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Case law: Landlord only needs one good reason for refusing to consent to assignment of lease for refusal to be reasonable

Landlords wishing to refuse consent to an assignment of a lease will welcome a recent ruling that, if they give multiple reasons for their refusal, only one needs to be reasonable for the refusal to be valid.

April 2018

This update was published in Legal Alert - April 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

The Court of Appeal has overturned a High Court decision that a landlord who gives multiple reasons for refusing to consent to assignment (sale) of a lease, they must all be reasonable. Now, only one needs to be reasonable, provided it stands alone as a reason.

A tenant wanted to assign its leasehold interests in several flats. The leases required the landlord to consent, but consent was not to be unreasonably withheld. The landlord refused consent to two of the assignments on three grounds:

  • Failure to provide a satisfactory bank reference
  • Refusal to allow inspection by the landlord's surveyor and pay the surveyor's reasonable costs
  • Refuse to pay the landlord's legal fees of £1,250 plus VAT

The tenant alleged that consent had been unreasonably withheld. The High Court found that the first two reasons for the landlord's refusal were valid, but the third was not. It said that the bad reason vitiated the two good ones and the refusal of consent was therefore unreasonable.

The Court of Appeal disagreed, saying ‘the question is whether the decision to refuse consent was reasonable; not whether all reasons for the decision were reasonable’. It therefore ruled that a landlord who gives one good reason for refusing consent will not be acting unreasonably, even if other reasons are not good reasons, provided the good reasons stands on its own.

Operative date

  • Now

Recommendation

  • Landlords wishing to refuse consent to an assignment of a lease can be assured that, following a recent ruling, if they give multiple reasons for their refusal, only one needs to be reasonable for the refusal to be valid.

Case ref: No.1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2018] EWCA Civ 250

Please note: An article published in the December 2016 edition of Legal Alert covered this case at an earlier stage in the legal process.

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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