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Landlord's response

This page deals with the following issues:
  • The reason that can be relied upon - adducing evidence that was not available at the time the reason was given to support that reason - elaborating the reasons.
  • Reasonable time.
  • Consent by accident! - Consent "in principle" - subject to conditions.
  • Consent required by deed

Reason given

The landlord will be only entitled to rely on reasons given by him in his written decision:
    “It is not now [ie since the 1988 Act] open to a landlord to put forward reasons justifying the withholding of consent if those reasons were not put forward in accordance with s1(3)(b))” (Neuberger J, Footwear Corporation Ltd v Amplight Properties Ltd [1999] 1 WLR 551 at 559H.
However, that requirement does not prevent the landlord from adducing evidence to support his ground that he did not have at the date that he gave his reasons. Nor must the landlord’s letter be construed too narrowly:
    “… the degree of detail contained in such a letter is likely to depend to a large extent on what is said by the tenant in the application to which the landlord is responding. In practice a dialogue may develop. Once the landlord has stated in writing the ground on which he refuses consent, he cannot later rely on any other ground. But that does not mean to say that, when seeking to show that it was reasonable for him not to consent on the stated ground, he is confined to what he has said in his letter. Section 1(6)(c) contains no such restriction. And rightly so” (Ashworth Frazer Ltd v Gloucester City Council [2001] UKHL 59, Lord Roger at para 75).
See also The Royal Bank of Scotland v Victoria Street (No. 3) Limited [2008] EWHC 3052 (Ch) where Morgan J said this (para 37) in relation to the letter of refusal sent in that case:
    "That brings me to the letter of refusal, which I have read. The letter is brief, but as explained by Lord Rodger in the Ashworth Frazer case … a landlord is entitled to elaborate a reason which is stated concisely in a letter of refusal, without going outside what is permitted by s.1 of the Landlord and Tenant Act 1988. In my judgment, the essential distinction in this area is between something which is an elaboration of the reasons stated in the letter, which is permitted, and something which is a different reason to that stated in the letter, which is not permitted." (Our emphasis).
Article: "Landlord and Tenant Act 1988 - Written Consents and Requests for Information" by Mark Warwick, barrister - Discusses the degree of detail required in a landlord's decision letter and related matters (Landlord and Tenant Review, (2003) vol.7, issue 1, p6).


Reasonable time

The landlord must respond within a reasonable time (s1(3)). How much time is reasonable will obviously depend on the individual facts of each case. In Midland Bank v. Chart Enterprises [1990] 44 EG 68 a period of 2½ months was considered unreasonable. In Dong Bang Minerva (UK) Ltd v Davina Limited [1994] EGCS 104 a period of one month from receipt of the request for consent, with references and accounts, was suggested. If legal or other professional advice has to be taken, a reasonable time for doing that will be allowed, bearing in mind the pressures on the tenant and the need to maintain the interest of the proposed assignee which delay might imperil. In Mount Eden Land Limited v Folia [2003] EWHC 1815 (Ch) the judge found that the period was unreasonable where the decision to refuse was made but not given to the tenants for a further 24 days in a case where there was urgency as the landlord well knew.

In NCR Ltd v Riverland Portfolio No 1 Ltd [2005] EWCA Civ 312 the judge formed the view that the application was to be treated as having been made on 28 July 2003. On 7 August the tenant’s solicitor wrote giving the landlord a deadline of 11 August. The landlord refused consent on 20 August. The judge considered that a period of two weeks was sufficient time for a decision once all the relevant information was available. This was criticised by Carnwarth LJ in the CA, para 21:
    “In my view, whatever earlier discussions there had been, Riverland was entitled to adequate time following receipt of the completed application to consider the serious financial and legal implications of a refusal with its advisers, and if necessary to report to the relevant Board. In the absence of special exceptional circumstances, a period of less than three weeks (particularly in the holiday period) cannot in my view be categorised as inherently unreasonable for that process.”
In E.ON UK plc v Gilesports Ltd [2012] EWHC 2172 the court held that 11 working days was not a reasonable time. It was a short period of time, it crossed a half-term break, the transaction had not been stated to be urgent and, although it was not complicated, it did require the landlord to consider a guarantee and an application for change of use (paragraph 59).

