The Dangers of Unreasonably Withholding Consent

21st August 2014

A recent case, Singh v Dhanji, reiterates the dangers of landlords attempting to impose conditions on assignments.

In the Singh v Dhanji case, the landlord tried to impose conditions on the proposed assignment by its tenant of a lease of a dental practice, namely :-

  • that the tenant should have remedied its breaches of covenant,
  • the tenant had to notify the landlord to enable him to inspect the rectifications and
  • the tenant was to stop trespassing on the landlords adjoining premises.

The tenant did not accept the conditions and when the landlord failed to give consent, the tenant issued proceedings against the landlord for breach of its statutory duties. The Court found for the tenant, on the basis that the alleged breaches by the tenant were not sufficiently serious as to make it reasonable to withhold consent. The tenant was awarded £183,000 in damages plus £31,000 in interest. The decision was upheld on appeal.

Although each case must be assessed on its own facts, in every situation landlords must give careful consideration as to whether breaches of covenant are sufficiently serious to withhold consent. The case is a useful reminder that the landlord holds the burden of demonstrating reasonableness.

For more details, contact Nyree Applegarth at Higgs & Sons.

 

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