Mark Buddha Singh v Mr Iqbal Dhanji and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Floyd,Lord Justice Underhill,Lord Justice Richards |
| Judgment Date | 13 March 2014 |
| Neutral Citation | [2014] EWCA Civ 414 |
| Docket Number | Case No: B5/2011/3363 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 March 2014 |
[2014] EWCA Civ 414
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NOTTINGHAM COUNTY COURT
(HIS HONOUR JUDGE BARRIE)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Richards
Lord Justice Underhill
Lord Justice Floyd
Case No: B5/2011/3363
Mr Stewart Patterson (instructed under the Direct Access Scheme) appeared on behalf of the Appellant
Mr Mark Diggle (instructed by Howman & Co) appeared on behalf of the Respondents
This is an appeal from His Honour Judge Barrie in a claim against an appellant landlord for damages for breach of statutory duty arising out of his refusal to consent to the assignment of a lease on dental premises at Talbot Street, Nottingham. After a three-day trial in the Nottingham County Court, His Honour Judge Barrie granted a declaration that the landlord's conditions for permitting the tenant to assign the lease were unreasonable and awarded damages, which he assessed at £183,000 plus interest of £31,000, giving a total judgment of some £214,000. He appeals from that judgment by permission of Rix LJ, granted at an oral hearing in October 2012 both in relation to the declaration and the damages award.
The appellant landlord, Mr Mark Buddha Singh, was referred to by the judge as "Mr Buddha" and I will continue to do so. Mr Buddha is a dentist and the owner of adjoining properties at 1A and 3 Talbot Street. Until March 2000 he practised there as a dentist, but in March of that year he sold the practice and let the building at number 3 Talbot Street to another dentist, Miss Hassanally (now Mrs Dhanji, and I will so refer to her), granting her a 15-year term from 10 March 2000. Her husband, Mr Iqbal Dhanji, is the practice director at the Talbot Street practice.
The relationship between Mr Buddha on the one hand and the Dhanjis on the other was not a congenial one almost from the outset. A number of disputes ensued. Firstly, Mrs Dhanji brought a claim for damages and breach of warranty in relation to the sale which was settled on terms which the judge described as favourable to Mrs Dhanji. Secondly, the rent due from Mrs Dhanji was, due to an error, not paid to Mr Buddha for a period of more than one year. This was because, again as the judge found, Mr Buddha had closed the account into which the rent was to be paid. Mr Dhanji was the first to notice the problem and raised it with Mr Buddha. This led Mr Buddha to reenter the premises on the evening of 16 December 2006 by way of an opening from number 1A into number 3 at attic level, to change the locks and disconnect the electricity supply. The judge characterised this conduct as unreasonable and unjustified, and noted that it had led to severe disruption to patients and to staff. Mr Buddha had had no reason to doubt that the tenants intended to pay the arrears which had arisen primarily through his own decision to close the account. His reentry into the premises led to the granting of an injunction by Briggs J, as he then was, on 19 December 2006 to restore Mrs Dhanji to possession and led some months later to a successful application by Mrs Dhanji for relief from forfeiture concluded at a hearing on 13 July 2007.
On the occasion of his evening visit, Mr Buddha noticed to his surprise that the premises had been extensively refurbished by Mrs Dhanji. This refurbishment had been carried out in 2004. The work involved moving two stud partition walls, replacing all the dental chairs and associated plumbing, replacing the sinks, cupboards and other equipment, removing suspended ceilings and replacing flooring. The cost of the works had been some £140,000. Mrs Dhanji did not tell Mr Buddha about it at the time.
The judge had before him two further disputes. The first of these concerned whether the lease was to be treated as forfeit because of Mrs Dhanji's alleged breaches of covenant identified in a number of notices served under section 146 of the Law of Property Act 1925. The second dispute concerned whether Mr Buddha had unreasonably refused his consent to an assignment of the lease proposed in July 2007. It is this last dispute alone which is the subject of this appeal.
On 26 July 2007 Mrs Dhanji's solicitors wrote to Mr Buddha to apply for consent to an assignment of the lease to a proposed purchaser, Dr Pradhan, who was a cousin of the tenants. Mr Buddha responded on 7 August 2007 to say, amongst other things, that he was preparing notices in relation to breaches of the lease. He added that until the breaches were resolved no assignment would be agreed to. He reiterated this point in a further letter of 9 August.
On 23 August and 9 September 2007, Mr Buddha served a number of section 146 notices. The judge found that Mr Buddha's definitive decision on the request for consent to assign was given in a letter of 17 September 2007. This contained a consent to assignment conditional on, firstly, all breaches of the lease specified in section 146 notices being complied with; secondly, that the tenant notify him of that so that an inspection could be carried out; and thirdly, that the tenant had, as he put it, stopped trespassing in the adjoining building. The letter also asked for confirmation that the proposed assignee was aware that Mr Buddha did not propose to renew the lease at the end of its term, but the judge held that that was not a condition of the assent to assign.
The tenants' response was to assert that even if the breaches complained of were genuine claims they were of such a minor nature that they would not adversely affect the value of the landlord's reversion. She denied that the breaches had taken place. Thus, as the judge said, the battle lines were drawn. On 24 September 2007 Mr Buddha brought a claim for possession based on the section 146 notices. Shortly thereafter, Mrs Dhanji brought her claim for a declaration that she was entitled to damages for unreasonable refusal of the consent to assign.
The lease contained the usual restriction on assignment without the landlord's consent, such consent not to be unreasonably withheld. As such, it imposed the duties on the landlord provided for in section 1 of the Landlord and Tenant Act 1988, which are as follows:
"1 Qualified duty to consent to assigning, underletting etc of premises.
(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."
Thus the burden of showing that the conditions of the assent were reasonable fell on Mr Buddha.
Mr Patterson, who appears for Mr Buddha, took us through a number of authorities. In particular, he stressed that the landlord's obligation to show that his conclusions were reasonable does not mean that he must show that they were right or justifiable; what must be shown is that they were conclusions which might be reached by a reasonable person in the circumstances. "Reasonable" should be given a broad commonsense meaning in this context as in others. For that he relied on Ashworth Frazer Limited v Gloucester City Council [2001] UKHL 59; [2001] 1 WLR 2180 at [5]. I accept that that is the right approach.
Mr Patterson also accepts that the mere fact that the landlord is able to identify a breach of covenant does not mean that he is reasonable in refusing consent. The question is...
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Singh V Dhanji (Consent To Alienation)
...duty arising out of his refusal to consent to the assignment of a lease of dental premises in Nottingham: Singh v Dhanji and Dhanji [2014] EWCA Civ 414. The Trial Judge had granted a declaration that the landlord's conditions for permitting the tenant to assign the lease were unreasonable a......