assignment in such circumstances, they should be free to
rely on reasons for their refusal which had not been mentioned to the tenant,
or even hinted at, either before or in the letter of 16 September 1980 which
contained the outright refusal. In the absence of authority, I would have
thought there was much to be said for the view that a landlord who, by stating
to the tenant one reason only for refusing his consent to an assignment, that
reason being a demonstrably bad one, provokes a tenant into assigning without consent,
should not thereafter be allowed to rely on unstated reasons for the purpose of
attacking the validity of the assignment. However, authorities … appear to
establish that the court, in considering questions of reasonableness or
otherwise in this context, is not confined to the reasons expressly put forward
by the landlord prior to the date of the refusal.
The law,
however, has moved on from the state in which it stood when Bromley Park
Garden Estates v Moss and City Hotels Group v Total
Property Investments were decided. The significant change since then is
that the Landlord and Tenant Act 1988 has been enacted. The Act was intended to
remedy the state of affairs in which a landlord, by his dilatory failure to
respond to an application for consent to an assignment or to subletting, could
cause substantial financial damage to the tenant without the tenant having any
remedy for that damage. A tenant might lose a valuable property transaction
because of the landlord’s failure to deal expeditiously with the application
for consent. It is clear that it was an intention of the Act to remedy that
state of affairs. 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.
Section 1(3)
provides, in the circumstances postulated, that, the landlord:
owes a duty to
the tenant within a reasonable time —
(a) to give
consent, except in a case where it is reasonable not to give consent,
(b) to serve
on the tenant written notice of his decision whether or not to give consent
specifying in addition —
(i) if the
consent is given subject to conditions, the conditions,
(ii) if the
consent is withheld, the reasons for withholding it.
So there is a
statutory duty on the landlord to deal with the application and to give the
consent, except where it is reasonable not to do so, and if the landlord
decides to withhold consent, to give the tenant reasons for the decision.
The Act having
imposed the statutory duty, no doubt an action for damages for breach of the
duty would lie in any case in which the breach could be established and in
which it could be shown that the breach had led to damage. But the Act does
not, expressly at least, make clear what the position is regarding the tenant’s
ability simply to assign the lease or grant the underlease or part with the
possession of the demised property in a case where the landlord has failed for
an unreasonably delayed period to deal with and consent to the application.
Mr Reynolds
has submitted that, even if I were to conclude, as I do conclude, that in the
present case the landlord, Shopmoor Ltd, delayed for an unreasonable time in
dealing with the tenant’s application for consent to assign to Pelmore LP, the
fact that no information about Pelmore LP’s financial circumstances was
provided to the landlord, prevents a conclusion that now, April 1997, a
declaration can properly be made that Norwich Union is entitled to assign to
Pelmore without the landlord’s consent. He accepts that Judge Paul Baker’s
statement of principle in the passage from the judgment in City Hotels Group
that I have read is inconsistent with his submission, but contends that that
does not represent the correct legal approach to the problem. It may be that in
the days before the 1998 Act was enacted he is correct, as I think the passage
from Slade LJ’s judgment in Bromley Park Garden Estates suggests.
In my
judgment, however, the 1988 Act 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
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 Baker was correct in his statement of the law in 1984, a similar
statement made now would, in my judgment, be a correct statement of the law.
There seems to me to be every reason of commonsense why that should be so. It
would enable there to be fair and sensible dealings between landlords and
tenants. It would enable a state of certainty 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.
Accordingly,
in my view, the fact — and it is a fact — that no information about the
financial circumstances of Pelmore LP was supplied is not, in the circumstances
of this case, a reason for withholding the declaration sought by Norwich Union
and granted by the master that Norwich Union is entitled to assign to Pelmore
LP. The master was correct, in my view, in his conclusion that no arguable
defence has been shown to the charge made in these proceedings that Shopmoor
Ltd has unreasonably withheld its consent. When these proceedings were started,
an unreasonable period had expired, the information that had been sought had
been given and there was no outstanding point raised by Shopmoor Ltd, which
justified the further withholding of consent. I am of the opinion, therefore,
that Master Barratt was correct and that Shopmoor Ltd’s appeal should be
dismissed.
