Claim for possession of flat — Assignment of tenancy without landlords’ consent — Plea that consent was unreasonably withheld — Forfeiture of lease — Question of when assignment was made — Held that there was no breach of covenant — Action dismissed
In this action Oriel Property Trust, Ltd, of Queen Street, Mayfair, W, sued Mr Clifford Meugens Kidd, of Charleville Mansions, Charleville Road, West Kensington, claiming possession of a flat occupied by him. The claim was based on a breach of agreement by assignment of the tenancy without the landlord’s consent.
The defence was a denial of breach of agreement, and Mr Kidd, who counter-claimed relief under Section 146(2) of the Law of Property Act, 1925, pleaded that consent to the assignment was unreasonably withheld.
Mr E Irvine Goulding (instructed by Wigram and Co) appeared for the plaintiffs; Mr Lionel A Blundell (instructed by Messrs Turner and Evans) represented the defendant.
Mr Goulding said that the tenant, Captain John Robert Hawkins Wilson, who made the assignment to his brother-in-law, Mr Kidd, was not a party to the action, as he went abroad after assigning the tenancy. The questions to be decided by the Court were whether the assignment was a breach of covenant, and whether Mr Kidd should be granted relief on his counter-claim.
Evidence was given by Mr Leonard Peter Clow, a chartered surveyor, of Royds & Co, the plaintiffs’ managing agents of the flats, that it was the general rule not to allow tenants to choose their successors. When an application was made on behalf of Captain Wilson for leave to assign, Royds & Co replied refusing the application and stating that they would accept a surrender of the tenancy.
Mr Kidd, a solicitor, said that his brother-in-law, Captain Wilson, who went abroad in February, 1947, agreed to the assignment of the tenancy. The landlords’ agents had not given any reason for withholding consent to the assignment.
Mr Blundell: Did you pay any consideration for the assignment of the tenancy to you? None at all.
Mr Brian Smart, a partner in the firm of Turner & Evans, Mr Kidd’s solicitors, said that in February, 1947, they received instructions to prepare an assignment, and apply for the landlords’ consent. The document was returned with instructions that it should not be stamped and registered until the position with the landlords had been settled.
Mr Goulding questioned Mr Smart about telephone conversations he had with Royds and Co, and suggested that the position was that the document of assignment had been prepared before the conversations took place.
“That is definitely not so,” replied Mr Smart. “The assignment was not completed until May.”
Mr Goulding submitted that the assignment was made before any application for the landlords’ consent had been made by the tenant. The Court ought, he contended, to find that the deed was delivered as an effective deed before the landlords had had any proper opportunity of giving or withholding consent. “If that is true,” he said, ” I submit that the Court ought to hold not only that there has been a forfeiture but also that relief ought not to be given against that forfeiture. In all the circumstances of this case, having regard to the nature of the property, the nature of the tenancy and the position of the landlords and the tenant, this was a case in which it would have been reasonable for the landlords to refuse their consent, and, therefore, it cannot have been lawful for the tenant to assign in the absence of consent. Even if the Court held that the assignment was not made until after the approach to the landlords had been made, I submit that there has been a forfeiture, because the tenant conducted the negotiations in such a way as not to get a plain answer from the landlords.”
Mr Blundell, dealing with the question whether it was reasonable for the landlord to withhold consent, said that notice to quit had not been given, and there had been no suggestion of bringing the contractual tenancy to an end. The withholding of consent was sought to be justified only because of a general policy expressed by the landlords’ managing agents, and no reason for withholding consent had been expressed.
Mr Justice Devlin, giving judgment dismissing the action, said that the question he had to determine was whether the landlords were justified in withholding their consent to a tenant’s application for leave to assign his tenancy. The landlords had an inflexible rule that they would never consent to such applications, because they said they would never allow a tenant to choose his successor inasmuch as, if they did, the tenant could demand a premium as a condition of assignment.
“I hope that nothing I say,” said the Judge, “will be construed as a criticism of the landlords. It is notorious that, if free to do so, they could let the flats at profitable rents, and I have no doubt that they find it extremely objectionable, when they are observing the law and are restricted in the rents they can charge, to find that tenants are making a profit instead. All I am concerned with in this case is the rights granted to the tenant under his lease. If those rights, properly construed, give him the right to select his assignee, in the particular circumstances of this case, he is entitled to do so. I ought to add, lest there be any misapprehension, that, whatever merits there may be in the landlords’ policy as a policy, there is, in the circumstances of this case, no question of any objectionable practice being pursued.”
