Go West Ltd v Spigarolo
| Jurisdiction | England & Wales |
| Judge | Mr Justice Munby,Lord Justice Pill,Lord Justice Potter |
| Judgment Date | 31 January 2003 |
| Neutral Citation | [2003] EWCA Civ 17 |
| Docket Number | Case No: B2/2002/0108 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 January 2003 |
[2003] EWCA Civ 17
Lord Justice Pill
Lord Justice Potter and
Mr Justice Munby
Case No: B2/2002/0108
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
His Honour Judge HORNBY
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Edward Cole (instructed by Wallace & Partners) for the appellant (claimant)
Mr Timothy C Dutton (instructed by Berwin Leighton Paisner) for the respondents (defendants)
Mr Justice Munby(giving the first judgment at the invitation of Lord Justice Pill) :
This is an appeal in a landlord and tenant dispute from a judgment and order of His Honour Judge Hornby sitting in the Central London County Court on 19 December 2001.
The appeal raises a novel point on the Landlord and Tenant Act 1988 ("the 1988 Act"), made no easier to resolve by the fact that it arises in circumstances which it appears that the draftsman of the legislation never had in mind.
It is convenient to set out the relevant parts of the 1988 Act before I go any further. Section 1 of the Act provides as follows:
"(1) This section applies in any case where –
(a) a tenancy includes a covenant on the part of the tenant not to enter into one or more of the following transactions, that is –
(i) assigning,
(ii) underletting,
(iii) charging, or
(iv) parting with the possession of,
the premises comprised in the tenancy or any part of the premises without the consent of the landlord or some other person, but
(b) the covenant is subject to the qualification that the consent is not to be unreasonably withheld (whether or not it is also subject to any other qualification).
(2) In this section and section 2 of this Act –
(a) references to a proposed transaction are to any assignment, underletting, charging or parting with possession to which the covenant relates, and
(b) references to the person who may consent to such a transaction are to the person who under the covenant may consent to the tenant entering into the proposed transaction.
(3) Where there is served on the person who may consent to a proposed transaction a written application by the tenant for consent to the transaction, he owes a duty to the tenant within a reasonable time –
(a) to give consent, except in a case where it is reasonable not to give consent,
(b) to serve on the tenant written notice of his decision whether or not to give consent specifying in addition –
(i) if the consent is given subject to conditions, the conditions,
(ii) if the consent is withheld, the reasons for withholding it.
(4) Giving consent subject to any condition that is not a reasonable condition does not satisfy the duty under subsection (3)(a) above.
(5) For the purposes of this Act it is reasonable for a person not to give consent to a proposed transaction only in a case where, if he withheld consent and the tenant completed the transaction, the tenant would be in breach of a covenant.
(6) It is for the person who owed any duty under subsection (3) above –
(a) if he gave consent and the question arises whether he gave it within a reasonable time, to show that he did,
(b) if he gave consent subject to any condition and the question arises whether the condition was a reasonable condition, to show that it was,
(c) if he did not give consent and the question arises whether it was reasonable for him not to do so, to show that it was reasonable,
and, if the question arises whether he served notice under that subsection within a reasonable time, to show that he did."
Section 2 of the 1988 Act imposes on the recipient of any written application by the tenant a duty to pass a copy of the application to any other person who may consent to the transaction. Section 4 provides that:
"A claim that a person has broken any duty under this Act may be made the subject of civil proceedings in like manner as any other claim in tort for breach of statutory duty."
The facts
The bare facts are shortly stated. The claimant is the tenant and the defendants are the landlords of premises in Camden High Street. The basement and ground floor are comprised in a lease made on 13 October 1992 for the term of twelve years from 29 September 1992. The first floor maisonette is comprised in a lease made on 15 March 1993 but for the same term. Nothing turns on the fact that there are two leases. Each lease contains a covenant:
"Not at any time during the said term to assign the whole of the demised premises without having obtained within three months prior thereto the consent in writing of the Landlord which shall not be unreasonably withheld or delayed."
