In a recent case, a tenant wished to convert the ground floor of a building into an Indian restaurant. He obtained the necessary planning permission and requested the consent of the landlord. The landlord was developing the upper floors into luxury flats and opposed the proposed alterations. The tenant sought a declaration by the court that permission had been unreasonably withheld. In the Court of Appeal, a set of principles which apply in these cases was set out. These are:
- the purpose of the covenant requiring consent for tenants’ alterations is to prevent the tenant from carrying out alterations that could damage the landlord’s interests;
- the landlord cannot refuse for reasons other than those relating to his property interests;
- the tenant must show that the landlord has unreasonably withheld his consent;
- the landlord need not show that the conclusions that led him to refuse consent were justified, only that they were conclusions that a reasonable landlord might have reached;
- consent cannot be refused on the basis of pecuniary loss alone – in the case of pecuniary loss the landlord is entitled to ask for a payment in compensation;
- in some cases it might be disproportionate for a landlord to refuse consent; and
- in each case the reasonableness of the refusal will be a matter of fact depending on all the circumstances of the case.
In this case, the tenant’s proposals were insufficiently clear to enable the landlord to assure himself that structural problems would not result, so the landlord’s refusal was justified.