West Layton Ltd v Ford

Whether a landlord has unreasonably withheld consent to an assignment or subletting depends upon the covenant’s purpose and all the circumstances. There are no strict or special rules based on whether the transaction is described as a “normal” or “abnormal” letting.

The landlord may consider legitimate interests in the property, including the effect of statutory protection upon recovery, control, reletting, sale or redevelopment. Applicable statutory provisions are relevant but are only one factor. Refusal may be reasonable where the proposed subletting would divide commercial premises, introduce an independent residential occupier and materially alter the landlord’s future control.

The tenant of a butcher’s shop with residential accommodation above sought the landlord’s consent to grant a furnished subtenancy of the residential part to persons unconnected with the business. The lease required written consent, which was not to be unreasonably withheld. The proposed subtenancy would attract protection under the Rent Act 1974.

The Brentford County Court declared that consent had been unreasonably withheld. The landlord appealed. Following the landlord’s death, it was agreed that Mrs Ford would be substituted as appellant after probate.

The central issue was whether the county court had wrongly treated “Rent Act cases” and “normal” lettings as governed by special rules, rather than deciding reasonableness from the covenant and all the circumstances.

1. Appeal allowed unanimously. Roskill LJ, with whom Lawton and Megaw LJJ agreed, held that the landlord had not unreasonably withheld consent. The county court’s declaration was set aside.

2. Per Roskill LJ, the court should begin with the covenant. It must identify the covenant’s purpose and assess the parties’ legitimate understanding of the interests created by the lease. The expressions “normal” and “abnormal” assignment do not establish strict rules governing reasonableness. Roskill LJ adopted the approach stated in Bickel v Duke of Westminster [1977] QB 517: earlier decisions provide practical guidance on their facts rather than universal propositions controlling every case.

3. The covenant contemplated that the accommodation above the shop could be occupied by an employee connected with the butcher’s business. Any independent residential use required a furnished tenancy and the landlord’s written consent. The proposed subletting would therefore alter the premises from a single commercial letting with ancillary accommodation into premises occupied under separate commercial and protected residential tenancies.

4. The landlord was entitled to consider his own legitimate interests in the property. The protection conferred by the Rent Act 1974, the possible loss of control at the end of the contractual term, and the effect upon reletting, sale or redevelopment were material considerations. The proposed residents would also require access through parts of the shop, potentially affecting its letting value.

5. Lawton LJ agreed that reasonableness was a question of fact depending upon all the circumstances. Relevant statutory provisions, whether rent, leasehold reform or business tenancy legislation, were factors rather than separate bodies of special rules. The county court had applied a supposed special rule for Rent Act cases and had failed to give proper weight to the landlord’s prospective loss of control. Appellate intervention was therefore justified.

6. The appeal was allowed with costs. The formal order was deferred until Mrs Ford was substituted as appellant following the grant of probate.

1. Court of Appeal: The landlord’s appeal was allowed unanimously. The declaration that consent had been unreasonably withheld was set aside.

2. Brentford County Court: His Honour Judge Wakley declared that the landlord had unreasonably withheld consent to the proposed subtenancy.