Commercial Property Cases Highlight Complexity of Consent

The commercial property solicitors at Wellers Law Group are experienced in all matters relating to commercial leases. We understand how disputes can disable a tenant’s business and, equally, can interfere with the profitability and plans of a landlord. In the following summary we take a look at some of the most important recent cases relating to unreasonable refusal of consent and commercial lease termination.

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

This 2018 Court of Appeal case concerned an instance in which a landlord had withheld consent from its tenant to assign residential leases. The refusal was made on the following grounds:

  • The landlord demanded a bank reference from the proposed new tenant.
  • The landlord required that a surveyor inspect the property for potential breaches of covenant.
  • The landlord requested a fee in exchange for consent.

The High Court had originally ruled that by demanding a fee, the landlord had withheld consent unreasonably; this was despite the fact that the court found the other two reasons to be reasonable.

However, the Court of Appeal determined that the landlord’s appeal should be allowed as the two good reasons provided outweighed the bad. Lord Justice Lewisham stated that “if the decision would have been the same without reliance on the bad reason, then the decision (looked at overall) is good”.

Although the case concerned a disputed residential landlord consent, the ruling is likely to also apply to commercial landlord consents and should inform the approach taken by both landlords and tenants in the future.

S Franses Ltd v The Cavendish Hotel (London) Ltd

This 2018 Supreme Court ruling was important as it ruled in favour of the tenant, establishing that a landlord is only entitled to withhold permission to grant an existing tenant a new tenancy if it can demonstrate that it intends to develop the site regardless of whether or not the tenant vacates voluntarily.

During the case, the landlord conceded that it only intended to carry out the works in order to make the tenant vacate the premises and to negate the need for planning permission.

During the first instance hearing, at the High Court, a ruling was made in favour of the landlord. However, after successfully bypassing the Court of Appeal, the tenant achieved a ruling in its favour at the Supreme Court, which found that the landlord must intend to perform the work whether or not the tenant voluntarily vacates.

TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd

This 2019 High Court case concerned The Fragrance Shop’s (TFS) claim that a landlord’s decision to not renew its leases and to instead offer them to a competitor was contractually invalid under the terms of The Landlord and Tenant Act 1954.

The landlords’ commercial property solicitors had provided warning notices to the tenant’s solicitors; however, the tenant claimed its solicitors were not authorised to receive them. The judge hearing the case disagreed, arguing that authority flowed from an earlier instruction to complete transactions on the original lease.

The court also considered two other key questions:

  • Whether the declarations were invalidated because of a failure to correctly state the commencement date of the term of the proposed tenancies.
  • Whether the TFS representative who signed the declaration had authority to do so.

On the first of these two points, the judge concluded that the tenancies were valid because of “adequate identifying badges of the prospective tenancy”. In short this means that there may not always need to be a fixed calendar commencement date in order for a declaration to be valid.

On the second of these two points, the judge stated that he was “wholly satisfied” that TFS’s representative, a retail director of the shop, had proper authority to execute the declarations.

Conclusions

As these cases demonstrate landlord and tenant disputes can be complex legal area. Making sense of case law can be a puzzling process and if you are involved in a dispute, you should seek the advice of a commercial property solicitor to ensure that you are able to uphold your full rights under the law.