In the absence of an absolute prohibition against assignment, when a tenant makes a request to it’s landlord to assign a lease, the landlord is under a statutory duty not to unreasonably withhold consent, to respond to the tenant’s request within a reasonable time and to provide it’s decision, including any conditions, in writing.
In the recent case of Singh v Dhanji the landlord attempted to impose the following conditions to the proposed assignment by it’s tenant of a lease of a dental practice:
- the tenant must have remedied its breaches of covenant;
- the tenant must notify the landlord to enable him to inspect the rectifications; and
- the tenant must have stopped trespassing on the landlord’s adjoining premises.
The tenant did not like these conditions and issued proceedings against the landlord for breach of its statutory duty.
The court found for the tenant on the basis that the alleged breaches by the tenant were not sufficiently serious so as to make it reasonable to withhold consent. The tenant was awarded £183,000 in damages plus £31,000 in interest, which was upheld on appeal.
Although clearly a question of fact and degree in each situation landlords must give careful consideration to whether breaches of covenant are sufficiently serious to withhold consent. In addition, this case is a useful reminder that it is the landlord who has the burden of demonstrating reasonableness and of the duties that the landlord is under when it’s tenant makes a request to assign its lease.