Consent for Alterations: Whether Consent Was Reasonably Withheld Where the Tenant Changed its Proposed Alterations (Messenex Property Investments Ltd v Lanark Square Ltd – 2024)

Where a tenant applied to the landlord for consent to alterations, was consent reasonably withheld in circumstances where the tenant changed the scope of its proposed alterations?

The background

In Messenex Property Investments Ltd v Lanark Square Ltd [2024], the claimant was the tenant under a 200-year lease of a mixed-use building in London comprising residential and commercial units across four floors. The respondent was the landlord.

The tenant proposed undertaking alterations at the building including the construction of 3 additional floors containing 9 flats, and converting commercial units on the ground floor into 5 flats. Planning permission was granted but, under the terms of its lease, the tenant was required to obtain consent of the landlord to the alterations, which was not to be unreasonably withheld or delayed.

An application for consent to the alterations was submitted in May 2020, and over the following 3 years the parties engaged in correspondence as to the scope of the works. The tenant’s proposed alterations changed during this period, including relocation of a bicycle store from the basement to the ground floor, and the tenant also widened the proposed works to include the erection of a site compound and scaffolding on the landlord’s retained land.

The landlord did not give consent to the alterations, and the tenant brought proceedings on the grounds that consent had been unreasonably withheld. The landlord believed that it had acted reasonably in not granting consent, citing its reasons:

1. Structural engineers’ drawings detailing the additional floors to be constructed had been requested, but these had not been supplied by the tenant;
2. In order to undertake the works, the tenant would be required to trespass across the landlord’s retained land, entitling the landlord to refuse its consent;
3. The tenant’s proposals were unclear; and
4. The tenant had not provided unconditional undertakings in respect of the landlord’s costs.

The decision

The High Court found that the landlord had acted reasonably in not granting consent.

The landlord argued that the tenant needed to submit a new application for consent where material changes to the original proposals were made. The Court rejected this, finding that the scope of works was sufficiently clear for the landlord to understand what it was being asked to consent to.

Addressing each of the landlord’s reasons, the Court held that:

1. The landlord had acted reasonably in withholding consent following the tenant’s failure to provide structural engineers’ drawings. The proposed works were substantial and a report had been prepared, and attached to the tenant’s planning application, querying whether the building’s structure could support additional floors;
2. The parties had agreed terms of access to the landlord’s retained land for the tenant for the purposes of undertaking the works, and therefore the suggested trespass was not a reasonable reason for withholding consent;
3. The tenant’s proposed works were clear. The scope of a licence for alterations may vary, and engrossment licences had been prepared and circulated between the parties;
4. The landlord acted reasonably in withholding consent following the tenant’s refusal to provide a further unconditional undertaking for costs.

Referring to No 1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2018], where the landlord has more than one reason for withholding consent, and where some of those reasons are reasonable (for example, in this case the tenant’s failure to provide structural engineers’ drawings), overall the decision to withhold consent should be reasonable.

Advice and action for landlords

This decision helpfully sets out the approach to considering applications for consent to alterations, particularly where the proposed works change following submission of the application.

The High Court considered the applications the tenant had made under its lease, and whether the nature of the application changed sufficiently and materially to require the submission of a new application for consent.

Both subjective and objective tests are applied to a landlord’s reasoning: opinion as to whether the landlord acted reasonably in reaching its decision, and a quantifiable number of reasons which are objectively reasonable.