Why might a Freeholder or Landlord refuse consent to amend a property and when is it reasonable to do so?

Richard Pulford, Senior Associate in the Dispute Resolution team, looks at the case of Jacobs v Chalcot Crescent (Management) Company and Messenex Property Investments v Lanark Square to provide some update as to what might be considered a reasonable refusal of consent for works to be carried out at a property.

When purchasing a flat or being subject to any long lease, it is only natural that leaseholders may want to put their own mark on the property to make it exactly how they see it in their head. The immediate issue with this is that pretty much any long lease entered into will have a number of limitations to the alterations that can be made. Breach of these conditions can have serious ramifications with freeholders/landlords potentially looking to take action which can include forfeiture proceedings or applications for an injunction to stop any works and revert to how the flat was. As a best-case scenario, this results in a big legal bill for the leaseholder and worst case, they may have their lease forfeited.

The potential ramifications, detailed above, mean that understanding the lease and when and how consent should be granted for planned works is crucial. With the usual caveat that each case of this kind is very individual, from the language in the specific lease, to the types of works that are required, we are going to introduce you to a couple of cases which explain how the issue of reasonable vs unreasonable refusal of consent has been dealt with by the court.

Jacobs v Chalcot Crescent (Management) Company Ltd

The case of Jacobs v Chalcot Crescent (Management) Company Ltd, started with Mr Jacobs proposing some changes to his flat. The Landlord appointed a building surveyor who made recommendations, and what followed was 9 months of back and forth with variations made to the original request for consent. At this stage, still without consent from the Landlord, Mr Jacobs began works and applied to court for a declaration that the Landlord’s refusal to provide consent had been unreasonable.

On appeal, the judge decided that it is not reasonable for the landlord to refuse consent when they were relying on an expert (his building surveyor) who is not a specialist on the specific area or when a minor amendment could alleviate the concern. In cross-examination, the surveyor acknowledged that on the topic of fire safety, he would have to rely on the judgement of a fire engineer. Given fire safety was the basis on which permission had been refused, it would have been far more reasonable to, instead of refusing completely, allow consent subject to complying with the recommendations of the fire engineer. Therefore, the refusal to consent was indeed unreasonable.

Messenex Property Investments v Lanark Square

In Messenex Property Investments v Lanark Square there is a look at what would be considered reasonable refusal by the freeholder and ultimately that just because some of the grounds for refusal may be unreasonable, this does not mean that refusal to consent as a whole is unreasonable. As a freeholder, you can be unsuccessful on some grounds and the decision still be reasonable.

In this case the principles of refusal to consent were looked at, and all parties were reminded of the general requirements for this i.e. that the reasons provided by the freeholder needed to be actual reasons that the landlord held (not just what may be considered reasonable in other circumstances) and the reasons must be objectively reasonable. So, both objective and subjective limbs would need to be satisfied.

Over the period of approximately 3 years, both parties went back and forth over the plans, which changed many times by the tenant. Eventually, the Landlord refused the consent on a number of grounds, including:

• The Landlord had requested the final structural engineers’ drawings in respect of the works, but these were not provided by Tenant.
• Carrying out the works would involve a trespass over Lanark’s retained land with the installation of scaffolding.
• Messenex failed to provide suitable undertakings for the Landlord’s costs.
• At the end it still was not suitably clear what the final proposal from the Tenant was.

Not happy with this response, Messenex made an application, claiming unreasonable refusal by the Landlord. Whilst the judge was not satisfied that the necessary trespass, nor the alleged lack of clarity were good enough reasons, the other two grounds were considered reasonable to refuse consent.

The failure to provide the final structural engineer’s drawings in particular was serious enough to mean that despite failing with the reasonableness argument on two of the grounds, the overall refusal by the Landlord therefore was reasonable.

Conclusion

Two different cases, but good examples of how the reasonableness argument can be interpreted. Consent is not a formality but, equally, the landlord does not have unquestioned authority to refuse whatever they want. The reality is that both parties are best suited to come to a resolution without the need for court and try to understand what is going to be required at an early stage.