Many commercial leases contain provisions preventing the landlord from unreasonably withholding consent to assign, and this is often a topic of debate. Last year we reported on the case of No.1 West India Quay (Residential) Ltd v East Tower Apartments Ltd in relation to a landlord's refusal to consent to an assignment until its costs were paid.
The case has now been referred to the Court of Appeal to consider whether a landlord is unreasonably withholding consent if two grounds for refusal are reasonable, but a third has been held not to be. The landlord had imposed the following three conditions:
- The tenant was to pay fees of £1,600 for the grant of the consent;
- The landlord was to inspect the premises for any breach of covenant; and
- The assignee was to provide a bank reference.
The reasonableness of all three conditions was disputed and the High Court held that only the first condition was unreasonable, but that this vitiated the good conditions and therefore consent had been unreasonably withheld. However, the Court of Appeal has now overturned this decision finding that the refusal of consent was valid where the landlord refused consent on three grounds, only one of which was unreasonable.
On the face of it, this is a decision to be welcomed by landlords, but the case was decided on its own facts.