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High Court of Justice in Northern Ireland Chancery Division Decisions
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URL: http://www.bailii.org/nie/cases/NIHC/Ch/2001/11.html
Cite as: [2001] NICh 11
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Neutral Citation no.[2001] NICh 11
Ref:
WEAF3484
Judgment: approved by the Court for handing down
Delivered:
07.09.2001
(subject to editorial corrections)
BETWEEN:
Plaintiffs;
Defendant.
WEATHERUP J
1. The first plaintiff, as tenant, claims against the defendant, as landlord, for declarations that the defendant has unreasonably withheld and/or delayed its consent under a lease dated 13 May 1998 of premises known as plot 6 Mays Meadows, Belfast –
(a) to the merger of plot 6 with the adjoining premises known as plot 5 Mays Meadows, Belfast (the merger consent).
(b) to alterations and additions to the structure of the premises on plot 6 in accordance with plans and specifications submitted to the defendant and identified as "scheme 2" (the alterations consent).
(c) to change the permitted user of plot 6 to add office use to the existing permitted user as a drive-through fast food restaurant with ancillary car parking and access road (the user consent).
The issues have resolved to determining whether it is unreasonable in the circumstances for the defendant to require the payment of a premium as a condition of the grant of consent.
2. A master development agreement in relation to Mays Meadows, Belfast, made on 29 January 1996 between the defendant as owner and the second plaintiff as developer, related to the proposed development of eight plots to be completed within four years. There was an indicative programme and plan which anticipated the development of plot 6 as a drive-in restaurant and the development of plot 5 as a service station. Draft licences were drawn up to provide for the development arrangements and draft leases were drawn up to provide for the leasing of the developed plots. The developer agreed to pay a site purchase price which was specified in respect of each of the plots and payable upon the grant of each agreed lease. By Clause 23 the developer was entitled to assign all or any of its rights and/or obligations with the consent of the defendant, such consent not to be unreasonably withheld or delayed. It was stated to be a pre-condition of assignment that the assignee should provide plans and specifications for development and details of the experience of the development team and financial information about the assignee. By supplemental agreement dated 10 August 1999 the date for completion of development on plots 1 and 5 was extended to 31 July 2002 and a change of user was agreed in relation to plot 1 with an amendment of the terms relating to the site purchase price. It was provided that the "premium" payable on the grant of the agreed lease of plot 1 would be a specified sum depending on the gross internal area of the building. By a second supplemental agreement dated 27 October 2000 the permitted user in respect of plot 5 was extended to permit the development of 25,000 square feet of office space in consideration for the payment by the second plaintiff to the defendant of the sum of £230,000 to be added to the site purchase price.
3. In the meantime plot 6 had been developed and by lease dated 13 May 1998 and made between the defendant as landlord and the first plaintiff as tenant and the second plaintiff as adjoining owner, the defendant demised plot 5 to the first plaintiff for the term of 999 years for use as a drive through fast food restaurant with ancillary car parking and access road.
By the terms of the lease it was provided –
(a) By Clause 3.11.1 that the tenant was not to use the demised premises other than for the permitted user "or such other use as may from time to time be approved by the landlord in writing (such approval not to be unreasonably withheld or delayed)".
(b) By Clause 3.12.1 that the tenant was not to make any alteration or addition to any external part or parts of the structure of the demised premises nor merge the demised premises with any adjoining premises … "without the written consent of the landlord (such consent not to be unreasonably withheld or delayed) …".
(c) By Clause 3.12.2 that similar provision applied in relation to demolition of any part of the demised premises (but this is no longer relevant since the first plaintiff's decision not to proceed with demolition of the fast food restaurant on plot 6 as appears below).
4. The first plaintiff met the defendant on Monday 20 November 2000 in relation to proposals for plot 5 and plot 6. The first plaintiff proceeded on the assumption that the second plaintiff's interest in plot 5 had been assigned to the first plaintiff. The proposals involved the demolition of the fast food restaurant on plot 6 and the change of the permitted user on plot 6 from fast food to office accommodation and the development of plots 5 and 6 together. A prospectus for the site development was produced and on 18 December 2000 copies of three sets of drawing were forwarded to the defendant outlining three different schemes for the proposed development. There followed correspondence between solicitors for the defendant and solicitors for the first plaintiff and in addition to comments on the proposals it is apparent that the defendant required the payment of a "premium" as a condition of consent. On 16 March 2001 the first plaintiff's solicitors made a formal request for the consent of the defendant to each of the three alternative schemes for development. Further plans and specifications were submitted in respect of the three schemes. Consent was not forthcoming.
