England and Wales High Court (Chancery Division) Decisions

Chancery Division

		10 April 1997

1. Giving judgment, SIR RICHARD SCOTT V-C said:This is an appeal against an order made by Master Barratt on February 21 1998 on an Ord 14 application for summary judgment in a landlord and tenant matter.
2. The litigation concerns property in Sheffield, situated in a street which I understand is a street of shops called The Moor. In a lease dated December 23 1993 Sheffield City Council, who I believe are freeholders, demised the property known as Rockingham House, nos 32 to 54 (even numbers), The Moor, to Norwich Union Life Insurance Society. It seems to be the case, although I have no details of this, that the corporation, as well as owning Rockingham House, owned other properties in The Moor. Be that as it may, Rockingham House was demised to Norwich Union for a term of 150 years from the date of the lease at a yearly rent of £ 100. It would be expected that a substantial premium was therefore paid. The premium was £ 460,000.
3. The lease contained a number of tenant's covenants that are relevant to this litigation. The covenants are in clause 2 of the lease. Subclause (2) required the lessee, Norwich Union, to pay all existing and future rates, taxes, etc. Subclause (6) was a user covenant:

(6) Not without the previous consent in writing of the Council which consent shall not be unreasonably withheld or delayed to use any part of the buildings erected on the demised property for any purpose or purposes other than as a saleshop department store restaurant assembly rooms work-rooms and workshops (the user of such workrooms and workshops to be limited to such purposes as are ancillary to the business carried on on the premises) staff living accommodation (but comprising reasonable accommodation only to such employees of the Lessee or its tenants or other occupiers of the demised property as shall be necessarily resident upon the premises for the purposes of the Lessees or its tenants or other occupiers of the demised property businesses) offices and garage for the parking only of vehicles …

4. There was, however, a proviso that the ground floor of the building should not be used except as a sales shop and department store. Subclause (15) imposed repairing obligations on the lessee. The covenant was:

(15) To keep the demised property and all services within the demised property in good and substantial repair (including the replacement of any part thereof where necessary) and decorative condition throughout the said term to the reasonable satisfaction of the Council.

5. There was, in addition, an obligation to pay a proportionate part of various other repair costs that might have to be incurred for the benefit both of the demised property and of other neighbouring properties. There was a covenant obliging the lessee to take appropriate steps to abate nuisances. There was a covenant requiring the lessee to pay the proper and reasonable administrative charges of the property services manager for considering and dealing with any application for consent, approval or authority.
6. The most important of these covenants is that relating to assignments. The covenant is to be found in subclause (9)(b) which provided:

(b) Not at any time during the last seven years of the said term to transfer assign underlet or part with the possession of the demised property or any part thereof and not at any time during the remainder of the said term to transfer assign underlet or part with the possession of the demised property or any part thereof without the previous consent in writing of the Council such consent not to be unreasonably withheld or delayed.

7. In April 1996 Norwich Union wrote to Sheffield Corporation informing the corporation that Norwich Union had entered into a conditional contract for the sale of the leasehold interest in Rockingham House. The letter sought the council's consent, pursuant to clause 2(9)(b) of the lease, for the assignment of the lease to a proposed assignee named as 'the Pelmore LP'. Pelmore LP was identified as a limited partnership registered in the State of Delaware, USA, whose registered place of business in the UK was 20 Conduit Street, London W1.
8. The ensuing correspondence led to the corporation informing Norwich Union that the corporation had granted a lease of the property to a company, the defendant to this action, Shopmoor Ltd. Shopmoor Ltd had become, vis-à-vis Norwich Union, the landlord under the 1993 lease. The corporation said also that they had asked the agents for Shopmoor Ltd to deal with Norwich Union's request for consent to the assignment.
9. The correspondence to which I have referred led, naturally, to correspondence between Norwich Union and the agents acting for Shopmoor Ltd. Those agents were a firm called Lambert Smith Hampton. The partner dealing with the matter was a Mr Bryan.
10. The first communication between Norwich Union and Mr Bryan appears to have been by telephone, but on June 19 1996 Mr Bryan wrote to Norwich Union, referred to the telephone conversation and said that he looked forward to:

hearing from you further with full details of the proposed transaction so that I may then take my clients instructions.

11. For all relevant purposes, therefore, it seems to me, Norwich Union's request for Shopmoor Ltd's consent to the assignment may be taken to have been made in about mid-June 1996.
12. In a letter of June 21 Mr Bryan wrote more fully to Norwich Union. He referred again to his telephone conversation and said:

I am sure you will agree there is a need for more information in respect of the proposed transaction.

I would therefore be grateful if you could let me have full details as to precisely who the purchaser is and the terms of the transaction especially bearing in mind your reference to the condition of the letting of the ex Nightingales shop.

13. I should explain that last reference. I have already mentioned that the proposed assignment to Pelmore LP was conditional. The condition was the letting by Norwich Union of a part of the demised premises, the part described in this letter from Mr Bryan as 'the ex Nightingales shop'. It was no 54 The Moor.
14. In response to the letter of June 21, to which I have just referred, Norwich Union gave some details to Mr Bryan. In the letter of June 24, the author, Mr Coles, said:

The Society has entered into a conditional contract to dispose of its interest in Rockingham House to The Pelmore LP, a limited partnership registered in the State of Delaware, USA pursuant to The Delaware Revised Uniform Limited Partnership Act …

15. Then a reference is given:

acting by Pelmore GP LLC, a limited liability company formed under The Delaware Limited Liability Company Act …

16. A reference to that Act is then given:

whose registered office is c/o 1013, Centre Road, Wilmington, County of New Castle, Delaware …

17. Then a Delaware postal reference is given:

and whose registered place of business in the UK is 20 Conduit Street, London, W1R 9TU.