I now turn to
the subletting. There is really only one point outstanding so far as the
subletting is concerned. the point was described by Mr Reynolds as the most
significant reason for the withholding of consent to the subletting. In my opinion,
it is the only significant reason which warrants attention. It is the point
that the rent proposed to be reserved on the subletting may be below market
rent. For Ord 14 purposes, at least, I must assume that the proposed rent will
be below market rent. There is no evidence to the contrary save that the rent
is a result of a bargain between Norwich Union and ARC, the proposed subtenant.
It appears
that the initial rent to be reserved is at the rate of £34.80 per sq ft. There
is evidence that other properties in the area are being let at a price per sq
ft of between £50 and £55. To that extent, therefore, there is evidence which
gives Shopmoor Ltd an arguable case, and I say no more than that, that £34.80
per sq ft may be below market level. On that hypothesis, and I repeat it is no
more than a hypothesis, I have to consider the legal consequences so far as the
withholding of consent to the underletting is concerned.
This is a case
in which the amount of the rent to be paid by the subtenant is of no direct
concern to the landlord. It cannot be suggested that the amount of the rent to
be paid under the subletting diminishes the value to the landlord of the
reversion. That is so, because this is a 150-year lease, granted in 1993, under
which the ground rent reserved is £100 and no more. The only circumstance in
which the amount of the subletting could become of direct concern to the
landlord, so far as the value of the reversion is concerned, would be if the
lease were to be forfeited. The probability of that is unlikely in the extreme.
If there were to be a forfeiture and the subtenants were to seek relief from
forfeiture, the relief would presumably be granted on terms that a market rent
was paid. I repeat, there is no realistic manner in which the low level of the
rent under the sublease can be said to affect adversely the value of the
landlord’s reversion in the property subject to the subletting.
So, on what
basis can it be said that the low level of the rent adversely affects the
landlord? Mr Reynolds has based his submissions on the fact that Shopmoor Ltd
has a property portfolio which includes a large number of shops in The Moor.
These are shops of which Shopmoor Ltd either is in possession or is in a
position to negotiate for the level of rents to be paid by the tenants. The
level of the rents obtained on the letting of these shops will directly affect
the value of the premises to Shopmoor Ltd. Shopmoor Ltd fears that the £34.80
per sq ft may be used as a yardstick or perhaps as a comparable by prospective
tenants of the shops when negotiating on rent levels.
There are two
points on this: one is a point on the facts and the other is a point on the
law. As to the facts, if it is right, which is the premise on which the point
is based, that the £34.80 per sq ft is less than market value, it is less than
market value because the other comparables in the area so demonstrate, and if
the other comparables in the area so demonstrate, then on the fixing of new
rents for other shops in The Moor, the same conclusion would, it seems to me,
be likely to be reached. Per contra, if £34.80 per sq ft is nearer the
true market level than those other rents to which reference is made in the
evidence before me, then it would be quite right that the £34.80 per sq ft
should be accepted as a yardstick. But, as Mr Reynolds pointed out, a
negotiation or an adjudication on rent levels is not an exact science and a
simple maverick rent that is below market level may have a disproportionately
adverse effect on other negotiated rent levels to the detriment of the
landlords of the properties in question.
I now come to
the point of law, which is an interesting point, in my view. Is a landlord, in
considering whether to grant consent to an underletting, entitled to withhold
consent because the financial terms of the underletting may have some effect on
the landlord’s property portfolio in the neighbourhood of the subject premises,
or is that a collateral advantage that a landlord is not entitled to seek as
one of the fruits of his, the landlord’s, ability to give or withhold consent?
There is a certain amount of authority on this point. In Woodfall on
Landlord and Tenant (the loose-leaf edition) the following comment appears
in the text under para 11.149:
Where the
landlord reasonably fears that the assignment will result in a diminution in
the rental value of the property or of other property belonging to him, and
hence in his own income, it will generally be reasonable for him to refuse
consent.
Of course,
there can be no question but that the landlord can reasonably refuse consent if
the assignment will result in a diminution in the value of the rental value of
the property itself. But, in the case of a subletting of premises comprised in
a 150-year lease, as in the present case, there can be no suggestion of any
such diminution. The sentence’s reference to ‘other property belonging to him’,
is the relevant point for present purposes.
