Ideal Film Renting Company v Nielsen
| Jurisdiction | England & Wales |
| Date | 1921 |
| Year | 1921 |
| Court | Chancery Division |
Landlord and Tenant - Underlease - Covenant not to assign without Consent - Cross-covenant by Lessor - Consent not to be unreasonably withheld - Private Company - Voluntary Liquidation - Reconstruction - Refusal of Consent to Assignments - Reasonableness.
By two underleases the defendant demised to the plaintiffs certain business premises, and the plaintiffs covenanted in each lease in identical terms that they would not assign the demised premises without the previous consent of the lessor, but the lessor covenanted with the plaintiffs not unreasonably to withhold such consent in the case of a respectable and responsible assignee. The plaintiffs were incorporated in 1913 to take over a small film-renting business, but had power by their memorandum to carry on the business of producers of films. They carried on at first a film-renting business, and shortly afterwards commenced a successful film-producing business as well, with a head office in London and separate premises in eleven of the large towns in the United Kingdom. In 1920, owing to the great need of more capital for the increasing business, the plaintiffs passed special resolutions for voluntary liquidation for the purpose of reconstruction. The new company was incorporated in 1920 as the Ideal Films, Limited, with a largely increased capital all fully paid up and with the view of carrying on exactly the same business as the old company under the same directors and staff. The defendant was informed of these facts and was offered any further information, but refused the request of the liquidator to consent to the assignment of the underleases to the new company. The grounds alleged for the refusal were that it was a new company which had done no business so far, and that the contemplated business of film producing was of a highly speculative character:—
Held, that the qualification of the lessee's covenant taking the shape of an express covenant by the lessor not to withhold his consent unreasonably did not put the lessee in a worse position than if there had been an express qualification in his own, but gave him a further remedy against the lessor; and if consent was unreasonably withheld the lessee could assign without it, and also bring an action for breach of the lessor's covenant.
Held also, on the facts, that the defendant's refusal was unreasonable, not being based on a reasonable apprehension of any change calculated to imperil the solvency of his tenants; and the plaintiffs were therefore entitled to a declaration of their right to assign the leases without his consent.
ACTION WITH WITNESSES.
The plaintiff company wax a private company incorporated in 1913 under the
The company's head office was at Nos. 76 and 78, Wardour Street, in the county of London, and it had separate premises at eleven large towns, including Liverpool, Glasgow, Manchester, Birmingham, Dublin, Nottingham, etc. In the memorandum of association the objects of the company were numerous and included the carrying on of “the business of manufacturers, producers, and dealers in cinematograph films, machines and accessories,” and also the manufacture, hiring, letting on hire, or dealing in films and cinematograph machines and all accessories used in the business of cinematograph entertainers. Shortly after its incorporation the company developed its business and started producing pictures as well as renting films, and ultimately became one of the largest producing companies in England. The defendant Niels Ove Nielsen was a Dane living and carrying on business at 76, Wardour Street, on part of the premises where the plaintiffs' offices were also situated.
By an indenture of underlease dated March 28, 1914, the defendant demised to the plaintiffs the ground and basement floors of the messuage and premises known as 76 and 78, Wardour Street, from March 25, 1914, for the term of fifteen and three-quarter years, less three days, at a rental of 650 l. a year; and the plaintiffs covenanted with the defendant that they “will not assign, underlet, or part with the possession of the said premises, or any part thereof, without the previous consent in writing of the lessor, but the lessor covenants with the company not unreasonably to withhold such consent in the case of a respectable and responsible assignee or under-tenant,” with a proviso that if any rent were in arrear for twenty days, or in the event of any breach of any of the covenants on the part of the company, or if the company should enter into liquidation, “whether compulsory or voluntary (other than for the purpose of reconstruction),” or if its assigns should become bankrupt, the lessor might re-enter upon the demised premises.
By a second underlease dated July 18, 1917, between the same parties the defendant demised to the plaintiffs the third floor of the said messuage and premises 76 and 78, Wardour Street, from June 24, 1917, for the term of twelve and a-half years, less three days, at a rental of 350 l. a year, and the plaintiffs covenanted with the defendant in identically the same terms as in the underlease of March 28, 1914, with the similar cross-covenant by the lessor, and the proviso as to re-entry.
Owing to largely increased business and the need of greater...
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