Use of demised premises restricted to purpose of a squash club – Landlord’s consent to change of use not to be unreasonably withheld – Landlord operating two fitness centres in nearby vicinity – Tenant proposing major reduction in number of squash courts in order to enlarge leisure and gymnastic facilities – Tenant applying for consent to corresponding change of use – Landlord fearing competition – Whether landlord’s refusal unreasonable – Judgment for landlord
In April 1989 the council granted a 99-year building lease of a site in Ilkeston. The lessee covenanted, inter alia, not to use the premises otherwise than “as and for a squash club” except with the written consent of the landlord, such consent not to be unreasonably withheld. As built, the premises consisted of 10 squash courts, a gym, saunas, jacuzzis, a sunbed room, a games room, a sports shop and a bar. In January 1995 the lease was assigned to the plaintiff, by which time the number of courts had been reduced to seven in order to create an enlarged gym with a dance floor above.
During the summer of 1998 the plaintiff made two applications for the council’s consent; the first, for the assignment of the lease to D, and, the second, for an alterations programme, involving the loss of four further squash courts to allow for the enlargement of the other facilities and the provision of a swimming pool (the non-squash facilities). On 30 September 1998 the plaintiff sought the council’s consent for a change of use, in so far as such consent was necessitated by the proposed alterations. The first two applications were allowed, but the third was refused, notably on the ground that the change of use would be detrimental to the operation of two municipal fitness centres run by the council on premises in close vicinity. The plaintiff brought proceedings contending that: (i) the use would continue to be for the purpose of a squash club; alternatively (ii) consent to the proposed change of use had been unreasonably withheld. At the hearing the judge, having received evidence of the decline in the popularity of squash, rejected the first contention after finding that the use of the non-squash facilities, as enlarged, could not be described as ancillary to the playing of squash. The judge then turned to the second contention.
Held: Consent had not been unreasonably withheld.
1. The plaintiff had relied on the second proposition of Balcombe LJ in International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 EGLR 39, viz that a landlord is not entitled to refuse his consent to an assignment on grounds that have nothing whatever to do with the relationship of landlord and tenant in regard to the subject-matter of the lease. However, it did not follow that the landlord’s concerns had to be limited to the property in question. It could not be said that no reasonable landlord would fear the threat of competition to his operations on other land: see Whiteminster Estates Ltd v Hodges Menswear Ltd (1974) 232 EG 715.
2. As a general rule, the landlord needed only to consider his own interests. The exception allowed for by the sixth proposition in International Drilling Fluids Ltd (supra) only applied where the damage to be sustained by the tenant would be quite disproportionate to that apprehended by the landlord. On the evidence before the court, the plaintiff had not established that the premises would be sterilised for the remainder of the lease if the proposed assignment to D did not take place.
Judith Jackson QC (instructed by Eversheds, of Manchester) appeared for the plaintiff; Jonathan Gaunt QC appeared for the defendant.
Alan Cooklin, barrister