The note
refers to a case, FW Woolworth plc v Charlwood Alliance Properties
Ltd [1987] 1 EGLR 53*. That was a decision of Judge Finlay QC, sitting as a
judge of this court. The headnote records the learned judge’s finding that the
landlords were not acting unreasonably in refusing consent on grounds which
were unexceptionable. But the judge went on to say that the landlords were
entitled to consider the probable adverse effects of the assignment on the
landlords’ ability to let satisfactorily other premises in the area. In his
judgment, the judge says, at p57M:
*Editor’s
note: Also reported at (1987) 282 EG 585
The landlords
here are, in my judgment, entitled to consider the likely effect upon their
ability to let other parts of the property and, indeed, to obtain the
appropriate rents for their other property in the centre. At all material times
there was a high likelihood, now shown to be a certainty, that the assignee
would not keep the store open and the landlords are entitled to consider the
effect which that would have upon their ability not only to let the other
property in the centre but to obtain satisfactory rents for them.
It seems the
case was one in which the point at issue was whether the proposed assignee was
going to keep the premises open, or whether they would become closed and
vacant, and in that state be detrimental to the centre as a whole.
The Court of
Appeal in International Drilling Fluids Ltd v Louisiville Investment
(Uxbridge) Ltd [1986] Ch 513* gave some guidance as to the principles to be
followed by courts in considering
leading judgment was given by Balcombe LJ, who set out seven propositions of
law. The first of these, he formulated as follows, at p519H:
*Editor’s
note: Also reported at [1986] 1 EGLR 39; (1986) 277 EG 62
(1) The
purpose of a covenant against assignment without the consent of the landlord,
such consent not to be unreasonably withheld, is to protect the lessor from
having his premises used or occupied in an undesirable way, or by an
undesirable tenant or assignee …
He then cited
some authority. His second proposition was:
(2) As a
corollary to the first proposition, a landlord is not entitled to refuse his
consent to an assignment on grounds which have nothing whatever to do with the
relationship of landlord and tenant in regard to the subject matter of the
lease …
He referred
to: Houlder Bros & Co Ltd v Gibbs*, a decision which he
regarded, despite some criticism, as binding on the court; to Bickel v Duke
of Westminster† and to Bromley Park Garden Estates Ltd v Moss,
a case which he described as:
*Editor’s
note: See [1925] Ch 575
†Editor’s
note: Reported at [1977] 1 EGLR 27; (1976) 241 EG 387
A recent
example of a case where the landlord’s consent was unreasonably withheld
because the refusal was designed to achieve a collateral purpose unconnected
with the terms of the lease …
Balcombe LJ’s
third proposition was that:
(3) The onus
of proving that consent has been unreasonably withheld is on the tenant.
That third
proposition has certainly been affected by the 1988 Act. But for present
purposes the important proposition perhaps is the second, in which Balcombe LJ
stated, as a proposition of law, that a landlord was not entitled to refuse his
consent to an assignment on grounds which did not relate to the relationship of
landlord and tenant in regard to the subject-matter of the lease. While there
might be cases in which the breadth of that proposition would be difficult to
accept, consent to assignment as to subletting is not necessarily subject to
the same principles as might be applicable to consent to a change of user.
Leases commonly have provisions under which user covenants to be observed by
the tenant can be varied with the consent of the landlord, with a proviso that
the landlord’s consent should not be unreasonably withheld. I did not think it
could be suggested that a change of user which would detrimentally affect the quality
of the street or centre in which the subject premises were located, would be a
circumstance which a landlord could not reasonably take into account in
declining to consent to the proposed change. It does not follow, to my mind,
that that approach would necessarily be correct when considering consent to a
proposed assignment. Certainly, so far as Court of Appeal authority constituted
by Balcombe LJ’s judgment is concerned, it would appear not to be correct.
Balcombe LJ formulated the second proposition to which I have referred, in
terms which would have the effect of the assignment on other property belonging
to the landlord being taken into account by the landlord as a reason for
withholding consent.
