No.1 West India Quay (Residential) Ltd v East Tower Apartments Ltd

Case Summary

In this recent case, East Tower Apartments Ltd (T) holders of long leases of residential apartments with No.1 West Quay Ltd (L) wished to assign apartments. As per the terms of the lease, L’s consent was required, such consent not to be unreasonably withheld.

L refused consent on 2 of its apartments, which T challenged L’s consent as being unreasonably withheld. Additionally, it was argued that the response time for granting consent to another of its apartments was unreasonably delayed.

In the first instance, the county court found that L had not unreasonably delayed the consent. This was because the T’s request to assign was not sent to L’s registered office. (Although it was sent to another address specifically stated by L).

However, in relation to the matter of unreasonably withholding consent, the county court decided in favour of T.

L appealed the decision and the matter was presented to the High Court.

High Court Decision

At the High Court, L argued that the grounds for refusal were not unreasonable for the following reasons:

  1. L wished to assess whether the prospective assignee’s could meet the lease covenants. T refused to agree to L’s request of providing a bank reference.
  2. L required an inspection of the apartments carried out by a surveyor, payable by T to check for breaches of the leases, however T refused.
  3. L wanted T to make an undertaking for L’s costs (£1,600 + VAT) for dealing with the applications for consent and for the surveyor’s inspection.

The High Court found that L’s conditions in relation to the request for bank statements and wanting to carry out inspections at T’s cost, prior to granting consent was reasonable; however the amount requested to deal with the application was unreasonably high and therefore L’s refusal, despite the first two conditions being reasonable, was found as unreasonable.

Comments

Landlords should take note that where they consent is considered to be granted on a conditional basis, they have carefully considered whether all of the conditions attached would be considered equally reasonable.

Remember where challenged, the onus is on the Landlord to show that its decision to refuse consent was reasonable!

Notwithstanding the above, the High Court did outline what would be considered as reasonable conditions. For example, bank references and surveyor’s inspections. However, landlord’s seeking to pass on costs to tenants should be able to justify any amounts claimed and provide a breakdown of the actual work undertaken.

 

The above is a general guide to the law and does not constitute legal advice. For further information please contact Nath Solicitors.

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