5. By originating summons dated 3 April 2001 the first plaintiff claimed against the defendant –
(1) A declaration that the defendant had unreasonably withheld and/or delayed its consent under Clause 3.12.1 of the lease dated 13 May 1998 to the merger of plot 6 with the adjoining premises known as plot 5 Mays Meadows, Belfast.
(2) A declaration that the defendant has unreasonably withheld and/or delayed its consent under Clauses 3.12.1 and 3.12.2 of the lease to the demolition of the drive through fast food restaurant on plot 6 and to rebuilding in accordance with plans and specifications submitted to the defendant on 18 December 2000.
(3) A declaration that the defendant had unreasonably withheld and/or delayed consent under Clause 3.11.1 of the lease to a change of the permitted user from use as a drive through fast food restaurant with ancillary car parking and access road to office use.
It will be noted that at the commencement of proceedings the first plaintiff was proceeding on the basis that it had acquired the interest of the second plaintiff as adjoining owner and that it was proceeding to demolish the existing building on plot 6 and that it was proposing to change from fast food restaurant use to office use.
6. By replying affidavit sworn on behalf of the defendant on 6 June 2001 it was stated that the defendant was willing in principle to consent to a change of use to offices on plot 6 but "requires a premium to reflect the scale of the development." While this was stated in relation to permitted user it does appear to have been intended to apply to the other consents required in relation to alterations and merger. This is apparent from the letter from the defendant's solicitors of 11 June 2001 which refers to the "variations" and thus extends to user, alterations and merger. That letter also insists that the first plaintiff identify the particular scheme which the first plaintiff proposed to adopt before the defendant's consent might be forthcoming. By letter dated 15 June 2001 the first plaintiff's solicitors identified "scheme 2" as their preferred option for development and rejected the defendant's entitlement to require payment of a premium in return for the consents sought in respect of plot 6. At the same time the first plaintiff's solicitors also applied, on behalf of the second plaintiff, for the defendant's consent under the master development agreement of 29 January 1996 for the assignment to the first plaintiff of the second plaintiff's rights. Further, there was furnished to the defendant information designed to address the preconditions for the granting of such consent under Clause 23 of the master development agreement.
7. At the hearing of the originating summons on 26 June 2001 leave was granted –
(i) to add the second-named plaintiff;
(ii) to permit the second plaintiff to claim a declaration that the defendant had unreasonably withheld and/or delayed its consent under Clause 23.1 of the master development agreement dated 29 January 1996 (as amended) between the defendant (as owner) and the second plaintiff (as developer) to assign the rights of the second plaintiff in respect of plot 5 Mays Meadows, Belfast to the first plaintiff;
(iii) to amend the declaration claimed by the first plaintiff at paragraph 5(2) above, so as to substitute for the demolition of the drive through fast food restaurant and the rebuilding of premises a requirement for consent to alterations and additions to the structure of the premises in accordance with plans and specifications submitted to the defendant on 18 December 2000 and further on 16 March 2001 and therein identified as "scheme 2";
(iv) to amend the declaration claimed by the first plaintiff at paragraph 5(3) above, so as to substitute for the change of permitted user from use as a drive through fast food restaurant to office use, a requirement of consent to the retention of the permitted user as a drive through fast food restaurant and the addition of permitted user as office accommodation.
These amendments reflected -
(a) the position of the second plaintiff as the developer of plot 5 and whose interest could not be assigned to the first plaintiff without the consent of the defendant in the circumstances set out in the master development agreement of 29 January 1996.
(b) the identification by the first plaintiff to the defendant of the preferred option for the proposed development of the plots. Consequently the first plaintiff specified a scheme that involved, not the demolition of the fast food restaurant but the retention of the fast food restaurant on plot 6 with a proposed office development spanning a part of plot 6 and extending to plot 5.