The Contract is conditional upon the Society achieving a letting of the Nightingale's unit upon current market terms, and Robin Smith of Messrs Smith Price is the Society's letting agent.

Rockingham House forms part of the portfolio of 13 properties being sold to The Pelmore LP, and completion has already taken place in respect of 11 of those properties. The total consideration to be paid by the Purchaser is in the region of £ 25m. The Society is of the opinion that the Purchaser is well able to observe the obligations of the Lessee contained in the lease dated 23rd December 1993.

If you require any further information, please do not hesitate to contact John Watkins, or if in respect of the letting of the Nightingale's unit, Robin Smith.

Accordingly, the Society seeks your client's consent to the proposed assignment pursuant to Clause 2(9)(b) of the Lease dated 23rd December 1993.

18. I would draw particular attention to the offer in that letter to provide any further information that Mr Bryan might seek.
19. The correspondence continued between Mr Bryan, writing on behalf of Lambert Smith Hampton, and Norwich Union officers. By a letter of July 4 1996 Norwich Union sent Mr Bryan a schedule detailing Norwich Union's subtenants of Rockingham House and giving a little further information about the reason why the Nightingale unit had become vacant. There had, apparently, been a disclaimer by liquidators. Details were given in regard to other sublettings about which some questions had been asked by Mr Bryan. Finally, the Norwich Union letter said:

Completion of the sale of the Society's Headlease is conditional upon obtaining an acceptable letting of the former Nightingales unit or proving liability of the former tenants under privity of contract. As you are aware, the sale forms part of a much larger portfolio of properties, totalling some £ 25M. Unfortunately I am unable to give you an individual breakdown of the purchase price relating to this individual transaction as it is confidential to the parties concerned. Whilst I can appreciate that our application for your Client's consent is an opportunity for a wider information-gathering exercise, the sale price is not relevant to your Client's assessment of Pelmore LP as a future tenant paying a ground rent of £ 100 per annum.

20. I draw attention to that passage, because it indicates that Mr Bryan had been pressing to be told what apportionment of the total £ 25m price had been attributed to Rockingham House, and that Norwich Union had refused, at this stage at least, to provide that information. The response from Mr Bryan, dated July 9, said that his instructions were clear:

there is an absolute need to receive full details of the proposed transaction before my clients can consider the application any further.

21. The details of the proposed transaction that he had requested, and had not been given, related to the apportionment of the £ 25m price so as to indicate what was being attributed to Rockingham House.
22. Mr Kirk Reynolds QC, counsel for Shopmoor before me, has submitted that, in asking to receive full details of the proposed transaction, Mr Bryan was asking not simply for details of the proposed transaction, but was asking, and should have been understood to have been asking, also for details of the financial worth of the proposed assignee. I am unable to read that letter in that sense. If Mr Bryan wanted details of the financial status of the proposed assignee, he could easily have so asked. The question could have been shortly, simply and clearly put. The matter that he was concerned about, he did put shortly and clearly. He was concerned to receive full details of the proposed transaction which, in the context of the correspondence, meant he wanted to know what price had been attributed to Rockingham House.
23. The next letter from Norwich Union related to the underletting. In a letter of October 16 1996, that is, over three months after the previous letter, Norwich Union addressed that subject. There is some evidence in the affidavits before the court explaining why that three-month delay occurred. The explanation put forward by Mr Bryan is that in a discussion with one of the officials acting for Norwich Union, it was agreed that until the underletting had been arranged, there was no point in pursuing the request for consent to the assignment, because the assignment was conditional on the underletting. So, Shopmoor Ltd took no further step during those three months in deciding what it was going to do about the application for consent to the assignment. The ball was, so to speak, in Norwich Union's court to make final arrangements for the underletting, at which point it would be in a position not simply to continue to press its request for consent to the assignment, but also to seek consent to the proposed underletting. The underletting would have to be completed if the assignment was to be completed, so both consents would be necessary.
24. In the letter of October 16, the author, Mr Coles, gave details of the proposed underletting. He said:

the Society have now agreed a letting of the former Nightingale's unit … to Arc Retail Management Limited … for a term of 10 years at a commencing rental of …Year 1 - £ 95,000 …

25. Then the rents for years two, three, four and five, with increasing rents in each of those years, are specified. The letter said there would be an upwards-only rent review at the end of the fifth year. It said that the tenant would receive a rent-free period of nine months and was to lodge with the society a rent deposit equivalent to six months' rent with the society. The letter said the premises were to be used as Class A1(a), that is to say ordinary retail premises for the sale of ladies' fashions and ancillary items:

or for such other [retail] use as the Society may consent to, such consent not to be unreasonably withheld.

26. The letter said that the parties were working towards providing the tenant with occupation of the premises by no later than October 31, and, accordingly, the letter sought consent pursuant to clause 2(9)(b) of the lease for the proposed underletting to ARC Retail Management Ltd. The letter then referred, again, to the completion of the assignment to Pelmore LP. It referred to the rent payable under the headlease as being for a nominal amount, that is to say the £ 100 pa, referred to the continuing liability that Norwich Union would have as original lessees and said:

I can see no reason why your Clients should continue to delay the giving of consent.

27. The letter said that Mr Coles looked forward to:

hearing from you at your earliest opportunity that your Clients will consent to both the letting and the assignment.

28. By his letter of response on October 23, Mr Bryan raised questions about costs and fees. He asked for confirmation that Norwich Union would be responsible for: paying his firm's fees of £ 250 plus VAT; the solicitors' fees, also put at £ 250 plus VAT; and the fees of his client's building surveyors on a time-chart basis of £ 79 per hour, plus VAT and expenses. He said:

Once I receive approval to the above I will then write to you seeking whatever further information is required.

