Leases often contain provisions for a tenant to make alterations, assign their lease etc. subject to obtaining consent from their landlord. Whether or not a landlord acts reasonably where consent is refused will depend on the circumstances of each case, as explained in our previous blog here

This issue was has once again come before the courts in the recent Court of Appeal decision Jacobs v Chalcot Crescent (Management Company) Limited. Whilst the tenant was ultimately successful in this case, the High Court decision provides sage guidance for landlords and practitioners alike in dealing with tenant applications for consent.

Background

The tenant was the long leasehold owner of a flat, which was situated within a converted terraced house in London. His lease contained a qualified covenant against alterations requiring the tenant to obtain the consent of his landlord for the works, which the landlord could not unreasonably withhold.

The tenant requested consent from his landlord to make alterations. Correspondence passed between the parties' surveyors, but no decision had been reached after 6 months, so the tenant wrote to the landlord asserting that they had unreasonably delayed in dealing with the request. Three months later the tenant undertook the works without the consent of the landlord.

Some 11 months after the Tenant's initial request, the landlord formally refused consent on the basis that the proposed alterations were "unsatisfactory in the context of fire safety and prejudices the fire safety of the block as a whole". The tenant applied to the court for a declaration that consent had been unreasonably withheld.

First instance decision

All grounds put forward by the landlord for withholding consent were rejected, but the court still held the landlord had not acted unreasonably in refusing consent, on the basis of reasonable concern about potential fire damage to the structure of the building.

Decision in appeal

The tenant successfully argued that the landlord had not relied on any evidence of structural damage to the building as a reason for refusing consent.

In considering the tenant's other grounds for appeal, the High Court concluded:

  • The landlord had not delayed in providing its decision because, between the request being received and its refusal, the landlord had engaged with the tenant in good faith.
  • If the landlord had withheld consent due to concerns for structural integrity, it would not have been acting reasonably because they had failed to obtain supporting expert evidence.
  • The landlord would not have been acting reasonably where there was a reasonable alternative to refusing consent that protected its legitimate interests.

If you are a commercial landlord or tenant dealing with consent applications under a lease, or you have any concerns or queries about how these issues may impact you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.

Contributors

Lucie Barnes

Partner

Catherine Cross

Senior Solicitor