8. On 27 June 2001 the parties agreed to the adjournment of those issues arising on the originating summons relating to plot 5 and which concerned the second plaintiff and the master development agreement of 29 January 1996. Accordingly the outstanding matters concerned the claims of the first plaintiff for the three declarations in relation to plot 6 involving consents to the merger of plot 6 and plot 5, the alterations to the premises on plot 6 and the change of use to permit office use on plot 6. As stated above the issues resolve to determining whether it is unreasonable in the circumstances for the defendant to require the payment of a premium as a condition of the grant of consent.
9. The parties to an agreement may prohibit some act in terms that amount to an absolute prohibition or in terms that amount to a qualified prohibition that any change shall be subject to consent or more particularly, as in the present case, that any change shall be subject to consent which shall not be unreasonably withheld or delayed. Statutory intervention in relation to payments to obtain a consent has been as follows -
(i) Section 3 of the Conveyancing Act and the Property Act 1892 provides –
"In all leases containing a covenant, condition or agreement against assigning, under-letting or parting with possession or disposing of the land or property leased without licence or consent, such covenant, condition, or agreement shall, unless the lease contains an expressed provision to the contrary, be deemed to be subject to a proviso to the effect that no fine or sum of money in the nature of a fine shall be payable for or in respect of such licence or consent; but this proviso shall not preclude the right to require the payment of a reasonable sum in respect of any legal or other expense incurred in relation to such licence or consent".
It will be noted that this provision applies to "leases"; that it is limited to clauses in leases against "assigning, under-letting or parting with the possession or disposing of the land or property leased"; that it applies to qualified prohibitions requiring "licence or consent"; that the lease may provide for the payment of a fine in respect of such licence or consent; that there remains the right to require payment of a reasonable sum in respect of expenses. Section 3 of the 1892 Act does not apply to the relevant consents under the lease of 13 May 1998 because the relevant consents do not relate to "the assigning, underletting or parting with the possession or disposing of the land or property leased". Nor would Section 3 of the 1892 Act apply to the proposed assignment between the plaintiffs of the interest in plot 5 under the master development agreement of 29 January 1996 because that agreement is not a lease. In England and Wales this provision is now contained in Section 144 of the Law of Property Act 1925.
(ii) Section 19(3) of the Landlord and Tenant Act 1927 applies in England and Wales and provides in relation to leases that no fine or sum of money in the nature of a fine shall be payable in respect of any consent to change of use. This does not preclude the right of the landlord to require payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or any neighbouring premises belonging to him and of any legal or other expenses incurred. Section 19(2) of the 1927 Act contains provisions in relation to consents to improvements. Equivalent provisions have not been introduced in Northern Ireland.
(iii) Article 26 of the Business Tenancies (Northern Ireland) Order 1996 applies from 1 January 1997 to a business tenancy where the tenant wishes to make any "improvement" as defined in Article 26(8) and the contract of tenancy contains a prohibition on the tenant doing so without the consent of the landlord. In such circumstances the prohibition is subject to the qualification that consent is not to be unreasonably withheld; the landlord shall not delay unreasonably in giving or refusing that consent; a consent may be given subject to any reasonable conditions; any question as to the reasonableness of withholding consent or of any delay or of any condition shall be referred to and determined by the Lands Tribunal. In the present case the lease was made on 13 May 1998 and the proposed additions and alterations constitute an "improvement" but there is an issue as to whether Article 26 applies to leases that by their express terms provide for consent not to be unreasonably withheld. Assuming that Article 26 applies to the alterations consent in the present lease, so as to give jurisdiction to the Lands Tribunal to determine unreasonableness in withholding consent or in delaying a decision or in imposing conditions, I would consider it impracticable to require consideration of the alterations consent in the Lands Tribunal and consideration of the user consent and the merger consent in these proceedings. It cannot have been the intention of the legislature that in circumstances such as these the Court would be deprived of jurisdiction to deal with the alterations consent. I would propose to deal with all three consents together.
Accordingly there is no statutory provision which applies to the three consents required in the present case.
10. In relation to the reasonableness of withholding consent to the assignment of a lease, Halsbury's Laws of England 4th Edition Volume 44 (1) paragraph 401 describes as the "guideline case" the decision of the Court of Appeal in International Drilling Fluids Limited –v- Louisville Investments (Uxbridge) Limited [1986] 2 WLR 581. While the case was concerned with consent to assignments Woodfall's Law of Landlord and Tenant proposes the same approach to consents to change of use (paragraph 11.195) and to consents to alterations (paragraph 11.262). While the principles may be the same their application may differ depending upon the nature of the agreement between the parties and the nature of the term being considered. As Lord Steyn stated in R v Secretary of State for the Home Department ex parte Daly [2001] 3 All ER 433 at 447a, "In law context is everything".
