The case of Dong Bang Minerva (UK) v Davina [1996] must be the greatest name of a legal case ever – #LPC examiners have been able to accept “Ding Dong” as an abbreviation, with even one generous examiner, it is rumoured, able to give a mark for “Ding Dong Bang” from a student in the ‘heat of the moment’.
What is more amusing is what the definition of ‘reasonable fees’ might be, referred to here in the judgement delivered in the Chancery Division of the High Court:
“The tone of this letter clearly offended Mr Bharat Amin. The material part of his reply dated 26th August 1993 was:
“I strongly object to your statement that our fees are unreasonable. The fees are based on estimated time and quality of professional services — lease, rent etc. The make up of the fees is as follows:..”
And in fact the Court of Appeal judgement is equally amusing for similar reasons.
“Held, dismissing the appeal, that although it might be acceptable for a landlord to require an undertaking as to his reasonable costs before consenting to an underlease, in the instant case the estimated fees were unreasonable and the landlord was in breach of its statutory duty.”
Anyway, according to this case it is felt that the landlord bears the onus of proof and must show that the time within which consent was given or response provided was reasonable; that any condition attached to consent was reasonable and if consent was refused it was reasonable not to give consent. If the landlord fails to discharge its obligation a claim may be brought for breach of statutory duty and the landlord may be liable in damages. What is considered a reasonable time depends on the facts of each case but generally is measured in days or weeks, not months (Go West Ltd v Spigarolo [2003] EWCA Civ 17).
s.1 Landlord and Tenant Act [1998] applies to all leases and to all forms of alienation. Where a tenant applies to the landlord in writing for consent to assign or sublet, s.1 LTA provides that the landlord must given written consent within a reasonable time. In the “Dong Bang” case, it was considered that 28 days from receipt of the notice of the application and references by the landlord was a reasonable period within which to inform the tenant of the decision.
Meanwhile, the effect of s.19(1)(a) Landlord and Tenant Act [1927] has no effect on absolute covenants prohibiting alienation. It, however, assists tenants by converting a qualified covenant against alienation into a fully qualified covenant. What is the definition of reasonableness of the landlord in withholding consent here? A number of interesting cases have allowed greater clarity of the statute.
International Drilling Fluids v Louisville Investments (Uxbridge) [1986] provides that a landlord is not entitled to refuse his consent on grounds which have nothing to do with the landlord and tenant relationship. It must be something to do with, for example, the proposed assignee’s ability to pay rent, or bad references. Yet again, it is quite amusing how the principle of legal precedent might have inflicted this dictum on that court:
“(2) As a corollary to the first proposition, a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject-matter of the lease (see Houlder Bros & Co Ltd v Gibbs (supra), a decision which (despite some criticism) is binding on this court; Bickel v Duke of Westminster[1977] QB 517).”
Moss Bros Group plc v CSC Properties Ltd [1999] provides that a landlord is reasonable in refusing consent if the proposed assignee’s business does not fit in with the landlord’s tenant-mix policy. A report by the CISCexplains why “tenant mix” is so important as follows: “The variety and location of retailers within a group of shops, known as tenant mix , has been identified as a critical factor in the success or failure of purpose-built shopping centres. There have been numerous studies made of the impact tenant mix can have on profitability, but less is known about the way in which landlord investors approach the allocation of leases within shopping centres. This study aims to increase understanding of how they perceive and manage tenant mix.”
In Ashworth Frazer Ltd v Gloucester City Council[2002], the House of Lords confirmed that where a landlord believed the a proposed assignee intended to use the premises for a purpose which would give rise to a breach of covenant, it was reasonable for the landlord to refuse consent to assign. Quoted in that judgment is a critical passage in the judgment of Stamp LJ then follows, from the decision of the Court of Appeal in Killick v Second Covent Garden Property Co Ltd [1973] 1 WLR 658, and one which, again, that present Court felt bound by:
“Mr. Priday, on behalf of the landlords, submitted that a landlord may reasonably refuse consent to an assignment if the assignment would necessarily involve a breach of covenant, and I will accept that submission as being well founded. But whatever view one takes as to the construction of the user covenant, I cannot accept that, if the landlords did consent to the proposed assignments, there would as a necessary consequence be a breach of the user covenant. As a result of the assignments Primaplex would step into the shoes of the lessee and underlessee and would thereupon become subject to the user covenant. The landlords would be in the same position, neither better nor worse, to enforce the user covenant as would be the case if the present underlessee was itself proposing to seek planning permission for use of the premises as offices and proposed so to use them. On that short ground I would hold that the landlords’ withholding of consent is unreasonable.”
There is a further statutory intervention in s.19(2) Landlord and Covenant Act (1927) which implies into a qualified covenant against improvements a proviso that the landlord’s consent is not to be unreasonably withheld. Lambert v FW Woolworth [1938] provides the leading case about what constitutes ‘improvements’, and they are generally construed widely as works which improve the property from the tenant’s perspective. Compared with the interpretation of “unreasonable” in the context of s.19(1)(a), there is less case law, but s.19(2) allows the landlord to require as a condition of giving consent, payment of compensation for a loss in value to the reversion caused by the alterations, reinstatement of the premises, and payment of the landlord’s expenses in giving consent. The case facts were so well known that even LJ Slessler seemed bored with them…
“The facts of this case have been so often stated during the protracted litigation which has taken place between the parties that I do not think it necessary in any detail again to repeat them.”