In December, 1944, Captain Wilson was granted by the plaintiffs’ predecessors in title a lease of a flat in Charleville Mansions. The lease contained a covenant by the tenant not to under-assign, under-let or part with possession of the flat without the landlords’ previous consent in writing, and the effect of Section 19 of the Landlord and Tenant Act, 1927, was to add the words “such consent not to be unreasonably withheld.” In February, 1947, Captain Wilson was contemplating going abroad, and his brother-in-law, Mr Kidd, who was living with him, desired to take over the tenancy. A formal assignment was prepared, and application made to the landlords’ agents for consent. It was not disputed that Mr Kidd was a respectable and responsible person, and no objection was taken to him as an assignee.
Evidence had been given that the landlords, who had a waiting list of prospective tenants, preferred to choose their own tenants. In May, no answer having been received from the landlords’ agents, Mr Kidd took further steps with regard to the assignment. He gave instructions for it to be completed, stamped and dated, and it was sent to Royds & Co for registration. On June 17 the landlords’ solicitors wrote stating that they did not recognise the assignment, and that it had been completed in breach of the tenancy agreement. The landlords did not expressly state the ground on which they withheld their consent.
Mr Goulding relied on a case in which it was decided, in effect, that the tenant was bound to apply to the landlord for consent, and that the fact that consent would certainly have been refused, and unreasonably refused, would not excuse or relieve the tenant from the necessity of applying. The first point taken by counsel was that the true date of the assignment was February 19, and that, as the application for the landlords’ consent was made on February 12, the interval was only seven days, and there was no unreasonable withholding of consent during that period. The applicant was bound, said counsel, to allow the landlords a reasonable time in which to reply.
“Judged by that test,” said his Lordship, “I think that the time of seven days was probably too short, but it is unnecessary for me to express a view on that, because before I have to consider that I have to determine whether Mr Goulding’s main contention is right whether the assignment should be treated as having been made on February 19. There is no doubt that it was signed on that date. The contention for the defendant is that it was not, in the eyes of the law, delivered on that date, and that it was returned to the solicitors to hold as an escrow. I have to determine whether the document was sent to the solicitors as an escrow. There was an obvious reason for the document being signed before it was intended to be legally delivered.
“Captain Wilson was going abroad, and that was the reason for the completion of the document. Mr Kidd’s evidence was that he had a discussion with Captain Wilson about the assignment and the necessity of obtaining the landlords’ consent. In view of Captain Wilson’s departure, Mr Kidd obtained authority to deal with the matter. Mr Smart’s evidence was that he understood he was to hold the document until the landlords’ consent had been obtained. Mr Goulding’s first point was that in the letter of February 19, which accompanied the document, nothing was said about the document being held as an escrow. His second point was that in the letter of April 10 Mr Kidd wrote ‘Captain Wilson has assigned his tenancy to me.’
“I find it difficult to believed that Mr Kidd would deliberately adopt a course which he must have known would be the one thing that was bound to lead to disaster assuming the landlords’ consent before it had been properly applied for and which would expose Captain Wilson to an action for breach of covenant. The second consideration is that there must be some reason why Mr Smart did not forthwith complete the assignment when it was returned to him. That would be the natural course for a solicitor to take, but Mr Smart let the document lie in his office until May.”
Stating that he took the date of the assignment as the date it bore, May 8, 1947, the Judge said that the next point taken by the plaintiffs was that even on that date there was nothing which amounted to a withholding by the landlords of their consent.
“It is not necessary,” said Mr Justice Devlin, “that I should find there was a refusal; it is sufficient that I should find a withholding of consent. I have to consider whether the landlords’ withholding of consent was unreasonable. If I am to take literally the reason given by the landlords for withholding consent, I think it is quite clearly bad. Their view was that it was for them and not for the tenant to choose his successor. That appears to me to make nonsense of the clause in the lease. The clause provides that the tenant is to have the right of assignment subject to the landlords’ consent, which is not to be unreasonably withheld. I am dealing with a clause to which the parties have agreed, and I cannot accept an interpretation of it which I think gives it no effect at all.”
Plaintiffs’ counsel had said that, as the tenant was going abroad, the result of an assignment would be to create a statutory tenancy which might not otherwise be created. The result of the assignment would be to postpone the date when the landlords might expect to regain dominion over their property.
“So far as the assignee was concerned,” continued the Judge, “I do not believe that he ever thought that the question of a statutory |page:501| tenancy would arise. He knew nothing of the landlords’ policy, and had every reason to believe that he would be accepted in the place of the assignor. In those circumstances I find that it was not the object of this assignment that a statutory tenancy should be created. I hold that there has been no breach of the covenant, and that, in the circumstances of this case, the assignment is quite valid and not in breach of the covenant. It is, therefore, unnecessary to consider the defendant’s counter-claim for relief from forfeiture. The action will be dismissed, with costs.”