In International Drilling Fluids Balcombe LJ at page 586 sets out the following propositions of law –
"(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 per A L Smith LJ in Bates –v- Donaldson [1896] 2 QB 241.247, approved by all the members of the Court of Appeal in Houlder Brothers and Company Limited –v- Gibbs [1925] Ch 575.
(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; see Houlder Brothers and Company Limited –v- Gibbs, a decision which (despite some criticism) is binding on this court; Bickel –v- Duke of Westminster [1977] QB 517. 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 is Bromley Park Garden Estates Limited –v- Moss [1982] 1 WLR 1019.
(3) The onus of proving the consent has been unreasonably withheld is on the tenant; see Shanly –v- Ward (1913) 29 TLR 714 and Pimms Limited –v- Tallow Chandler's Company [1964] 2 QB 547.564.
(4) It is not necessary for the landlord to prove that the conclusions which led him to refuse consent were justified, if they were conclusions which might be reached by a reasonable man in the circumstances; Pimms –v- Tallow Chandler's Company.
(5) It may be reasonable for the landlord to refuse his consent to an assignment on the ground of the purpose for which the proposed assignee intends to use the premises, even though that purpose is not forbidden by the lease; see Bates –v- Donaldson [1896] 2 QB 241.244.
(6) There is a divergence of authority on the question, in considering whether the landlord's refusal of consent is reasonable, whether it is permissible to have regard to the consequences to the tenant if the consent to the proposed assignment is withheld. (Balcombe LJ then discusses the diverging authorities and continues.) But in my judgement a proper reconciliation of those two streams of authority can be achieved by saying that while a landlord need usually only consider his own relevant interests, there may be cases where there is such a disproportion between the benefit of the landlord and detriment to the tenant if the landlord withholds his consent to an assignment that it is unreasonable for the landlord to refuse consent.
(7) Subject to the propositions set out above, it is in each case a question of fact, depending upon all the circumstances, whether the landlord's consent to an assignment is being unreasonably withheld; see Bickel –v- Duke of Westminster [1977] QB 517.524 and West Layton Limited –v– Ford [1979] QB 593.604.606-607."
Woodfall adds to the list of propositions (paragraph 11.140) -
"(8) It will normally be reasonable for a landlord to refuse consent or impose a condition if this is necessary to prevent his contractual rights under the lease from being prejudiced by the proposed assignment or sub-lease.
(9) It will not normally be reasonable for a landlord to seek to impose a condition which is designed to increase or enhance the rights that he enjoys under the lease."
11. As appears from the second proposition the landlord's refusal of consent must be on grounds related to the relationship of landlord and tenant in regard to the subject matter of the lease and must not be designed to achieve a collateral purpose unconnected with the terms of the lease. The first case cited by Balcombe LJ was Houlder Brothers & Co Limited –v- Gibbs where the landlord refused to consent to assignment because of the difficulties this would have created for the landlord in the letting of adjoining premises. The Court of Appeal held the refusal of consent by the landlord to be unreasonable and considered that the construction of the contract between the lessor and the lessee required that the lessor's reason should relate to the lessee or the premises or the relation of lessor and lessee. Pollock MR stated that the landlord's reason "is something extraneous to the relation of landlord and tenant, something extrinsic from the lessee, and something which is wholly personal to the lessor." (page 583).
The second case referred to was Bickel –v- Duke of Westminster where the landlord refused to consent to assignment so as to prevent an assignee obtaining a statutory right to acquire the freehold. It was held that this was a reasonable refusal as "this clearly affects the property which is the subject matter of the lease and the relationship between the landlord and the tenant" per Waller LJ at page 528F.
The third case referred to was Bromley Park Garden Estates Limited –v- Moss where the landlord refused consent to assign a tenant's interest because he had plans to grant a lease of the whole of the building to another tenant. It was held that the withholding of consent was unreasonable as the landlord's reason was wholly extraneous to the intention of the parties to the contract when the covenant was granted and accepted. Cumming-Bruce LJ at page 1031E-F stated –
"That reason cannot be relied upon merely because it would suit the landlord's investment plans or their purpose in obtaining … the surrender of her lease. It may well enhance the financial interests of the landlord to obtain a single tenant holding the whole building on a full repairing covenant with long-term capital advantage when they put the building upon the market, but that intention and policy is entirely outside the intention to be imputed to the parties at the time of the granting of the lease …"
Dunn LJ referred to earlier authorities and at page 1033A continued –
"… there is nothing in the cases to indicate that the landlord was 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 have been in accordance with good estate management."