29. Finally, he referred to the previous correspondence regarding consent to the assignment and said:

I did ask for full details of the proposed transaction …

30. That could, in my judgment, only be read as a reference to his request to be told the apportioned price to be attributed to Rockingham House. He ended by saying:

I take the view that until that information is forthcoming my clients are not under any obligation to commence consideration of the application.

31. The letter of October 23 was the first in which the question of fees had been mentioned. The position regarding fees and costs when a landlord's consent to assignment is sought is that, under a section of the Landlord and Tenant Act 1927, the landlord is permitted to require the tenant seeking consent to pay a reasonable sum towards the landlord's costs of considering the application.
32. The last paragraph of Mr Bryan's letter of October 23 referred again to the 'full details of the proposed transaction'. As I have already said, in the context of this correspondence I read that reference as relating to Mr Bryan's requirement to be told the part of the overall price of £ 25m that had been attributed to this particular property, Rockingham House.
33. Mr Reynolds, for Shopmoor, has accepted, rightly in my opinion, that a landlord whose consent is sought to a proposed assignment is not entitled to be told the price at which the transaction is taking place. It must follow that this insistence by Mr Bryan to be told the apportioned price before consent was given was not a reasonable requirement.
34. Norwich Union's response of the 24th, however, did give Mr Bryan the apportioned price that had been sought. The letter said that the apportionment in respect of Rockingham House was £ 3.7m, but made the point again that the transaction was conditional in that it was subject to the reletting of the Nightingale unit at no 54 The Moor. The letter informed Mr Bryan that:

The Society has no further information it can give regarding the Assignee and I request that your Clients now give full consideration to the assignment and give their consent.

35. Mr Reynolds submitted that it was clear from this letter that Norwich Union knew that Shopmoor, through Mr Bryan, was worried about the financial status of the assignee. I am not prepared to accept that that is a reasonable reading of this letter or of the correspondence leading up to this letter. There is no reference in any letter to the financial status of the proposed assignee. A landlord with worries in that regard can reasonably, in my view, be expected to make them explicitly clear. Whatever may have been in the mind of Mr Bryan when writing the letters he wrote, and when reading the letters from Norwich Union, I am not satisfied, on a fair and normal reading of this correspondence, that the financial status of the proposed assignee was something he had in mind at the time.
36. The letter of the 24th made clear Norwich Union's wish to have a decision on their application for consent to the assignment given speedily. The response to that letter, a letter of October 29 1996, from Mr Bryan, contains some comments on fees, particularly in relation to the costs of Shopmoor's building surveyors who, Mr Bryan suggested, would need to consider any shopfitting works proposed to be carried out by the tenant to whom Norwich Union proposed to sublet the Nightingale unit. In the final paragraph of the letter, Mr Bryan asked for information on the proposed works, or the lack of them, so that he could arrange an inspection by the building surveyors.
37. As to the assignment and consent to the assignment, he said he was unable to progress the matter because the client, by which he meant the executive of Shopmoor who was responsible for the matter, was away on holiday. The next letter, dated November 7, from Norwich Union expressed Norwich Union's agreement to cover Shopmoor's surveyors' reasonable fees, up to an agreed maximum. The amount of the agreed maximum was never specified, but none the less this letter, in my view, prevents the issue of costs from being a ground upon which consent could reasonably have been withheld.
38. Norwich Union then, by a letter of November 18, sent to Mr Bryan details of the shopfitting proposals which had been received from the proposed subtenant of the Nightingale unit, and asked for those to be considered. The letter said:

This should therefore complete all the information required for your clients to assess the proposals for this proposed sub-letting and as previously confirmed by Mr Coles, we will of course underwrite your client's reasonable and proper costs in connection with this application.

39. There then followed, on November 22, either a meeting or a telephone conversation (it is not quite clear which) between the Norwich Union official dealing with the matter and the Shopmoor executive, to whom I referred a moment ago, Mr Warren. There is a note from the Norwich Union official recording what was said in the course of this conversation, or meeting (as the case may be). It is apparent from this note that Mr Warren had asked for further information regarding the proposed subletting. The note reads:

I was very surprised to learn that further information was still required on ARC in connection with our application relating to this proposed sub-letting. In view of the fact that the original proposal was sent to you in the middle of last month and there has been further correspondence concerning fees, why wasn't this need for further information communicated to us earlier?

40. The fax message went on to give information about other trading outlets from which ARC traded and identified ARC's landlords in respect of those outlets. The message ended by saying:

Please confirm by return that you now have sufficient information to process this application without further delay.

41. On November 26, consent to the assignment and consent to the underletting still not having been given, Norwich Union sent Shopmoor Ltd a letter before action. The letter referred to the fact that the applications for consent had been made some considerable time ago and that no decision on them had been communicated by Shopmoor. It said:

we are of the view you are withholding consent to assignment unreasonably and withholding consent to underletting unreasonably.

42. The letter said that unless the consents were given by 4pm on Friday November 29, proceedings for declarations would be commenced. That letter before action produced two letters in response from Mr Bryan, which are worth a certain amount of attention. Each of these letters was dated November 28 and I will take the letters in the order in which they appear in the bundle of documents before me.
43. The first of these letters said, in para 2:

2. Information is still required from your company on the proposed underletting and in this direction I can do no better than to enclose the following:

(i) My letter to Mr Watkins of 26th November

(ii) My letter to Mr Watkins of today's date.

44. The latter letter is the second letter of November 28, to which I shall be referring in a moment. If one goes to the letter to Mr Watkins of November 26, one finds no request for information in that letter. There is a reference to fees.
45. Mr Bryan says he thinks the question of fees has been left in a somewhat vague manner. But there is no request for information. So, what he had in mind in referring to his letter of November 26 is not clear to me. After referring to his letter to Mr Watkins of November 28, which, as I have said, I will come to, Mr Bryan went on to refer to the assignment. He said:

we do not appear to have a formal application for this consent.

