The Court of Appeal has reversed the High Court decision in No.1 West India Quay (Residential) Ltd v East Tower Apartments Ltd  EWCA Civ 250 (see October 2016 Law Now). It found that a landlord’s refusal to grant consent can be reasonable even if, where consent is withheld on a number of grounds, one of the grounds for refusal is unreasonable.
The tenant, East Tower, sought consent from its landlord, West India, to assign its interest in three apartments. West India withheld its consent in relation to two of these on three grounds: it had not received an undertaking for its legal fees, it had not received an undertaking for the cost of carrying out inspections of the apartments and it required a bank reference for the assignee to assess its covenant strength. The High Court held that the legal fees requested were excessive and that this one bad reason vitiated the two good reasons making West India’s refusal unreasonable. The court said West India would not have given consent even if East Tower had satisfied the two good reasons.
East Tower argued that the Landlord and Tenant Act 1988 had changed the law so that a landlord was now only permitted to put forward good reasons for refusing consent. The Court of Appeal disagreed and held that if the good reasons are freestanding and not dependent on the bad reason then, in line with other areas of law, on the face of it there would not have been an infection of the good by the bad. The correct question was whether the landlord would still have refused consent on the reasonable grounds, if it had not also put forward the unreasonable ground? If a good reason is no more than a "makeweight" then this cannot outweigh a bad decision because the decision could not have been caused by that makeweight good reason.
Here the reasons were freestanding and two of them were reasonable. As a result the Court held that the decision to withhold consent was reasonable.
This decision will be a relief to landlords of commercial and residential property alike. It means that where a landlord gives multiple reasons for refusing consent, provided there are valid, independent and freestanding reasons, the overall decision to refuse consent will be reasonable, notwithstanding any otherwise invalid reasons.