Summary

A tenant was not able to show at the summary judgment stage that the landlord had no real prospect of defending a claim that it had unreasonably withheld its consent to alterations. It was not appropriate to stay those proceedings pending the outcome of judicial review proceedings in respect of the planning permission granted for those proposed works.

Facts

Applications by: (i) the tenant ('T') for summary judgment under CPR Part 24 on its claim for a declaration that the defendant landlord ('D') had unreasonably withheld its consent to alterations proposed by T ('summary judgment application'); and (ii) D to stay T's claim pending the outcome of its application for judicial review of the planning permission granted to T for those proposed works ('stay application'). T was the tenant of a building on Oxford Street, London, under a lease for 999 years from 11 October 1913 and which had been occupied by the C&A department store until January 2001. D was the owner of the building as well as several other properties in the area. The lease provided that D's consent was required for an "addition or alteration affecting the elevation external structure or stability of the building" and the effect of s.19 Landlord and Tenant Act 1927 was to require D not to unreasonably withhold that consent. T had made unsuccessful attempts to find a retail tenant for the whole of the building but had located a tenant for the first two floors. T proposed the works to refurbish those two floors and obtained planning permission for the same on 9 May 2002. T planned a second phase of works to use the third and fourth floors as offices and the fifth floor as residential accommodation. D applied for permission to apply for judicial review of the planning permission as D believed that if it was allowed to stand the local authority would be more likely to grant T's application for change of use of the upper floors. D's application was refused on paper on 17 July 2002 and its renewed application was due to be heard in September 2002. In a letter of 14 June 2002 D indicated that it did not consent to the proposed works to the first and second floors on the grounds that: (a) in the interests of the general area and D's other properties the building should be let as a single retail unit; (b) T's proposals took no account of the local initiative to increase shop frontage in the nearby area ('the Marketplace initiative'); and (c) the judicial review proceedings should be concluded before any works were carried out.

Held

(1) It was quite a burden for T to show that D had no real prospect of success in defending its claim for a declaration, particularly as the burden of proving unreasonableness fell on T. (2) It might be that after consideration of the marketing evidence at trial that T had been justified in concluding that the building could not be let as a single retail unit, but the judge could not conclude at this point that D had no real prospect of successfully defending its refusal of consent on this point. (3) The judge doubted whether the reason in respect of the Marketplace initiative was reasonable, but it would depend on the facts and if issue (a) was to go to trial this issue should also go to trial. (4) If T was to be prevented from carrying out the works pending the judicial review proceedings T would be deprived of rental income of #40,000 per week without any right to claim against D for compensation. Whether D was unreasonably withholding consent was clearly an urgent point and should not be delayed. If this claim reached trial before the judicial review proceedings it would be for the judge to decide at that point how best to proceed. It was wrong to decide now that no further preparation should proceed in this claim and the stay would be refused. An expedited trial would be ordered. (5) The judge left open the question whether the existence of the judicial review proceedings was a reasonable ground for D to withhold consent.

Summary judgment application dismissed. Stay application dismissed. Costs reserved. T's application for permission to appeal refused.