46. That was a quite astonishing remark for him to have made. A formal application for consent had been made as long ago as June and had been pressed for in the June and July correspondence and in the correspondence in October and November. An inference which might be drawn from Mr Bryan's remark that there had been no formal application for consent is that Mr Bryan had simply not bothered to reread the earlier correspondence. His letter went on:

We have no information whatsoever on the details of the proposed assignee, unusually namely Pelmor [sic] LP. Shopmoor are entitled to know the nature of the proposed assignee.

47. Now, that is an extraordinary remark to make, bearing in mind that in the letter of June 24 1996, details of Pelmore LP had been given and Shopmoor had been told the nature of the proposed assignee. As to this, Mr Reynolds repeated his submission that what Mr Bryan was asking for were details of the financial substance of Pelmore, but I repeat an observation I have already made. If Shopmoor wanted details of the financial substance of Pelmore LP, there was no problem in Mr Bryan formulating the question in clear and explicit terms. At no stage had that been done.
48. In his affidavit, sworn for the purposes of these proceedings, Mr Bryan has said, in para 6:

It appeared to me entirely reasonable for the Defendant to have detailed information about the state of Pelmore's finances so as to satisfy itself as to Pelmore's good character and standing.

49. Now, if a question along those lines had been, at any stage, addressed by Mr Bryan to Norwich Union, there is no reason to suppose that the question would not immediately have been answered. But no question on those lines was ever addressed to Norwich Union, and it is, to my mind, unsatisfactory for Mr Bryan to seek, by an affidavit sworn on February 4 1997, to amend and clarify, to the disadvantage of Norwich Union, the correspondence which had taken place over the relevant months in 1996.
50. Turning to Mr Bryan's other letter of November 28 to Mr Watkins, the letter commences with a reference to the meeting between Mr Warren and Mr Watkins on November 22 - the meeting which led to the fax message to which I have already referred - and then continues:

Mr Warren reminds me that he mentioned to you when you met him on 22nd November that further information is still required in respect of Arc Retail Management Limited.

51. It will be recalled that in the faxed message certain additional information was given about ARC, in particular in connection with its trading outlets and the identity of the landlords at some of those outlets. This letter of November 28 went on to identify the further information that was still required:

More information as to who the tenant actually is, ie have you taken references out and can you supply the registered address?

52. That seems to me a rather odd item of information to be sought. Shopmoor knew who the tenant actually was. It was ARC Retail Management Ltd. The reputation of ARC was not something which had been previously raised. There is no suggestion that ARC was thought to be undesirable in the sense of having a record of unsatisfactory trading practices or anything of that character.
53. The second item of 'further information' still required was 'where currently trading'. But that was information which had been given by Norwich Union in the faxed message of November 22 to which I have referred. Here, again, it seems that Mr Bryan had not looked back at the previous correspondence.
54. Third, the letter asked for information about 'precise user'. But details of the precise user had been given in the original application for consent. The letter of October 16 had said that the premises were to be used as:

class A1(a) premises for the sale of ladies fashions and ancillary items or for such other retail use as the Society may consent to …

55. The request for more precise user seems to me to have been entirely misplaced. The final item of further information that was requested was:

4. Further information from you to allay our concerns that they operate as 'temporary traders'.

56. That, too, was a matter which had not been specifically mentioned in any of the previous letters. It may or may not have been something which Mr Warren mentioned to Mr Watkins at their meeting on November 22. It is not referred to in Mr Watkins' faxed message of that date and there is no evidence before me from Mr Warren. It is a matter, however, which has been relied on by counsel to some extent and it is a matter to which I shall therefore refer.
57. Mr Bryan's letter to Mr Watkins went on to make comments regarding other subtenants of Rockingham House, but nothing, for present purposes, turns on that.
58. Mr Watkins, on behalf of Norwich Union, answered Mr Bryan's second letter of November 28 by a letter of November 29. Mr Watkins told Mr Bryan that Norwich Union had not taken out references, but had seen ARC's latest accounts. He gave its registered address. He said, as he was entitled to do, that his faxed message of November 22 had given the details of where ARC was currently trading. He reminded Mr Bryan that the use intended by ARC had been set out in the letter of October 16. As to temporary trading, Mr Watkins said he could not give any additional information, but pointed out that ARC was proposing to enter into a 10-year lease for the unit in question and that commitment under a 10-year lease was hardly something that would be described as 'temporary trading'. This letter ended by saying:

Can you please now confirm that your clients will be dealing with this matter without further prevarication.

59. However, Mr Watkins was too optimistic. By a letter of December4 Mr Bryan said that he would like to see a copy of the latest ARC accounts and be told the reason why Norwich Union had not taken out references. He said he had not previously seen the fax of November 22 and said that he was not concerned with the standing of ARC's landlords at its various trading sites, but was more concerned with the standing of the locations. He then referred to the user point and said that the user suggested by the letter of October 16 was 'far too wide in my opinion'. Finally, Mr Bryan said that if the 10-year lease proposed to be granted to ARC was the first long lease ARC had entered into, he thought that Norwich Union should have taken references about ARC.
60. This letter reads to me like the letter of an experienced prevaricator. It does not seem to me that Mr Bryan was reasonably considering the question of whether his clients had any ground for withholding consent, either to the assignment or to the subletting. The final paragraph of his letter is one which raises the point that, in the end, Mr Reynolds seeks to rely on. The paragraph says:

Now, turning to the Body Care subletting …

61. That was subletting of another part of Rockingham House:

which you quite rightly say and I do apologise was set out in the schedule attached to your letter of 4 July. Having looked at this schedule I see that it provides an analysis of £ 63.00 per sq ft in terms of Zone A.