Woodfall at paragraph 11.154 refers to this issue under the heading "Collateral or Uncovenanted Advantages" and sets out examples where the landlord's refusal was unreasonable because it was conditional on the landlord achieving a variation of the terms of the lease or in effect seeking to compel surrender or recover possession of the premises.
A landlord may adopt a reason for refusal which relates to the personality of the assignee (in the case of assignment consents) or to the relationship of the landlord and tenant or to the impact upon the premises, whether by their condition or value or use. A landlord may not seek to achieve a purpose which is collateral to the terms of the agreement, for example by seeking to compel the tenant to accept a variation of the existing agreement or to bring it to an end in a manner outside the scope of the existing arrangements.
12. One aspect of the debate on the scope of collateral purpose is whether the landlord can take into account the impact of consent on other premises owned by the landlord. In F W Woolworth Plc –v- Charlwood Alliance Properties Limited (1987) 1 EGLR 53 the landlord refused consent to assignment as the landlord believed that, in breach of covenant, the premises would not be kept open as a department store and this would have a probable adverse effect on the landlord's ability to let other premises in the shopping centre. It was held that the landlords consent was not unreasonably withheld and that the landlords were entitled to consider the likely effect of assignment upon their ability to let other parts of the property and to obtain the appropriate rents for their other property in the shopping centre. In Norwich Union Life Insurance Society –v- Shopmore Limited [1998] 3 All ER 32 the landlord refused to consent to an underletting which was below the market rent where this might be used as a comparable by prospective tenants of other shops owned by the landlord in the vicinity when negotiating rent levels. It was held that this was an unreasonable refusal of consent as it represented an attempt to obtain a collateral advantage. In relation to Balcombe LJ's second proposition it was stated by Sir Richard Scott V-C at page 49g –
"While there might be cases in which the breadth of that proposition would be difficult to accept, consent to assignment as to sub-letting 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 do 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 circumstances 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 as far as a 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."
Sir Richard Scott decided that the landlord's refusal of consent to the sub-letting for the purpose of enhancing future rent levels at the landlord's other shops represented an attempt to obtain a collateral advantage out of the ability to grant or withhold consent. He was reinforced in that conclusion by a consideration of the issue as one of construction of the lease. He concluded that the proposition that the landlord would be entitled to control the rents at which the sub-lettings took place by use of the consent provision in the covenant was to bestow upon the landlord a power of control which could not have been contemplated by the parties at the time of lease was drawn.
Whatever may be the position in relation to assignment consents I consider that in relation to merger consents and alteration consents and user consents the impact of the proposed changes on other premises of the landlord is a matter which the landlord can take into account unless the terms of the agreement are to be read as indicating otherwise.
13. There are four questions to be answered in relation to the present refusals of consent to the merger and the alterations and the change of use.
First, what are the defendants reasons for the refusal of consent to the merger, alterations and change of use?
Secondly, are the defendant's reasons such reasons as can be relied on in the circumstances to refuse consent?
Thirdly, do the defendant's reasons serve a collateral purpose which renders unreasonable the refusal of consent?
Fourthly, is the condition requiring the payment of a premium otherwise unreasonable?
First, the defendant's reasons for refusal by consent. At paragraph 10 of the affidavit sworn on behalf of the defendant on 6 June 2001 it was stated that the defendant required a premium to reflect the scale of the development. This was repeated in the defendant solicitor's letter of 11 June 2001 where a premium was required "in accordance with the scale of the development which your client proposes", which is said to be consistent with the approach which the defendant has taken for alterations relating to other plots. There is no purported justification for the claim for a premium set out in correspondence or affidavit, but Mr Orr QC appearing for the defendant stated in argument that the core of the first plaintiff's proposals related to the merger of plots 5 and 6 with consequential effects arising from alterations and change of use and that this would have a detrimental commercial impact for the defendant on plot 6 as well as on the prospects for dealing with the new enlarged unit and on the whole scheme for Mays Meadows. Mr Hanna QC for the plaintiffs complained about the lack of particulars of the defendant's purported justification. I consider that there are two reasons for the defendant's requirement for the payment of a premium. The first reason, which is not in itself a justification, is that the overall scheme for development of Mays Meadows provided for payments upon the grant of leases and, at a later date, upon variation of the permitted user, and that these payments came to reflect the scale of proposed development of each plot. The second reason, which does purport to be a justification, relates to the alleged commercial impact of the particular proposal involving merger of the plots and the consequential alterations and change of user.
