In Messenex Property Investments Ltd v Lanark Square Ltd [2024] the High Court found that a landlord was acting reasonably in withholding consent to a tenant's proposed alterations to a property.
The facts
Messenex Property Investment Ltd (Messenex) was the tenant of a four-storey mixed-use building on the Isle of Dogs in London (the Premises) under a 200 year lease. Lanark Square Ltd (Lanark) was the immediate landlord and the freehold owner of the Premises.
Messenex wished to make alterations to the Premises which included adding three additional floors and converting the ground floor from business to residential use and they had already obtained planning permission for the proposed works.
There was a covenant in the lease which prevented Messenex from erecting any additional structure of any kind upon the Premises or making alterations to the main structure, external appearance or layout of the Premises without Lanark's consent (such consent not to be unreasonably withheld or delayed). The parties also accepted that section 19(2) of the Landlord and Tenant Act 1927 (which implies into all leases containing a covenant not to carry out alterations without the landlord's consent a proviso that consent to improvements will not be unreasonably withheld) applied and that this was similar in scope to the terms of the lease.
Whilst draft licences for alterations went back and forth between the parties, Messenex did not ultimately agree to the terms on which Lanark was prepared to grant consent and instead issued an application for a declaration that Lanark had unreasonably withheld consent and that Messenex should therefore be discharged from the covenant in the lease requiring them to seek Lanark's approval.
Lanark defended the claim on the basis that:
1. Messenex had failed to provide structural engineer's drawings;
2. The works involved trespass on property retained by Lanark;
3. Messenex had failed to provide an unconditional undertaking for landlord's reasonable costs; and
4. There was a lack of clarity in Messenex's proposals.
The Court's Decision
The Court considered the scope of the application for consent made by Messenex and held that it was reasonable to withhold consent based on failure to provide structural drawings and an unconditional undertaking to pay costs and that these were self-standing grounds.
Whilst trespass in these circumstances (where access to Lanark's retained land had already been agreed at the time Messenex issued its claim) was not something on which the landlord could rely to withhold consent and the Court held that the scope of the works was sufficiently clear, as two of the four grounds advanced by Lanark for refusing consent were found to be reasonable Messenex's application was dismissed.
This is useful reminder for both landlords and tenants about how the Courts will assess reasonableness in the context of applications for consent to carry out works.