The very point that concerned me was that why you are now seeking consent to a subletting at a rental substantially less than that. Furthermore and of course perhaps of more importance, the phased rental set out in Keith Coles' letter of 16 October is substantially less than the rents passing and I can only therefore reach the conclusion that I must recommend to my clients to turn down your application for this subletting.

As far as the assignment is concerned I did deal with that in my letter to Miss Leslie dated 28th November.

62. The November 28 letter that he had in mind was the first of the two November 28 letters to which I have referred. But there is nothing in that letter about the assignment.
63. Proceedings were then commenced, affidavits were sworn on each side and Norwich Union, taking the view that the matter was so clear as not to require a full trial, applied under Ord 14 for summary judgment, both for a declaration that the delay by Shopmoor Ltd, in dealing with the applications for consent to the assignment and to the underletting, represented an unreasonable delay, and for a declaration that, in the circumstances, Norwich Union was entitled to assign the 1993 lease to Pelmore LP and to sublet the unit in question to the proposed tenant, ARC Retail Management Ltd.
64. Master Barratt took the view that there was no arguable defence to Norwich Union's case regarding consent to the proposed assignment, and he made the declaration sought so far as the assignment was concerned. However, he took the view that there was an arguable point available to Shopmoor Ltd so far as the underletting to ARC was concerned. As to that, therefore, he refused to make the declarations that had been sought and granted leave to defend.
65. Shopmoor Ltd has appealed against the master's order so far as the consent to assignment is concerned. Norwich Union has appealed against the master's order so far as consent to the subletting is concerned. Those are the two appeals which have been the subject of the hearing before me.
66. It is convenient to take the two in turn. As to the assignment, Mr Reynolds submitted that a landlord whose consent was requested to an assignment was entitled to ask for all relevant information as to the nature of the assignment, details of the assignment and as to the substance of the proposed assignee. I would readily accept that that is so, but it is for the landlord to decide what information to ask for. It is for the landlord to put to the proposed assignor, the landlord's tenant, the questions on which information is sought. Of course, in many cases it will be obvious, to the tenant seeking the landlord's consent, what matters are likely to concern the landlord, and the tenant may anticipate the landlord's questions by sending a volume of information with the application for consent itself; and that is no doubt usual and convenient. However, in the last resort, it is for the landlord to decide what information it needs before it can make up its mind what to do about the application for the consent, and it is for the landlord to formulate its questions and put them clearly and explicitly to the tenant with whom it is dealing.
67. Mr Reynolds submitted that, in the present case, information had been requested by Shopmoor Ltd about the financial substance of Pelmore LP that had not been provided by Norwich Union. If that submission had been well founded, then it would be impossible to say that Shopmoor Ltd had unreasonably withheld its consent to the assignment, because it is common ground that no information about the financial standing of Pelmore LP has been provided to Shopmoor Ltd. In my view, however, Mr Reynolds is unable to point to any explicit request for that information contained in any of the many letters that passed from his client's side to Norwich Union over the many months covered by the correspondence in this case.
68. A question which has exercised me in hearing this appeal is what the result of that state of affairs should be. I would agree that, prima facie, a landlord is entitled to be told something of the financial substance of a proposed assignee, someone with whom the landlord will be coming into privity of estate upon the completion of the assignment. I would agree that, if the landlord puts such requests in reasonable terms, and the information is not forthcoming, the landlord is entitled to withhold consent and the withholding could not, in those circumstances, be described as unreasonable. In this case, however, as I have said, no request for that information was ever put to Norwich Union.
69. Over a long period covered by the correspondence, Norwich Union was not given to understand that the absence of such information was an obstacle to the granting of consent and, therefore, to the completion of the proposed assignment. The question is whether the raising of such a point, when the matter comes before the court, can enable the landlord to resist a declaration that the tenant is entitled to assign without supplying that information.
70. The point is the subject of some judicial authority. In City Hotels Group Ltd v Total Property Investments Ltd [1985] 1 EGLR 253 Judge Paul Baker QC, sitting as a judge of this court, had to deal with a question whether landlords' consent to an assignment had been unreasonably withheld. The case was one in which the landlords had not, in terms, refused consent, but had not given it notwithstanding a considerable passage of time and lengthy correspondence. The judge held that, in the circumstances, the landlords were unreasonably withholding their consent, and he held, as a consequence, that the tenants were entitled to proceed with the proposed assignment without the landlords' consent. He dealt with the question whether the landlords could raise new matters for the purpose of resisting the declaration, matters not raised at the time when the correspondence was being conducted. At the end of his judgment, at p257, he said:

It was not until March 7 that a further requisition of information was sent along.

71. Then he cited from the letter, and commented that the letter:

then goes on to deal with matters which have been adumbrated in this court and which I have commented upon. That was answered on March 30 by which time the writ had been issued. It was issued the day after the letter of March 7. It had not been served, but I think it was shortly to be served. Further correspondence follows there. Looking at the matter when the writ was issued on March 8, it seems to me that the landlords were then far too late to raise these inquiries. They had had the information from the tenants which was submitted in December, and completed by January, and this was a substantial transaction. The tenants were entitled to have the matter dealt with expeditiously, having made their application, and the landlords were supplied, as I find, with full information about it. Had this letter of March 7 been sent within a reasonable time after the letter of December and the accounts in January, had it been sent, say, in place of the letter that has been sent about the accounts on January 24, it may well be that one could readily find that the landlords were not being unreasonable, applying the test in the Pimms case, in pressing for some further assurances on the lines of this letter. But to leave it until March 7 before they finally formalised what is worrying them seems to be far too late. Hence at the time of the writ on March 8 they were unreasonably withholding the licence to assign, and therefore I propose to make the declarations that are sought in this case.