Secondly, can the defendant rely on the reasons in the circumstances. The first plaintiff complains of unreasonable delay on the part of the defendant in failing to respond to the first plaintiff's applications for consent and of unreasonable delay in advancing the purported justification and the lack of particulars of the alleged impact of the merger.
At common law the landlord is not confined to reasons put forward at or before the commencement of proceedings but the court can take into account new reasons advanced at the hearing - Woodfall paragraph 11.139. There has been statutory intervention in England and Wales by the Landlord and Tenant Act 1988 which imposes a statutory duty on the landlord to deal with an application to give consent, except in a case where it is reasonable not to do so, and to serve on the tenant a notice of decision specifying conditions and the reasons for withholding consent. The effect of this provision was discussed in the Norwich Union case at pages 45b-47b. The common law position prevails in Northern Ireland in relation to the present case (although there is a statutory duty not to delay unreasonably in giving or refusing consent under Article 26(3) of the Business Tenancies (NI) Order 1996).
The proceedings commenced in April 2001 but the first plaintiff only specified its preferred option for development by letter of 15 June 2001. At that time the future of both plot 5 and plot 6 was in issue. The defendant's solicitors made requests for information in relation to the first plaintiff's proposals for both plots and in the circumstances did not unreasonably delay its response. The scope of this application continued to evolve as the hearing proceeded. In the circumstances I propose to consider the reason advanced by the defendant's counsel at the hearing.
13. Thirdly, do the defendant's reasons represent an attempt to achieve a collateral purpose? The reason based on the alleged commercial impact is related to the premises which are the subject matter of the lease, namely, the use of plot 6. Further it is claimed that the alleged commercial impact extends to the new enlarged unit which will comprise plots 5 and 6 as well as to the adjoining premises at plot 5 and possibly to the whole of Mays Meadows. I accept that the proposed merger and alterations and change of user may impact on the demised premises. Being an alleged detriment to the demised premises the defendant's reason is not collateral to the agreement between the parties. Further, I accept that the proposals may have an impact beyond the demised premises on plot 5 and on the wider development area. As indicated above I accept that the landlord is entitled to take into account the effect on other properties of the landlord.
However this is not an outright refusal of consent because of adverse commercial impact because the defendant is prepared to furnish consent on condition that the first plaintiff pays a premium. Is this a reasonable condition? The alleged commercial impact must have an estimated value and in my opinion it is reasonable for the landlord to seek to recover that value as a condition of consent. The requirement that a premium be paid for the reason advanced as a condition of consent is not an attempt to obtain a collateral advantage but is an attempt to redress the detriment which is alleged to arise from the impact of the proposals on the demised premises as well as on the adjoining premises at plot 5 and possibly on the whole of Mays Meadows. Accordingly the condition requiring payment of a premium for the reason advanced is not invalid in principle. However a consent would be "unreasonably withheld" if it were based on a simple demand for payment to obtain that consent.
Fourthly, is the condition requiring a payment of premium otherwise unreasonable? No particulars have been furnished about the premium sought by the defendant in the present case. The parties agreed to proceed with the hearing to secure a ruling on whether the condition requiring payment of a premium in the circumstances was invalid in principle. The payment to be made must not only be required for a proper purpose but must be a reasonable amount in all the circumstances and there is no evidence as to the amount of the premium. The onus of proving that consent has been unreasonably withheld is on the tenant. The tenant has not established that the condition is unreasonable.
14. Accordingly the application for declarations that the defendant has unreasonably withheld and/or delayed its consent to the merger and to the alterations and to the change of use is refused. The remainder of the originating summons in relation to plot 6 Mays Meadows stands adjourned. The costs of the present application are reserved to the further hearing of the originating summons.
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
BETWEEN:
Plaintiffs;
Defendant.