England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
His Honour Judge Huskinson
LRX/49/2016

		Royal Courts of Justice Strand, London, WC2A 2LL
		4 October 2018

Lord Justice David Richards:

Introduction

1. This appeal arises out of the sale of a flat held on a long lease. The first appellant (Ms Reiner) was the seller and the second appellant (Mr Wismayer) was the buyer.
2. Consent to the assignment of the lease, or to Ms Reiner subletting or parting with possession of the flat, was required from the landlord under a covenant in the lease (the covenant). Management of the block of flats containing Ms Reiner's flat had been assumed by a right to manage company, Northwood Hall RTM Company Limited (the RTM Company), in accordance with the Commonhold and Leasehold Reform Act 2002 (the 2002 Act). Under provisions of that Act to which I refer below, responsibility for giving or withholding consent was therefore vested in the RTM Company. However, it was not permitted to give consent without first giving 30 days' notice to the landlord, thereby enabling the landlord to object. It was found below that Ms Reiner had applied to the RTM Company for consent to the assignment. The RTM Company, of which at that time Mr Wismayer was the sole director, did not give notice to the landlord. This was a deliberate decision by Mr Wismayer who was concerned that the landlord would object. The RTM Company neither consented nor expressly refused consent to the assignment.
3. The contract to assign Ms Reiner's interest was completed on 29 July 2015. On 4 August 2015, the landlord, Triplark Limited, the Respondent in this appeal (Triplark), applied to the Land Registry for registration of a restriction to prevent registration of the transfer to Mr Wismayer. On 25 September 2015, it applied to the First-tier Tribunal for a determination that Ms Reiner had breached the covenant. The assignment has not been registered, so that Ms Reiner remains the registered proprietor of the leasehold interest. It is common ground that, unless and until the transfer is registered, there has been no "assignment" to Mr Wismayer for the purposes of the covenant.
4. On the application made by the landlord, the First-tier Tribunal held that Ms Reiner had parted with possession of her flat in breach of the covenant. On appeal to the Upper Tribunal (Lands Chamber) (HHJ Huskinson) (the UT), which the parties agreed and the UT ordered should proceed by way of a re-hearing, the UT came to the same conclusion.
5. Two principal issues arise on the appeal. First, did Ms Reiner part with possession of the flat for the purposes of the covenant when the contract to assign was completed? Second, if she did part with possession, was the failure of the RTM Company to give consent an unreasonable withholding of consent within section 1 of the Landlord and Tenant Act 1988 (LTA 1988)?

The facts in more detail

6. Northwood Hall in Hornsey Lane, London N9 is a block of 194 flats, which, in 2015, was held by Triplark under a head lease dated 19 January 1977. Ms Reiner is the registered proprietor of a leasehold interest in Flat LG-01 under an Underlease dated 12 May 1978 and granted for a period of a little over 123 years.
7. Under the covenant, contained in clause 3(8)(ii) of the Underlease, the lessee agrees that she will:

"Not at any time assign sublet or part with possession of the whole of the flat or permit or suffer the same to be done without the previous written consent of the Lessors such consent not to be unreasonably withheld."

8. The reversionary interest under the Underlease was, in 2015, held by Tripark, under its headlease of Northwood Hall, which interest included another 29 flats which were held "in hand", i.e, directly out of the headlease and which were not subject to long underleases. Triplark also held one further flat on a long underlease. In 2011, the management of the block was taken over by the RTM Company.
9. In March 2015, Ms Reiner put her flat on the market. Problems with a major overhaul of the heating system for the block led to a polarisation of views among the tenants about the RTM Company and its board, which appears to have adversely affected her ability to secure a buyer. In June 2015, she contacted the RTM Company to obtain necessary information, leading to communications with Mr Wismayer, its sole director following the resignation of the other three directors in May and June 2015. Mr Wismayer suggested that he might purchase the flat. On 26 June 2015 contracts were exchanged for the purchase of the flat by Mr Wismayer at a price of £445,000, with a deposit of 10% paid at that time. Completion was fixed for 29 July 2015.
10. The UT found that by 18 June 2015 Ms Reiner had through her communications with Mr Wismayer applied to the RTM Company for the consent required by the covenant. The RTM Company failed to give notice of this to Triplark. Mr Wismayer took a conscious decision not to do so, because Triplark, by virtue of its direct control, in 2015, of 30 of the other flats, was in the opposing camp to Mr Wismayer and he suspected that, on account of that, it would refuse its consent. He did not inform Ms Reiner or her solicitors that he had not notified Triplark nor did the RTM Company give its consent in writing under the covenant
11. The contract was completed on 29 July 2015. The full amount due by way of the purchase price was paid by Mr Wismayer to Ms Reiner. Ms Reiner moved out of the flat with her possessions and gave up the keys to Mr Wismayer.