72. So, the judge took the view that, even if the request for information was, taken by itself, a reasonable request that, had it been asked at the right time, the tenant could have been expected to comply with, the landlord could not, once an unreasonably long period had elapsed without that information having been requested, rely on the absence of the information in order to resist a declaration that the tenant was entitled, notwithstanding the absence of consent, to assign.
73. Whether that approach represented the law at the time that the learned judge gave judgment on July 6 1984 may be open to some question. In Bromley Park Garden Estates Ltd v Moss [1982] 2 All ER 890* the Court of Appeal had had to consider whether consent to an assignment had been unreasonably withheld. Slade LJ in that case said, at p901h:

I find it rather more surprising that, when the landlords came subsequently to question the validity of the assignment in such circumstances, they should be free to rely on reasons for their refusal which had not been mentioned to the tenant, or even hinted at, either before or in the letter of 16 September 1980 which contained the outright refusal. In the absence of authority, I would have thought there was much to be said for the view that a landlord who, by stating to the tenant one reason only for refusing his consent to an assignment, that reason being a demonstrably bad one, provokes a tenant into assigning without consent, should not thereafter be allowed to rely on unstated reasons for the purpose of attacking the validity of the assignment. However, authorities … appear to establish that the court, in considering questions of reasonableness or otherwise in this context, is not confined to the reasons expressly put forward by the landlord prior to the date of the refusal.

74. The law, however, has moved on from the state in which it stood when Bromley Park Garden Estates v Moss and City Hotels Group v Total Property Investments were decided. The significant change since then is that the Landlord and Tenant Act 1988 has been enacted. The Act was intended to remedy the state of affairs in which a landlord, by his dilatory failure to respond to an application for consent to an assignment or to subletting, could cause substantial financial damage to the tenant without the tenant having any remedy for that damage. A tenant might lose a valuable property transaction because of the landlord's failure to deal expeditiously with the application for consent. It is clear that it was an intention of the Act to remedy that state of affairs. The Act creates a statutory duty requiring landlords to attend promptly to applications for consent to assignments, or underletting or parting with possession of premises comprised in a tenancy where there is a covenant not to do those things without consent.
75. Section 1(3) provides, in the circumstances postulated, that, the landlord:

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.

76. So there is a statutory duty on the landlord to deal with the application and to give the consent, except where it is reasonable not to do so, and if the landlord decides to withhold consent, to give the tenant reasons for the decision.
77. The Act having imposed the statutory duty, no doubt an action for damages for breach of the duty would lie in any case in which the breach could be established and in which it could be shown that the breach had led to damage. But the Act does not, expressly at least, make clear what the position is regarding the tenant's ability simply to assign the lease or grant the underlease or part with the possession of the demised property in a case where the landlord has failed for an unreasonably delayed period to deal with and consent to the application.
78. Mr Reynolds has submitted that, even if I were to conclude, as I do conclude, that in the present case the landlord, Shopmoor Ltd, delayed for an unreasonable time in dealing with the tenant's application for consent to assign to Pelmore LP, the fact that no information about Pelmore LP's financial circumstances was provided to the landlord, prevents a conclusion that now, April 1997, a declaration can properly be made that Norwich Union is entitled to assign to Pelmore without the landlord's consent. He accepts that Judge Paul Baker's statement of principle in the passage from the judgment in City Hotels Group that I have read is inconsistent with his submission, but contends that that does not represent the correct legal approach to the problem. It may be that in the days before the 1998 Act was enacted he is correct, as I think the passage from Slade LJ's judgment in Bromley Park Garden Estates suggests.
79. In my judgment, however, the 1988 Act has altered the law in this respect. It has done so by necessary implication, although not explicitly. 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. The question whether the case is one 'where it is reasonable not to give consent' ought, in my judgment, to be tested by reference to the point at which the reasonable time for dealing with the application has expired. 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.
80. Accordingly, whether or not Judge Baker was correct in his statement of the law in 1984, a similar statement made now would, in my judgment, be a correct statement of the law. There seems to me to be every reason of commonsense why that should be so. It would enable there to be fair and sensible dealings between landlords and tenants. It would enable a state of certainty to be achieved at the earliest sensible moment. There seems to me to be no reason of convenience why the ability of the landlord to still keep in doubt the entitlement of the tenant to assign should survive any longer than the reasonable time which the landlord may need for considering the tenant's application for consent.
81. Accordingly, in my view, the fact - and it is a fact - that no information about the financial circumstances of Pelmore LP was supplied is not, in the circumstances of this case, a reason for withholding the declaration sought by Norwich Union and granted by the master that Norwich Union is entitled to assign to Pelmore LP. The master was correct, in my view, in his conclusion that no arguable defence has been shown to the charge made in these proceedings that Shopmoor Ltd has unreasonably withheld its consent. When these proceedings were started, an unreasonable period had expired, the information that had been sought had been given and there was no outstanding point raised by Shopmoor Ltd, which justified the further withholding of consent. I am of the opinion, therefore, that Master Barratt was correct and that Shopmoor Ltd's appeal should be dismissed.
82. I now turn to the subletting. There is really only one point outstanding so far as the subletting is concerned. the point was described by Mr Reynolds as the most significant reason for the withholding of consent to the subletting. In my opinion, it is the only significant reason which warrants attention. It is the point that the rent proposed to be reserved on the subletting may be below market rent. For Ord 14 purposes, at least, I must assume that the proposed rent will be below market rent. There is no evidence to the contrary save that the rent is a result of a bargain between Norwich Union and ARC, the proposed subtenant.
83. It appears that the initial rent to be reserved is at the rate of £ 34.80 per sq ft. There is evidence that other properties in the area are being let at a price per sq ft of between £ 50 and £ 55. To that extent, therefore, there is evidence which gives Shopmoor Ltd an arguable case, and I say no more than that, that £ 34.80 per sq ft may be below market level. On that hypothesis, and I repeat it is no more than a hypothesis, I have to consider the legal consequences so far as the withholding of consent to the underletting is concerned.
84. This is a case in which the amount of the rent to be paid by the subtenant is of no direct concern to the landlord. It cannot be suggested that the amount of the rent to be paid under the subletting diminishes the value to the landlord of the reversion. That is so, because this is a 150-year lease, granted in 1993, under which the ground rent reserved is £ 100 and no more. The only circumstance in which the amount of the subletting could become of direct concern to the landlord, so far as the value of the reversion is concerned, would be if the lease were to be forfeited. The probability of that is unlikely in the extreme. If there were to be a forfeiture and the subtenants were to seek relief from forfeiture, the relief would presumably be granted on terms that a market rent was paid. I repeat, there is no realistic manner in which the low level of the rent under the sublease can be said to affect adversely the value of the landlord's reversion in the property subject to the subletting.
85. So, on what basis can it be said that the low level of the rent adversely affects the landlord? Mr Reynolds has based his submissions on the fact that Shopmoor Ltd has a property portfolio which includes a large number of shops in The Moor. These are shops of which Shopmoor Ltd either is in possession or is in a position to negotiate for the level of rents to be paid by the tenants. The level of the rents obtained on the letting of these shops will directly affect the value of the premises to Shopmoor Ltd. Shopmoor Ltd fears that the £ 34.80 per sq ft may be used as a yardstick or perhaps as a comparable by prospective tenants of the shops when negotiating on rent levels.
86. There are two points on this: one is a point on the facts and the other is a point on the law. As to the facts, if it is right, which is the premise on which the point is based, that the £ 34.80 per sq ft is less than market value, it is less than market value because the other comparables in the area so demonstrate, and if the other comparables in the area so demonstrate, then on the fixing of new rents for other shops in The Moor, the same conclusion would, it seems to me, be likely to be reached. Per contra, if £ 34.80 per sq ft is nearer the true market level than those other rents to which reference is made in the evidence before me, then it would be quite right that the £ 34.80 per sq ft should be accepted as a yardstick. But, as Mr Reynolds pointed out, a negotiation or an adjudication on rent levels is not an exact science and a simple maverick rent that is below market level may have a disproportionately adverse effect on other negotiated rent levels to the detriment of the landlords of the properties in question.
87. I now come to the point of law, which is an interesting point, in my view. Is a landlord, in considering whether to grant consent to an underletting, entitled to withhold consent because the financial terms of the underletting may have some effect on the landlord's property portfolio in the neighbourhood of the subject premises, or is that a collateral advantage that a landlord is not entitled to seek as one of the fruits of his, the landlord's, ability to give or withhold consent? There is a certain amount of authority on this point. In Woodfall on Landlord and Tenant (the loose-leaf edition) the following comment appears in the text under para 11.149:

