Covenant by tenant to put house in repair — Covenant against assignment without lessor’s consent — Assignment — Second scheme of improvements — Adjoining owner potential purchaser — Building contract cancelled — Lessor refusing consent to assign — Whether consent unreasonably refused
The plaintiff company is the sublessee of a house on the Grosvenor Estate holding a 51-year sublease granted in 1985 to its predecessor in title; the defendant company is the sublessor. At the time of the grant, the house was in poor repair and the plaintiffs’ predecessor in title covenanted to put it into repair and to use it as a single dwelling-house. There was also a covenant against assignment without the consent of the defendants. The original tenant did not carry out the repairs and within 10 months had assigned, with the defendants’ consent, to the plaintiffs.
In June 1986 the defendants gave consent to the plaintiffs’ scheme of repair and a contract was placed with a builder. An adjoining owner expressed interest in taking an assignment of the sublease and entered into a contract to purchase; the building contract was cancelled before work commenced, and the plaintiffs sought consent to assign the sublease. The proposed assignee did not wish to proceed with the plaintiffs’ scheme and the defendants were only prepared to consent to an assignment if the assignee carried out the approved scheme within a time-limit. The plaintiffs sought a declaration that the defendants had unreasonably withheld consent to the proposed assignment.
Held The application for a declaration was dismissed; the defendants had not unreasonably withheld consent to the proposed assignment. The defendants’ reasons for withholding consent were: (1) the assignee was unwilling to agree to a condition about a timetable for the works of repair; (2) he had broken promises about some urgent repairs; (3) as the defendants were not minded to allow the incorporation of the house with the assignee’s, the assignee’s incentive might not be to complete the works but only to sell at a profit; and (4) there were no financial references on the assignee, who was not prepared to enter into a performance bond or deposit.
The withholding of consent related not simply to breaches of covenant but to the desirability of the proposed assignee as a tenant who could be relied upon to remedy those breaches. It was not unreasonable for the sublessors to demand, as a condition of assignment, a more stringent timetable for the works than that in the sublease in view of earlier breaches. The burden on the plaintiffs was not disproportionate to the benefit to be gained by the defendants, as the plaintiffs had acquired the sublease with full knowledge of the obligations; an assignee could still be found at an appropriate price.
International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd
[1986] Ch 513; [1986] 1 EGLR 39 considered.
Mark Blackett-Ord (instructed by Dawson & Co) appeared for the plaintiffs; and Paul de la Piquerie (instructed by Boodle Hatfield) appeared for the defendants.