Imposing conditions within a reasonable time

London & Argyll Developments Ltd v Mount Cook Land Ltd
[2002] 50 EG 111 (ChD).

A landlord imposing a condition can only rely upon written reasons given within a reasonable time of receiving T's application and within a reasonable time of imposing the condition. The question of reasonableness is determined by the information available to L at the time he imposed the condition. Landlord unreasonably requested the provision of a surety without giving any reasons and even though there was nothing wrong with the financial information provided.

Giving a decision brings time to an end

Go West Ltd v Spigarolo
[2003] EWCA Civ 17

Once L has given written notice with reasons refusing consent the period of reasonable time for giving consent (required by s1(3) of the Landlord and Tenant Act 1988) has passed. L cannot subsequently change his mind and say that the change has occurred within a reasonable time of the request. The fact that there were subsequent attempts to negotiate permission to assign did not deprive T on the facts to its rights under the 1988 Act.
    "The expression 'within a reasonable time' may have entitled the landlords to a longer period in which to serve the notice than in fact they chose to take. Having chosen to serve a notice, however, they cannot subsequently be allowed to say, because they could have taken more time, that their refusal was ineffective as a refusal under the section. The purpose of written statutory notices such as those required by section 1(3) is to ensure that each party knows where the other stands and the refusal must be treated as such." (Pill LJ at para 80).

Consent by accident

Consent by letter - subject to licence

Aubergine Enterprises Ltd v Lakewood International Ltd
[2002] EWCA Civ 177

Summary

The landlords consent may be sufficiently proved to the proposed assignee for the purposes of condition 8.3.4 of the Standard Conditions of Sale, 3rd edition, by documents other than a formal licence to assign. The consent was clearly contained in the correspondence that had been given to the proposed assignee. The heading subject to licence did not prevent it from being the granting of consent.

Citation

Auld LJ:
    "In my view, the landlords solicitors heading of a number of their letters 'Subject to Licence', coupled with a statement of conditions, did not qualify the plain indication of consent in the body of the letters so as to make it equivocal or uncertain" (para 43).
And Ward LJ:
    "With these contextual points in mind I turn back to condition 8.3.4. When and how is consent given for the purposes of that condition? It cannot sensibly be when a formal licence deed is handed over on completion, for reasons fully analysed in paragraph 33 of Auld LJ's judgment. At any rate since the coming into force of the 1988 Act consent is given, in my view, when the landlord's decision in principle is communicated to the tenant by the landlord himself, or by the landlord's solicitors or other agents (no one has suggested that the landlord's solicitors did not have actual authority to communicate the decision in principle). A decision in principle can be a sufficient decision for the purposes of s1(3) of the 1988 Act, and in my judgment it clearly was in this case." (Paras 99 and 100).
Consent in principle subject to conditions

Alchemy Estates Limited v Astor
[2008] EWHC 2675 (Ch)

Summary

The landlord's solicitors' e-mail confirming consent to assign "in principle" subject to conditions had in fact constituted consent, despite the fact that the e-mail specifically stated that no such consent was being granted.

Facts

The parties entered into a contract for sale and purchase of a leasehold property. The lease of the property required the landlord's "previous consent in writing" for an assignment of the lease, which was not to be unreasonably withheld. The contract contained provision for either party to rescind the contract if the landlord's consent was not given. In fact, the parties initially failed to seek landlord's consent to assign the lease, each expecting the other to make the application.

When landlord's consent was eventually sought, the landlord's solicitor confirmed by e-mail that the landlord is: "in principle prepared to grant its consent to enable the Lease ... to be assigned to [the buyer] ... The conditions attaching to the grant of such Licence are (a) the payment of our client's reasonable costs ... and (b) such Licence is documented within the form of the attached draft Licence to Assign ...".

The e-mail went on to state:
    "Please note that this correspondence does not constitute the provision of consent by our client. Such consent will only be provided on the completion and delivery of a formal Licence executed as a Deed. Please also note that our client reserves the right to change the form of the draft Licence submitted herewith and to impose new conditions to the grant of their licence in light of any further information received".
The landlord's solicitor subsequently sent out the engrossed licence.