Where the landlord reasonably fears that the assignment will result in a diminution in the rental value of the property or of other property belonging to him, and hence in his own income, it will generally be reasonable for him to refuse consent.

88. Of course, there can be no question but that the landlord can reasonably refuse consent if the assignment will result in a diminution in the value of the rental value of the property itself. But, in the case of a subletting of premises comprised in a 150-year lease, as in the present case, there can be no suggestion of any such diminution. The sentence's reference to 'other property belonging to him', is the relevant point for present purposes.
89. The note refers to a case, FW Woolworth plc v Charlwood Alliance Properties Ltd [1987] 1 EGLR 53*. That was a decision of Judge Finlay QC, sitting as a judge of this court. The headnote records the learned judge's finding that the landlords were not acting unreasonably in refusing consent on grounds which were unexceptionable. But the judge went on to say that the landlords were entitled to consider the probable adverse effects of the assignment on the landlords' ability to let satisfactorily other premises in the area. In his judgment, the judge says, at p57M:

The landlords here are, in my judgment, entitled to consider the likely effect upon their ability to let other parts of the property and, indeed, to obtain the appropriate rents for their other property in the centre. At all material times there was a high likelihood, now shown to be a certainty, that the assignee would not keep the store open and the landlords are entitled to consider the effect which that would have upon their ability not only to let the other property in the centre but to obtain satisfactory rents for them.

90. It seems the case was one in which the point at issue was whether the proposed assignee was going to keep the premises open, or whether they would become closed and vacant, and in that state be detrimental to the centre as a whole.
91. The Court of Appeal in International Drilling Fluids Ltd v Louisiville Investment (Uxbridge) Ltd [1986] Ch 513* gave some guidance as to the principles to be followed by courts in considering issues regarding the withholding of consent to assignments of leases. The leading judgment was given by Balcombe LJ, who set out seven propositions of law. The first of these, he formulated as follows, at p519H:

(1) The purpose of a covenant against assignment without the consent of the landlord, such consent not to be unreasonably withheld, is to protect the lessor from having his premises used or occupied in an undesirable way, or by an undesirable tenant or assignee …

92. He then cited some authority. His second proposition was:

(2) As a corollary to the first proposition, a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease …

93. He referred to: Houlder Bros & Co Ltd v Gibbs*, a decision which he regarded, despite some criticism, as binding on the court; to Bickel v Duke of Westminster† and to Bromley Park Garden Estates Ltd v Moss, a case which he described as:

A recent example of a case where the landlord's consent was unreasonably withheld because the refusal was designed to achieve a collateral purpose unconnected with the terms of the lease …

94. Balcombe LJ's third proposition was that:

(3) The onus of proving that consent has been unreasonably withheld is on the tenant.

