Landlord Reasonably Withheld Consent to Lease Assignments

Landlords are generally not entitled to unreasonably withhold consent to assignment of leases – but what if some of the reasons given for such a refusal are good, and others bad? The Court of Appeal tackled that issue in a case of importance to property professionals.

A company registered in the British Virgin Islands (the tenant) held 999-year leases in respect of a number of flats in a residential tower block. With a view to selling two of those flats, it asked the landlord to grant consent for assignment of the relevant leases. The landlord refused to do so unless the tenant complied with three conditions.

Those conditions were that the tenant was required to pay a £1,600 fee for each flat in respect of legal and surveying costs; that each flat had to be inspected by a surveyor before assignment; and that a bank reference had to be provided. The assignments were completed under protest after the tenant complied with those conditions, but it subsequently launched proceedings.

In ruling that the landlord had unreasonably withheld consent to the assignments, a judge found that the latter two conditions were reasonable but that the first was not. The professional fees demanded were excessive and the landlord was ordered to repay certain sums to the tenant by way of damages.

In upholding the landlord’s appeal against that ruling, the Court found that, looked at overall, the landlord’s refusal of consent was reasonable. Each of the conditions was free-standing and two of them were reasonable. The unreasonable condition had not infected or otherwise vitiated the good ones.        

No.1 West India Quay (Residential) Limited v East Tower Apartments Limited.