BT entered into an agreement to grant an underlease of commercial premises to RSSB. The agreement was conditional upon the consent of the superior landlord to the underletting. The agreement defined Superior Landlord’s Consent to mean “the consent of the superior landlord to the grant of the Leases by way of the Licence to Underlet.” BT was obliged to use reasonable endeavours to obtain the superior landlord’s consent. Either party was entitled to walk away if the consent had not been obtained by a long stop date of 5 October 2007. On 20 November 2007, RSSB served notice to terminate the agreement on the basis that superior landlord’s consent had not been obtained. By this date, the licence to underlet had been executed by all parties, including the superior landlord, but had not been completed.  

BT argued that “Superior Landlord’s Consent” for the purposes of the agreement did not require completion of the licences, rather it could be satisfied by the unilateral confirmation of the superior landlord that it consented in principle to the underletting. As this had been given, RSSB was not entitled to terminate. RSSB argued that consent for the purposes of the agreement was not given until the licence to underlet had been completed.

The judge agreed with BT. Whilst the agreement clearly contemplated that there would be a formal licence, this was not the same as saying that consent would not exist until a licence had been completed. The words “by way of” in the definition of Superior Landlord’s Consent demonstrated that the consent would ultimately be confirmed in a licence but this was not inconsistent with it arising prior to completion of a formal licence.