Ansa Logistics Ltd v Towerbeg Ltd & Ors

A covenant against parting with possession is breached only when the tenant wholly relinquishes legal possession. A third party’s operational control or occupation is insufficient if the tenant retains responsibilities and access. A landlord bears the burden of showing that refusal of consent was reasonable. The reasons must relate to the landlord-and-tenant relationship and must be assessed in context. A suspected or remediable breach does not ordinarily justify refusal. The landlord may rely only on reasons given in writing within a reasonable time. A proposed undertenant’s financial position may be only marginally relevant where the head tenant remains liable for rent. Planning objections unrelated to the landlord-and-tenant relationship do not justify refusal.

Ansa held two long leases of a vehicle-storage and logistics site. It permitted Ford to occupy and operate from the site under written arrangements while Ansa retained legal possession and residual responsibilities. Ansa later sought Towerbeg’s consent to underleases to Ford. Towerbeg refused consent, relying on alleged parting with possession, Ford’s financial position and the effect of Ford’s occupation on redevelopment plans. Towerbeg also served a forfeiture notice and sought possession. The central issues were whether Ansa had parted with possession, whether any breach had been waived or should attract relief from forfeiture, and whether consent had been reasonably withheld under section 1(6) of the Landlord & Tenant Act 1988.

1. Parting with possession. The covenant was construed strictly because breach could lead to forfeiture. The decisive question was whether Ford had the right to exclude Ansa from the site. The 2007 heads of terms gave Ford a licence to occupy, not legal possession. Ford’s security, access procedures, repairs and operational control concerned its business and did not show that Ansa had been wholly ousted. Ansa retained responsibilities, access and involvement. There was therefore no breach.
2. Waiver and relief. These issues did not arise. Nevertheless, acceptance of rent would not have waived any breach because Towerbeg did not have good reason to believe that Ansa had parted with possession. If there had been a breach, relief from forfeiture would have been granted because it was inadvertent, non-prejudicial and remediable.
3. Reasonableness of refusal. Under section 1(6) of the Landlord & Tenant Act 1988, Towerbeg bore the burden of showing that refusal was reasonable. Its alleged belief that Ansa had parted with possession was unsupported and, in any event, the alleged breach would not have been sufficiently serious or prejudicial. Ford’s financial position was not a reasonable ground because Towerbeg could continue to look to Ansa for rent. The planning objections were ineffective because Ford could object whether or not it held an underlease. The reasons advanced in writing were unreasonable. Consent had therefore been unreasonably withheld.