95. That third proposition has certainly been affected by the 1988 Act. But for present purposes the important proposition perhaps is the second, in which Balcombe LJ stated, as a proposition of law, that a landlord was not entitled to refuse his consent to an assignment on grounds which did not relate to the relationship of landlord and tenant in regard to the subject-matter of the lease. While there might be cases in which the breadth of that proposition would be difficult to accept, consent to assignment as to subletting is not necessarily subject to the same principles as might be applicable to consent to a change of user. Leases commonly have provisions under which user covenants to be observed by the tenant can be varied with the consent of the landlord, with a proviso that the landlord's consent should not be unreasonably withheld. I did not think it could be suggested that a change of user which would detrimentally affect the quality of the street or centre in which the subject premises were located, would be a circumstance which a landlord could not reasonably take into account in declining to consent to the proposed change. It does not follow, to my mind, that that approach would necessarily be correct when considering consent to a proposed assignment. Certainly, so far as Court of Appeal authority constituted by Balcombe LJ's judgment is concerned, it would appear not to be correct. Balcombe LJ formulated the second proposition to which I have referred, in terms which would have the effect of the assignment on other property belonging to the landlord being taken into account by the landlord as a reason for withholding consent.
96. Balcombe LJ's second proposition, it will be recalled, contained a reference to the Bromley Park Garden Estates case. In that case, Dunn LJ referred to two cases, West Layton Ltd v Ford* and Premier Confectionery (London) Co Ltd v London Commercial Sale Rooms Ltd†. Then Dunn LJ went on, at p900g:

In both cases the withholding of consent to the assignments by the landlords were held not to have been unreasonable. In both cases the landlords were seeking to uphold the status quo and to preserve the existing contractual arrangements provided by the leases. In both cases, the landlords reasonably believed that they would suffer detriment if the assignments were made. It is true that in deciding the question of unreasonableness the courts did not confine themselves to narrow considerations as to the personality of the proposed assignee or the subject matter of the lease, as had been done in some of the older cases, and it may be that the passage in Woodfall was intended to draw attention to that, but there is nothing in the cases to indicate that a landlord is entitled to refuse his consent in order to acquire a commercial benefit for himself by putting into effect proposals outside the contemplation of the lease under consideration, and to replace the contractual relations created by the lease by some alternative arrangements more advantageous to the landlord, even though this would be in accordance with good estate management.

97. In my judgment, applying proposition (2), as stated by Balcombe LJ in International Drilling Ltd, the refusal by Shopmoor Ltd of consent to the subletting for the purpose of enhancing, or avoiding comparisons which might be thought to be detrimental to, future rent levels of its other shops in The Moor, represents an attempt by Shopmoor Ltd to obtain a collateral advantage out of its ability to grant or withhold consent. To allow such a thing would, it seems to me, be contrary to the statement of principle expressed by Balcombe LJ.
98. The conclusion is, in my view, reinforced by considering the issue as one of construction of the lease. In a lease such as the lease between Sheffield Corporation and Norwich Union, under which a 150-year lease of shop premises at a nominal ground rent is granted, it must be in the contemplation of the parties that there will be assignments, perhaps many assignments of the lease. The property in question will inevitably be subject to many subtenancies. It may very well be the case that from time to time the consent of the landlord to the granting of new subtenancies will be sought. In the present case the proposed assignment was conditional on a satisfactory subletting being arranged. The proposition that the landlord would be entitled to control the rents, at which the sublettings take place, by use of the consent provision in the covenant in question is, in my opinion, to bestow upon the landlord a power of control which could not have been contemplated by the parties at the time that the lease was drawn. If it had been intended that Sheffield Corporation or their successor landlord should have that power, I am in no doubt that the lease would have expressly so provided. Shopmoor Ltd seems to me to be attempting to exert that power for the benefit of the other shops in The Moor acquired by Shopmoor Ltd from Sheffield Corporation. To do so is, in my view, a collateral purpose of the sort referred to by Balcombe LJ in International Drilling Fluids, and is not permissible.
99. Accordingly, for that reason, I conclude that the ground relied on by Shopmoor Ltd for withholding consent to the underletting cannot be sustained.
100. There is an additional point. The point regarding the rent level of the proposed subletting was raised by Mr Bryan at a very late stage indeed. There is ground for considerable suspicion, in my opinion, as to whether it is a genuine point. If it had been a genuine point I cannot understand why it took so long for it to be raised. The rent levels were known from October 16 onwards. The point was not raised until towards the end of November. A conclusion against Shopmoor Ltd and Mr Bryan on such a point could not, I think, be properly made on an Ord 14 summary judgment application. I suspect some degree of cross-examination might be requisite before a final conclusion to that effect could be made. None the less, it is a matter which I refer to, because it is sufficiently striking, in my view, to require comment. Moreover, it appears that on October 21, five days after becoming aware of the proposal by Norwich Union to enter into the subletting arrangement with ARC, agents for Shopmoor Ltd were contacting ARC in an endeavour to induce ARC to abandon its negotiations with Norwich Union and instead to take a lease of other units in The Moor, direct from Shopmoor Ltd. The commercial propriety of that form of dealing is, of course, for Shopmoor Ltd itself to consider, but it bears upon the suspicions I entertain of the genuineness of the very late emergence of this rental point as an objection to the subletting.
101. In my view, Shopmoor Ltd has no arguable case for the withholding of consent to the subletting, and I would allow the appeal on that point and make the same declaration in regard to the subletting as has been made by Master Barratt in relation to the assignment.

The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.