No.1 West India Quay (Residential) Ltd v East Tower Apartments Led

Where a landlord refuses consent to assignment for several independent reasons, the refusal may remain reasonable although one reason is unreasonable. The court asks whether the landlord would still have refused consent on the reasonable grounds had the unreasonable ground not been advanced.

The Landlord and Tenant Act 1988 requires the landlord to communicate all reasons and prove that the refusal was reasonable overall. It does not require every stated reason to be reasonable. A bad reason does invalidate the refusal where it infects the good reasons, or where the supposedly good reasons are merely makeweights and would not independently have caused the refusal.

A long lessee sought consent to assign two flats. The landlord refused on three grounds: failure to undertake to pay its requested fees, the need for an inspection and the absence of bank references for the proposed assignees.

HHJ Walden-Smith held that all three requirements were unreasonable and that the landlord had breached its statutory duty. On appeal, Henderson J held that the inspection and bank-reference grounds were reasonable, but that the administration fee was excessive. He nevertheless held that the unreasonable fee ground vitiated the two reasonable grounds: [2016] EWHC 2438 (Ch); [2017] 1 P & CR 8.

The landlord appealed. The central issue was whether a refusal based on several independent grounds remains reasonable when some grounds are reasonable and another is not.

1. Appeal allowed. The landlord's refusal of consent was reasonable. Lewison LJ gave the judgment, with which Floyd and Peter Jackson LJJ agreed.

2. Under section 1(3)(a) of the Landlord and Tenant Act 1988, the relevant question is whether it was reasonable not to give consent in the particular factual situation. Section 1(3)(b)(ii) confines the landlord to the reasons communicated in writing, but section 1(3)(a) neither ties the statutory duty to each individual reason nor requires every reason to be reasonable. Section 1(6)(c) places on the landlord the burden of showing that the refusal itself was reasonable.

3. The mixed-reasons approach stated in British Bakeries and BRS remained broadly correct after the 1988 Act. A refusal supported by good and bad reasons may be reasonable if a sufficient good reason is not infected by the bad reason. A purportedly good reason which is merely a makeweight cannot independently support the decision.

4. The controlling inquiry is causal. The court asks whether the landlord would still have refused consent on the reasonable grounds had it not advanced the unreasonable ground. It does not ask whether the landlord would have continued to insist upon the unreasonable ground after the reasonable requirements had been satisfied. Where the good reasons are freestanding and each has causative effect, the bad reason does not infect them.

5. The inspection and bank-reference grounds were reasonable, independent grounds for refusing consent. The excessive administration fee did not vitiate them. Henderson J therefore asked the wrong question when he treated the landlord's continued insistence on the fee as decisive.

6. The tenant could not recharacterise the landlord's decision on a second appeal as a refusal to entertain the applications rather than a refusal of consent. The unappealed findings below established that consent had been refused on three grounds, and the case had previously proceeded on that basis.

1. Court of Appeal (Civil Division): The landlord's appeal was allowed. The refusal of consent was reasonable because two independent and reasonable grounds would have caused the same decision without the unreasonable ground: [2018] EWCA Civ 250.
2. High Court, Chancery Division: Henderson J held that the inspection and bank-reference grounds were reasonable and that the administration fee was excessive. He held that the bad ground vitiated the good grounds: [2016] EWHC 2438 (Ch); [2017] 1 P & CR 8.
3. County Court: HHJ Walden-Smith declared all three conditions unreasonable, found a breach of statutory duty under section 3 of the Landlord and Tenant Act 1988, and ordered repayment of the disputed fees.