Balcombe LJ’s
second proposition, it will be recalled, contained a reference to the Bromley
Park Garden Estates case. In that case, Dunn LJ referred to two cases, West
Layton Ltd v Ford* and Premier Confectionery (London) Co Ltd
v London Commercial Sale Rooms Ltd†. Then Dunn LJ went on, at p900g:
*Editor’s
note: subnom West Layton v Joseph [1979] 1 EGLR 59; (1979) 250 EG
345
†Editor’s
note: See [1933] Ch 904
In both cases
the withholding of consent to the assignments by the landlords were held not to
have been unreasonable. In both cases the landlords were seeking to uphold the
status quo and to preserve the existing contractual arrangements provided by
the leases. In both cases, the landlords reasonably believed that they would
suffer detriment if the assignments were made. It is true that in deciding the
question of unreasonableness the courts did not confine themselves to narrow
considerations as to the personality of the proposed assignee or the subject
matter of the lease, as had been done in some of the older cases, and it may be
that the passage in Woodfall was intended to draw attention to that, but
there is nothing in the cases to indicate that a landlord is entitled to refuse
his consent in order to acquire a commercial benefit for himself by putting
into effect proposals outside the contemplation of the lease under
consideration, and to replace the contractual relations created by the lease by
some alternative arrangements more advantageous to the landlord, even though
this would be in accordance with good estate management.
In my
judgment, applying proposition (2), as stated by Balcombe LJ in International
Drilling Ltd, the refusal by Shopmoor Ltd of consent to the subletting for
the purpose of enhancing, or avoiding comparisons which might be thought to be
detrimental to, future rent levels of its other shops in The Moor, represents
an attempt by Shopmoor Ltd to obtain a collateral advantage out of its ability
to grant or withhold consent. To allow such a thing would, it seems to me, be
contrary to the statement of principle expressed by Balcombe LJ.
The conclusion
is, in my view, reinforced by considering the issue as one of construction of
the lease. In a lease such as the lease between Sheffield Corporation and
Norwich Union, under which a 150-year lease of shop premises at a nominal
ground rent is granted, it must be in the contemplation of the parties that
there will be assignments, perhaps many assignments of the lease. The property
in question will inevitably be subject to many subtenancies. It may very well
be the case that from time to time the consent of the landlord to the granting
of new subtenancies will be sought. In the present case the proposed assignment
was conditional on a satisfactory subletting being arranged. The proposition
that the landlord would be entitled to control the rents, at which the
sublettings take place, by use of the consent provision in the covenant in
question is, in my opinion, to bestow upon the landlord a power of control
which could not have been contemplated by the parties at the time that the
lease was drawn. If it had been intended that Sheffield Corporation or their
successor landlord should have that power, I am in no doubt that the lease
would have expressly so provided. Shopmoor Ltd seems to me to be attempting to
exert that power for the benefit of the other shops in The Moor acquired by
Shopmoor Ltd from Sheffield Corporation. To do so is, in my view, a collateral
purpose of the sort referred to by Balcombe LJ in International Drilling
Fluids, and is not permissible.
Accordingly,
for that reason, I conclude that the ground relied on by Shopmoor Ltd for
withholding consent to the underletting cannot be sustained.
There is an
additional point. The point regarding the rent level of the proposed subletting
was raised by Mr Bryan at a very late stage indeed. There is ground for
considerable suspicion, in my opinion, as to whether it is a genuine point. If
it had been a genuine point I cannot understand why it took so long for it to
be raised. The rent levels were known from October 16 onwards. The point was
not raised until towards the end of November. A conclusion against Shopmoor Ltd
and Mr Bryan on such a point could not, I think, be properly made on an Ord 14
summary judgment application. I suspect some degree of cross-examination might
be requisite before a final conclusion to that effect could be made. None the
less, it is a matter which I refer to, because it is sufficiently striking, in
my view, to require comment. Moreover, it appears that on October 21, five days
after becoming aware of the proposal by Norwich Union to enter into the
subletting arrangement with ARC, agents for Shopmoor Ltd were contacting ARC in
an endeavour to induce ARC to abandon its negotiations with Norwich Union and
instead to take a lease of other units in The Moor, direct from Shopmoor Ltd.
The commercial propriety of that form of dealing is, of course, for Shopmoor
Ltd itself to consider, but it bears upon the suspicions I entertain of the
genuineness of the very late emergence of this rental point as an objection to
the subletting.
In my view, Shopmoor Ltd has
no arguable case for the withholding of consent to the subletting, and I would
allow the appeal on that point and make the same declaration in regard to the
subletting as has been made by Master Barratt in relation to the assignment.
