Yet another recent case has been decided against a landlord held to have unreasonably refused consent.

In the case of NCR Ltd v Riverland Portfolio No. 1 Limited (16 July 2004) the tenant was successful in establishing that the defendant landlord had unreasonably withheld and delayed giving consent to an underletting. This decision indicates that it is harder for a landlord to reasonably object to a proposed underletting than to an assignment.

On 30 June 2003 NCR applied to its landlord, Riverland, for consent to grant a sublease to Telco Global. The Landlord and Tenant Act 1988 requires landlords to give consent within a reasonable time of a tenant’s application, except where it is reasonable not to do so. Here it was held that the period of reasonable time started on 28 July, by which time NCR had provided all necessary information to Riverland.

The parties solicitors corresponded culminating on 20 August in Riverland refusing consent. Riverland was concerned as to Telco’s covenant strength and the level of sublease rent.

The court held that Riverland had failed to give its decision in a reasonable time. The subtenant’s financial strength was not of great significance since, the tenant, NCR, was going to remain directly liable for the rent payable to the landlord and for complying with the covenants in the lease. A comparatively short time was required to make a decision, particularly as the landlord was experienced in considering such applications – it was held that 11 working days was more than sufficient and consent had been unreasonably withheld.

The court also made it clear that a landlord cannot refuse consent simply because its mortgagees object to a subletting. A tenant only has to satisfy its landlord and not the landlord’s mortgagees.

Click on link for further guidance on applications for consent: Applications for consent - recent cases reiterate the need for urgency when dealing with applications:An update for Landlords

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