SEQUENT NOMINEES LTD (FORMERLY ROTRUST NOMINEES LTD) v HAUTFORD LTD (A COMPANY REGISTERED IN THE BRITISH VIRGIN ISLANDS)

[2019] UKSC 47 Supreme Court, Lord Wilson, Lord Carnwath, Lord Hodge, Lord Briggs and Lady Arden, 30 October 2019

Interpretation of lease – Consent not to be unreasonably withheld – Three overriding principles

Clause 3(19) of a long lease between the parties provided that the tenant was subject to an obligation not to apply for planning permission without the prior written consent of the landlord and such consent was not to be unreasonably withheld by the landlord. The tenant applied for planning permission for a change of use to part of the premises from business to residential use. Clause 3(11) of the lease provided that the tenant could use any part of the building for retail, office or residential purposes. The landlord refused to give its consent because of its concern that the grant of such permission would substantially increase the risk that the tenant could compulsorily acquire the freehold reversion under the Leasehold Reform Act 1967. The judges at first instance and the Court of Appeal held that the landlord had unreasonably withheld its consent. The Supreme Court, by a majority (Lady Arden dissenting), allowed the landlord’s appeal and held that the decision to withhold consent had been reasonable.