It is common ground between Mr Edward Cole, who appeared before us on behalf of the tenant, and Mr Timothy C Dutton, who appeared on behalf of the landlords, that these are covenants falling within section 1 of the 1988 Act.
On 13 March 2001 the tenant's solicitors, Messrs Richard Freeman & Co ("RF"), wrote to the landlords seeking licence to assign both leases to Fleetmill Limited. Correspondence ensued. The landlords instructed solicitors, Messrs Berwin Leighton Paisner ("BLP"), to act for them. On 30 May 2001 BLP wrote to RF refusing consent to assign the leases. Further correspondence followed. On 10 July 2001 the tenant commenced proceedings in the Central London County Court seeking a declaration that the landlords had unreasonably withheld their consent to the proposed assignment. The trial came on before His Honour Judge Hornby who on 19 December 2001 gave judgment for the landlords.
The learned judge's decision is to be found in the following passages in his judgment. The first (Transcript p 31F) is this:
"I … hold that on 30 th May 2001 the [landlords] served upon the [tenant] written notice of their decision to withhold consent and that upon that date it was not reasonable for the defendants to withhold such consent for the reasons given in their written notice and to that extent they were in breach of their duty under section 1 of the Landlord and Tenant Act 1988.
That is not, however, an end of the matter at all, as in my judgment it is clear from the correspondence … which passed between the parties after 30 th May that it shows that the parties effectively treated the letter of 30 th May as having no real effect, because both sides treated the [tenant's] request for consent to be given as continuing."
Having then considered the correspondence and analysed events from 30 May 2001 to 10 July 2001, the judge asked himself this question (Transcript p 45G):
"Was this consent still being unreasonably withheld on 10 th July? The burden is on the landlord to show that he is moving with due diligence and properly, having regard to the exigencies of time, to a proper conclusion."
He continued (Transcript p 46F):
"How can one say that as at 10 th July they were acting unreasonably without regard to the exigencies of time. My view of the correspondence … is that there would be no breach of duty by the [landlords] as at 10 th July."
He concluded (Transcript p 48E):
"I am not persuaded that there has been a breach as at 10 th July."
It is to be noted – and this is an important point which gives rise to the first issue we have to decide – that the learned judge did not hold that the reasonable time referred to in section 1(3) of the 1988 Act had expired by 30 May 2001. On the contrary, the judge's decision was in effect that the landlords had 'jumped the gun' by refusing consent by the letter dated 30 May 2001 without giving the tenant adequate time to respond to a letter dated 21 May 2001 in which BLP had, as the judge found, properly been seeking further information from the tenant. That letter had ended by saying "We look forward to hearing from you with the outstanding references as a matter of urgency so that we may progress this matter." The letter of 30 May 2001 was sent without waiting for the tenant's response and, as the judge pointed out, without the landlords even sending a 'chaser'. Essentially, the landlords' refusal of consent was unreasonable because it was premature.
It appears that the letter of 30 May 2001 may have been sent by mistake, that mistake arising out of some misunderstanding between the landlords and BLP. But Mr Dutton properly accepts that that fact, if fact it be, cannot affect the position as between his clients and the tenant.
I need not further describe the correspondence down to 30 May 2001. But to put counsel's submissions in context it is necessary to consider the correspondence between 30 May 2001 and 10 July 2001 with some care. I start with the landlords' refusal of consent.
i) On 30 May 2001 BLP wrote to RF refusing consent, the stated reasons being, in essence, that the tenant had failed to propose acceptable sureties.
ii) On 31 May 2001 RF wrote to BLP challenging these reasons. The letter added:
"In the circumstances your client may on reflection wish to withdraw the refusal … for the obvious reason that if we apply to the Court for a Declaration our client will succeed in obtaining one … Unless … we have your confirmation that the refusal is withdrawn by close of business on 4 th June we shall issue proceedings without further notice."
iii) BLP replied on 1 June 2001 asserting that RF's analysis was flawed. The letter went on:
"Should you issue proceedings they will be strenuously defended. Our client will reconsider the position on receipt of further references. However, we consider it unlikely that consent will be given".
iv) RF responded on 7 June 2001 saying that,...
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