The statutory provisions

12. The issues on this appeal raise questions of the construction of, and interplay between, the LTA 1988 and the 2002 Act. Section 1 of the LTA 1988 applies to covenants in tenancies against assigning, underletting, charging or parting with possession of the demised premises without the consent of the landlord, where the covenant is subject (as it is in this case) to the qualification that consent is not to be unreasonably withheld. Section 1(3) provides:

"(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."

13. By section 1(6)(c), it is for the landlord or other person who owed any duty under section 1(3) "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".
14. Section 2 provides that, in a case where the landlord or other recipient of an application for consent believes there to be another person who may consent (and who he does not believe has received the application or a copy of it), he is under a duty to the tenant to take reasonable steps to secure that a copy of the application is received by that other person within a reasonable time.
15. 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".
16. The 2002 Act introduced the regime whereby tenants of properties held under long leases can require the transfer of the management role from the landlord to a right to manage company.
17. Sections 98 and 99 make provision in relation to the grant of approvals under long leases of premises to which an RTM company has been appointed. Section 98(2) provides that where a landlord "has functions in relation to the grant of approvals to a tenant under the lease, the functions are instead functions of the RTM company".
18. Section 98(4) is of particular importance in the present case:

"The RTM company must not grant an approval by virtue of subsection (2) without having given-

(a) in the case of an approval relating to assignment, underletting, charging, parting with possession, the making of structural alterations or improvements or alterations of use, 30 days' notice, or

(b) in any other case, 14 days' notice,

to the person who is, or each of the persons who are, landlord under the lease".

19. Section 99(1) provides:

"If a person to whom notice is given under section 98(4) objects to the grant of the approval before the time when the RTM company would first be entitled to grant it, the RTM company may grant it only-

(a) in accordance with the written agreement of the person who objected, or

(b) in accordance with a determination of (or on an appeal from) the appropriate tribunal."

20. The words in section 99(1) "before the time when the RTM company would first be entitled to grant [approval]" refer back to the times specified in section 98(4). If, as here, the covenant precluded the landlord from unreasonably withholding its consent, the same restriction applies to the agreement contemplated by section 99(1)(a): see section 99(2). If objection is made, notice of it must be given to the RTM company and the tenant: section 99(4).
21. An application to the tribunal for a determination under section 99(1)(b) may be made by, among others, the landlord.
22. Section 107 provides for the enforcement of duties imposed by these provisions:

"(1) The county court may, on the application of any person interested, make an order requiring a person who has failed to comply with a requirement imposed on him by, under or by virtue of any provision of this Chapter to make good the default within such time as is specified in the order.

(2) An application shall not be made under subsection (1) unless-

(a) a notice has been previously given to the person in question requiring him to make good the default, and

(b) more than 14 days have elapsed since the date of the giving of that notice without his having done so."

Parting with possession

23. The first principal ground on which the appellants challenge the determination by the UT that Ms Reiner was in breach of the covenant when she completed the contract of sale of her flat is that she did not thereby part with possession of the flat.
24. The appellants' submission on this issue before us, as before the UT, was that, whatever the position between Ms Reiner and Mr Wismayer as seller and purchaser under the completed contract, Ms Reiner had not parted with legal possession of the flat and would not do so unless and until the transfer was registered. Ms Reiner remained the tenant under the Underlease and therefore remained in law entitled to the rights and subject to the obligations created by it, as well as the owner's powers under section 23 of the Land Registration Act 2002. For example, Ms Reiner as the tenant remained liable under clause 3(3)(a) to "repair maintain renew uphold and keep the flat….in substantial repair and condition" and under clause 3(5) to permit Triplark and its surveyors or agents to enter the flat to view and examine its condition. How, it was asked, could Ms Reiner perform these obligations if she had in law parted with possession of the flat?
25. The appellants submitted that the covenant is not broken by a tenant who retains possession in law and allows another to occupy the premises. They accepted that completion of the contract made Ms Reiner a bare trustee of her interest under the Underlease for Mr Wismayer, but that was inconsistent with a complete exclusion of Ms Reiner from legal possession of the flat.
26. It was common ground before us and the UT that the meaning of "parting with possession" in the covenant was governed by the decisions of this court in Akici v LR Butlin Ltd [2005] EWCA Civ 1296, [2006] 1 WLR 201 and Clarence House Ltd v National Westminster Bank plc [2009] EWCA Civ 1311, [2010] 1 WLR 1216 which in turn drew on the reasoning of the Privy Council in Lee Kee Ying v Lam Shes Tong [1975] AC 247.
27. In its decision at [79], the UT said that it was "important to distinguish between a true parting with possession and a circumstance where a lessee, who in law retains the possession, allows another to use and occupy the premises". Mr Johnson QC, appearing for the appellants, submitted that the UT went on immediately to ask the right question but lost sight of it in giving its decision:

"The question is whether the agreement between Ms Reiner and Mr Wismayer and the completion of that agreement on 29 July 2015 wholly ousted Ms Reiner from the legal possession of the flat so as to amount to a complete exclusion of Ms Reiner from the legal possession of the flat for all purposes."

28. At [82] the UT made the point that if the contract had related to unregistered land, the steps taken on completion would clearly have amounted to a parting with possession. The UT continued at [83]:

"Subject only to the fact that this case involves registered conveyancing, the foregoing in effect is what occurred in the present case. There was a contract for sale with vacant possession. This contract was completed by the execution of the transfer and by the handing over of the purchase price by Mr Wismayer to Ms Reiner and by the handing over of the flat by Ms Reiner to Mr Wismayer. There was a handing over by Ms Reiner to Mr Wismayer of the flat for all purposes with the full right to use it thereafter as he wished to the complete exclusion of Ms Reiner. Unless the particular rules regarding registered conveyancing require a different conclusion there was in my judgment as a matter of form and substance a parting with possession by Ms Reiner to Mr Wismayer."

29. Mr Johnson criticised this approach because it ignored the tenant's legal right to access to the flat, for example to ensure compliance with the covenants in the Underlease, in the period between completion and registration. The UT's response to this point was given at [89]:

"The fact that during the interregnum period Mr Wismayer, as unregistered purchaser, would not have had the ability to enjoy certain powers (e.g the power to serve a notice to quit had there been a tenant in the flat) and would have had to ask Ms Reiner as trustee to serve the relevant notice does not mean that Ms Reiner has retained any right to possession of the flat. All the rights over the flat which Ms Reiner continued to hold were rights which she held for the exclusive benefit of Mr Wismayer. In her personal capacity she was completely excluded from the legal possession of the flat for all purposes."

30. At [90] the UT said:

"Reverting to the considerations from the decision in Clarence House referred to in paragraph 80 above, I observe that the hallmark of the right to possession is the right to exclude all others from the property in question. In my judgment Mr Wismayer after the execution of the transfer on 29 July 2015 did have the right to exclude all others (including Ms Reiner) from the flat. I also notice that parting with possession is concerned with the question whether the tenant has allowed another into physical occupation with the intention of relinquishing the tenant's own exclusive possession of the property to that other. I consider that Ms Reiner did allow Mr Wismayer into physical occupation of the flat with the intention of relinquishing her own exclusive possession of the flat to him."

31. Mr Johnson criticised the assertion that Mr Wismayer had the right to exclude all others from the flat after completion, on the grounds again that Mr Wismayer was not the party required by the Underlease to give access to the flat to the landlord and its agents.
32. The UT therefore concluded at [91] that on 29 July 2015 Ms Reiner parted with possession of the flat to Mr Wismayer.
33. The Privy Council in Lam Kee Ying v Lam Shes Tong (Lam), and the Court of Appeal in Akici v LR Butlin Ltd (Akici), held that "possession" in covenants against alienation generally means "legal possession", as opposed to occupation. As Neuberger LJ (as he then was) remarked in Akici at [23], the distinction is rather technical "and, even to those experienced in property law, often rather elusive and hard to grasp", but it was nonetheless very well established.
34. Mr Johnson submitted that, even though Ms Reiner held all her rights under the Underlease as a bare trustee for Mr Wismayer, she remained in legal possession of the flat by reason of remaining in law the lessee. In other words, a completed equitable assignment of her interest as lessee was insufficient to put Mr Wismayer in legal possession of the flat. The relationship of trustee and beneficiary which came into existence on completion on 29 July 2015 was, Mr Johnson submitted, fundamentally incompatible with the notion that Mr Wismayer had wholly ousted Ms Reiner from the legal possession of the flat for all purposes. He relied in particular on a passage from the judgment of Farwell J in Stening v Abrahams [1931] 1 Ch 470 at 473-474, cited with approval by the Privy Council in Lam, that the grant of a licence to use the demised premises is not a breach of a covenant against parting with possession of it:

"unless his agreement with his licensee wholly ousts him from the legal possession…nothing short of a complete exclusion of the grantor or licensor from the legal possession for all purposes amounts to a parting with possession."

35. The critical question is, therefore, the nature of "legal possession". This question was analysed by this court in Clarence House Ltd v National Westminster Bank plc (Clarence House). Ward LJ, with whom Jacob LJ and Warren J agreed, accepted the appellant's submission that it meant "the right to enter and occupy the land to the exclusion of others": [28]-[29]. He cited from Lord Browne-Wilkinson's speech in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at [40], where the two elements necessary for legal possession were identified as being a sufficient degree of physical custody and control and an intention to exercise such custody and control on one's own behalf and for one's own benefit. He also cited from the judgment of Chadwick LJ in Manchester Airport plc v Dutton [2000] QB 133 at 142: "possession is synonymous…with exclusive occupation – that is to say occupation (or a right to occupy) to the exclusion of all others, including the owner or other person with superior title". Ward LJ said at [32(2)] that: "The hallmark of the right to possession is the right to exclude all others from the property in question".
36. At [32(5)], Ward LJ, referring to Stening v Abrahams, Lam and Akici, said: "This stream of cases is consistent with the notion that a leasehold covenant against parting with or sharing possession is concerned with the question of whether the tenant has allowed another into physical occupation with the intention of relinquishing his own exclusive possession of the premises to that other".
37. Both Lam and Akici establish that the question in any particular case of whether a person has parted with possession is to be determined on an examination of the facts of the case and the arrangements between the lessee and the person to whom it is said that possession has been given.
38. Applying the analysis set out in Clarence House to the facts of this case, the conclusion is in my judgment inescapable that Ms Reiner parted with possession of the flat to Mr Wismayer on completion of the sale of the flat. She comprehensively gave up physical possession and control of the flat to him by removing all her belongings and delivering the keys to him. Equally comprehensively, she ceded all legal right to possession of the flat by completing the contract to assign her interest as lessee. For good measure, the flat was expressly sold with vacant possession.
39. In these circumstances, it is nothing to the point that, unless and until the transfer was registered, Ms Reiner remained in law the lessee. The assignment was complete in equity and, as bare trustee, she was required to exercise her legal rights as lessee only in accordance with Mr Wismayer's directions and she was entitled to be indemnified by him against all liabilities and entitled to require him to perform all her obligations as lessee.
40. Moreover, as Ms Stevens-Hoare QC submitted, Mr Johnson's submissions would appear to give no substance to the covenant against parting with possession, in distinction to the covenant against assigning or subletting the flat. But there clearly is a distinction, as this court said in Horsey Estate Ltd v Steiger [1899] QB 79. In that case, an agreement for the sale of leasehold premises provided that, if after a certain period the contract had not been completed, the purchasers would be let into possession on terms that they paid the rent and other outgoings. The purchasers were let into possession while the contract remained uncompleted. It was held that this did not amount to a breach of a covenant in the lease against assigning or subletting the premises. In giving the judgment of the court, Lord Russell of Killowen LCJ said at p. 93: "Had the covenant been (as is of late years often the case) against parting with possession without licence of the landlord, the plaintiff company would have proved a breach of such a covenant".
41. I would therefore reject this ground of appeal.