Thereafter, the buyer's solicitor sent the seller's solicitor a notice to rescind the contract, accompanied by a "without prejudice" letter seeking a substantial reduction in the price. The buyer's solicitor explained that the buyer had a right to rescind as the seller was not in a position to comply with the requirement for landlord's consent on either the contractual completion date (some two months earlier) nor the date of the purported rescission. The licence to assign was subsequently executed by both landlord and seller, and completed.

Decision

The High Court held that the buyer was not entitled to rescind the contract, and ordered specific performance in favour of the seller:
  • The buyer had lost his right to rescind the contract because he had not exercised the right to rescind in the three-day period leading up to the completion date or within a reasonable time afterwards. He had allowed the contract to continue and the seller to continue to work towards completion. The parties had not intended to create a right to rescind "which either of them could simply keep in their pocket and then use later at any time after the contractual completion date without any prior warning to the other, if the contract was no longer thought to be commercially attractive".

  • However, the court also said that landlord's consent had already been given in the landlord's solicitor's e-mail as this confirmed "consent in principle". This was expressed to be subject only to reasonable conditions and was unequivocal.

Citation

Sales J at para 66:
    " It is for observation, but is not critical to the analysis above, that by 19 May 2008 the landlord had, by Olswang's e-mail of 25 April 2008, already provided the relevant consent referred to in standard condition 8.3. Although the consent was expressed to be in principle and to be conditional upon payment of reasonable costs and execution and delivery of a formal Licence to Assign in the form of a deed, it is clear from the terms of standard condition 8.3.3(b) that a consent given subject to certain conditions may be sufficient to prevent the right to rescission under the standard condition from arising or continuing. This was the basis for the decision of the Court of Appeal on a similar issue which arose in Aubergine Enterprises: see [34]-[45], especially at [36] and [43]-[44]. In my view, the expression in Olswang's e-mail of the landlord's consent in principle, subject to certain conditions, satisfied the relevant test for landlord's consent laid down by the Court of Appeal in that case, which applies to what is now standard condition 8.3. It was consent which was expressed to be subject only to reasonable conditions, and was unequivocal. "
Comment

This case illustrates:
  • The importance of clear drafting in conditional contracts - in this case, responsibility for applying for landlord's consent, the buyer's obligations in relation to any landlord's response and the timing of the right to rescind could all have been spelt out in more detail;

  • The difficulty that a landlord's solicitor faces when confirming consent to assign or sublet "in principle". Here, the landlord's solicitor could hardly have spelt out more clearly that consent was not intended to be granted by the e-mail, but the court nonetheless held that consent had in fact been granted.

Consent required by deed

What if the lease requires the consent to be in the form of a deed? Does that change the position? Does that mean that consent will only be deemed to have been granted when the deed is executed? In Rail Safety and Standards Board Ltd v British Telecommunications Ltd [2012] EWCA 553 a tenant could not grant a sub-lease without the head landlord’s consent. The agreement stated:
    “The Superior Landlord’s Consent means the consent of the Superior Landlord to the grant of the Leases by way of the Licence to Underlet …

    Licence to Underlet means the licence to underlet to be entered into between (1) the Superior Landlord (2) the Landlord and (3) the Tenant which shall be in the form in Schedule 3.”
The form in Schedule 3 required the consent to be in the form of a deed.

A draft licence to assign was signed by the tenant and sub-tenant and sent to the Superior Landlord’s solicitors. It was subsequently signed by the Superior Landlord. However, it was never delivered as a deed. The Court of Appeal therefore held that consent had not been granted. Etherton LJ at para 23:
    “The Agreement provides that the Superior Landlord's Consent means the consent of the Landlord "by way of" the Licence to Underlet and "by way of" the Licence for Alterations. The ordinary and natural meaning of the words is that the Superior Landlord's Consent has to be in those specified forms of Licence and no other. That the ordinary and natural meaning applies is confirmed by the mandatory requirement in the definitions of "Licence to Underlet" and "Licence for Alterations" that those Licences "shall be" in those forms … That mandatory requirement makes no sense if the Superior Landlord's Consent can be given, for example, orally or on quite different terms to those in the schedules…”

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