Singh v Dhanji & Anor

Under section 1 of the Landlord and Tenant Act 1988, a landlord must consent to an assignment unless refusal is reasonable. Any conditions attached to consent must also be reasonable, and the landlord bears the burden of proving this. Where alleged breaches of covenant are relied on, the landlord must show both reasonable grounds for supposing that a breach existed when the decision was made and sufficient seriousness or prejudice to justify the condition. Minor breaches will not suffice. An appellate court will not readily permit new factual challenges or evidence requiring a retrial.

The appellant landlord had granted a lease of dental premises to the first respondent. When the tenant sought to assign the lease, the landlord gave conditional consent, requiring alleged covenant breaches to be remedied and alleged trespass to cease. The tenant claimed that the conditions were unreasonable under section 1 of the Landlord and Tenant Act 1988.

After a three-day trial, Nottingham County Court declared the conditions unreasonable and awarded damages of £183,000 plus interest. The landlord appealed against the declaration and damages assessment. The central issues were whether the conditions were reasonable and whether the proposed challenges to the damages award and further evidence were properly available on appeal.

Appeal dismissed. Lord Justice Floyd gave the judgment, with Lord Justices Underhill and Richards agreeing.

1. Section 1 of the Landlord and Tenant Act 1988 imposed a duty to consent within a reasonable time unless refusal was reasonable. A condition which was not reasonable did not satisfy that duty. The burden of showing that a condition was reasonable fell on the landlord. The requirement of reasonableness had its ordinary broad and commonsense meaning. The landlord did not need to show that its conclusion was right, but it had to show that it was one which a reasonable person could reach, applying Ashworth Frazer Limited v Gloucester City Council [2001] UKHL 59.
2. Where alleged covenant breaches were relied on, two matters had to be established: first, reasonable grounds at the date of decision for supposing that the tenant was in breach; secondly, breaches sufficiently serious or grave to justify refusal of consent or the imposition of a condition. Identifying a breach was insufficient. Its nature, gravity and effect on the landlord’s position had to be considered.
3. The trial judge had found that the alleged breaches were not serious enough to justify requiring their remedy, even if they had been proved. That finding independently established that the condition was unreasonable. It was a finding of fact with which the appellate court had no proper basis to interfere.
4. Permission to appeal on a ground refused after an oral hearing could not subsequently be granted by another judge; the purported grant was a nullity. A challenge to the refusal of permission to adduce further evidence also had to be made within seven days under CPR 52.16(6) and (6)(a). The proposed extension was unnecessary and unsupported.
5. The challenge to the damages assessment had not been properly advanced below and depended on further evidence, disclosure and potentially a retrial. The appellate court would not readily permit the point to be raised for the first time. The damages assessment was not vitiated.

The declaration and damages award therefore stood.

• Court of Appeal (Civil Division) — In [2014] EWCA Civ 414, dismissed the landlord’s appeal.
• Nottingham County Court — His Honour Judge Barrie declared the conditions attached to consent unreasonable and awarded £183,000 damages plus interest.