Withholding consent

42. I have earlier set out the provisions of the LTA 1988 and the 2002 Act most relevant to this issue.
43. The provisions of the LTA 1988 are designed to improve the position of tenants, particularly where the landlord (or other person whose consent is required) fails to respond to an application for consent to an assignment, parting with possession or other alienation listed in section 1(1). Section 1(3) imposes a duty on a landlord (or other such person) within a reasonable time either to give consent or to give notice of the reasons for withholding consent or subjecting consent to conditions. The onus of proving that the landlord acted reasonably lies on the landlord. The duty is enforceable by a claim in tort for breach of statutory duty: section 4.
44. Under the 2002 Act, the grant of consent to such alienations is conferred on an RTM company in place of the landlord. However, the benefit of a covenant against alienation is a valuable right for the protection of a landlord's interest in the demised property. For that reason, section 98(4), which I have earlier set out in full, prohibits an RTM company from giving consent to a proposed alienation without having first given 30 days' notice to the landlord. Section 99(1) provides that, if the landlord objects to the grant of consent, an RTM company may grant it only either in accordance with the landlord's written agreement or in accordance with a decision of the appropriate tribunal. There can be no doubt that the purpose of these provisions is to provide some protection to landlords.
45. These provisions are to be read with the LTA 1988. Paragraph 13 of schedule 7 to the 2002 Act so provides:

"(1) The Landlord and Tenant Act 1988 (statutory duties in connection with covenants against assigning etc) has effect with the modifications provided by this paragraph.

(2) The reference in section 1(2)(b) to the covenants is to the covenant as it has effect subject to section 98 of this Act.

(3) References in section 3(2), (4) and (5) to the landlord are to the RTM company."

.

46. One consequence of this provision is that, although the 2002 Act contains no express provision for an RTM company to which an application for consent to an alienation is made to give notice of it to the landlord, the duty to do so arises under section 2 of the LTA Act 1988. It is right to add that the duty would otherwise arise by necessary implication under the 2002 Act.
47. A second consequence is that, by virtue of paragraph 13(2), the covenant against alienation without consent is made subject to section 98, which includes the prohibition in section 98(4). Therefore, both under the statute and under the covenant read with section 98, an RTM company is prohibited ("must not grant") from granting consent without first giving 30 days' notice to the landlord.
48. In the present case, the RTM Company did not give notice to Triplark, the landlord. The UT found that an application for consent had been made to the RTM Company by 18 June 2015 and, although that finding is challenged in the respondent's notice, I will proceed at present on the basis of that finding. The RTM Company was, therefore, prohibited from giving consent for Ms Reiner to part with possession to Mr Wismayer.
49. This prohibition formed the principal ground on which the UT held that the RTM Company had not unreasonably refused to give consent. The judge said at [100] that he accepted Ms Stevens-Hoare's argument that "if on a particular date the RTM Company is subject to a statutory prohibition that it must not grant an approval for an assignment, it cannot be said on the self-same date that the RTM Company is unreasonably withholding consent to such an assignment". Any other conclusion would deprive a landlord of the protection which section 98(4) is clearly intended to provide.
50. This conclusion is challenged by the appellants. The failure of the RTM company to react within a reasonable time to Ms Reiner's application for consent was a breach of its duty under the LTA 1988, read with the 2002 Act, and therefore constituted a deemed unreasonable withholding of consent (Footwear Corporation Ltd v Amplight Ltd [1999] 1 WLR 551 at 557-560). Reliance by the UT on section 98(4) was misplaced because it only prohibits the granting of consent without giving notice to the landlord. It says nothing about prohibiting an RTM company from unreasonably refusing consent, whether in the form of an express refusal or of a deemed refusal as a result of failing to respond to an application for consent. Mr Johnson submitted that this could be tested as follows. If the RTM company had in fact responded within a reasonable time after 18 June 2015 with a refusal on grounds that were reasonable, there would have been a valid refusal of consent. If it had responded with a refusal on grounds that were unreasonable, there would have been an unreasonable refusal of consent and Ms Reiner would have been entitled to proceed with the assignment and with giving possession to Mr Wismayer. Just as section 98(4) has no application to an express refusal of consent on unreasonable grounds, so it has no application to a deemed unreasonable refusal of consent. Neither an express nor a deemed refusal is the grant of consent, which is the sole concern of section 98(4), and Parliament must be taken to have decided not to equate the two.
51. I do not accept these submissions. The point relied on by the UT is simply stated. As the RTM Company was prohibited by section 98(4) in the clearest terms from giving consent until it had given 30 days' notice to Triplark, a refusal or failure to give consent in the meantime could not in law be unreasonable. The RTM Company had no choice in the matter; until it had given the requisite notice, it was required to withhold consent. The only response it could give (other than a refusal on reasonable grounds) was that it could not give consent until 30 days' notice had been given. In the present case, the RTM Company did nothing. How, I ask rhetorically, can that be unreasonable and amount to a deemed consent when it was prohibited from giving consent?
52. The point is clearly illustrated by what Sir Richard Scott V-C (as he then was) said in Norwich Union Life Insurance Society v Shopmore Ltd [1999] 1 WLR 531 at 545 E-G, in relation to the LTA 1988:

"The landlord has a statutory duty to the tenant within a reasonable time to give consent, except in a case where it is reasonable not to give consent. In judging whether it is reasonable not to give consent, the position must, in my view, be tested by reference to the state of affairs at the expiry of the reasonable time. If, at that time, the landlord has raised no point and there is no point outstanding which could constitute a reasonable ground for refusal of consent, then it seems to me that the landlord's duty is positively, as expressed by section 1(3), to give consent…If at that point it cannot be shown that it is reasonable for the landlord not to give consent, then the statutory duty of the landlord is to give consent, the court can so declare and the tenant can, in my judgment, proceed on the footing that the assignment in question would not constitute breach of a covenant not to assign without consent."

53. Reading that passage with the substitution of the RTM company for the landlord, as one must in the context of the 2002 Act, it makes clear that once there are no grounds for reasonably refusing consent, there is a positive statutory duty on the RTM company to give consent. But, an RTM company is expressly prohibited by section 98(4) of the 2002 Act from giving consent until 30 days' notice has been given to the landlord. It follows that, until such notice has been given, the RTM company cannot be under the positive duty to which Sir Richard Scott referred and there cannot be an unreasonable withholding of consent by the RTM company.
54. We do not have to decide what the position would be if, instead of doing nothing, it had refused consent on grounds that were unreasonable. But, in my view, the answer would be the same. Although a landlord refusing consent cannot later add to the reasons originally given by it, the position is in my judgment quite different where the RTM company is by statute prohibited from giving consent.
55. This conclusion does not prejudice the position of a lessee, such as Ms Reiner, who has applied for consent from an RTM company. Section 107 of the 2002 Act entitles "any person interested", which would include such a lessee, to apply to court for an order requiring "a person who has failed to comply with a requirement imposed on him by, under or by virtue of any provision of this Chapter to make good the default within such time as is specified in the order". A lessee could therefore apply for an order that the RTM company fulfil its duty of giving notice of the request to the landlord. It would be surprising if it was not part of standard conveyancing practice for solicitors or others acting for a selling lessee, where an RTM company is in place, to require evidence that the necessary notice has been given. Ms Reiner did not, of course, know of the RTM company's default in this case, but lessees might seek to protect themselves by requiring the provision to them of evidence that notice had been given by the RTM company and that the landlord had raised no objection within the 30 day period.
56. In my judgment, therefore, the UT came to the right conclusion on this issue for the principal reason given by it. Accordingly, I would reject the second ground of appeal.
57. The UT's alternative ground for concluding that the RTM Company had not unreasonably withheld consent is based on the particular facts of the case. The sale contract imposed on Mr Wismayer responsibility for obtaining the necessary consent from the RTM Company. At [104], the UT said that:

"The conduct of Ms Reiner in placing all responsibility for obtaining the RTM Company's licence upon Mr Wismayer (who to her knowledge was the sole director of the RTM Company) coupled with Mr Wismayer's own conduct placed the RTM Company in an impossible position. Ms Reiner and Mr Wismayer are not entitled to say that the RTM Company acted unreasonably."

58. While it is not necessary to consider this alternative ground in the light of my conclusion on the principal ground, I should say, for completeness, that I do not regard this ground as sustainable. Ms Reiner had no knowledge of Mr Wismayer's failure to give notice to Triplark or of his deliberate decision not to do so. If it had otherwise been open to the appellants to say that the RTM Company had unreasonably withheld consent, I do not see why Ms Reiner should be disqualified from doing so simply because the contract, sensibly in the circumstances, provided that responsibility for obtaining the consent lay with Mr Wismayer. The position might well be different if Ms Reiner had colluded with Mr Wismayer in his plan to avoid giving notice to Triplark, but she was entirely ignorant of this plan.
59. By its respondent's notice, Triplark challenged the UT's finding on the facts that an application for consent was made to the RTM Company by 18 June 2015. In view of my conclusion on whether the RTM Company unreasonably withheld consent, this challenge does not arise for decision.

Conclusion

60. For the reasons given in this judgment, I would dismiss the appeal.

Lord Justice Holroyde:

61. I agree.

Lady Justice Arden:

62. I also agree.