Clinton Cards (Essex) Ltd v Sun Alliance & London Assurance Co Ltd (2002)
The claimant's action against the defendant for unreasonable withholding of consent to an under-letting was dimissed.
Action by the claimant ('Clinton') for damages for breach by the defendant ('RSA') of its duty under the Landlord and Tenant Act 1988 not unreasonably to withhold its consent to an under-letting. Clinton was RSA's tenant in a unit in a shopping centre that it held under a lease of 25 years from 1990 at an annual rent of #95,000 ('the basic rent'). The lease contained covenants on the part of Clinton that, inter alia, it would not under-let: (i) only part of the premises; or (ii) the whole of the premises at a rent less than the basic rent or the full rack rent unless RSA should otherwise agree. By 1997 the premises had become surplus to Clinton's requirements. Clinton unsuccessfully marketed the premises for assignment throughout 1997 and 1998. In early 1999 it accepted an offer from a mobile phone company ('Orange') for a sub-letting at an annual rent of #75,000, with an initial rent-free period of six months. Clinton applied for consent to the proposed under-letting and change of use, which was refused by RSA because: (a) the proposed rent was below the basic rent; and (b) the proposed use would duplicate the use of an adjacent unit and hence was contrary to the principles of good estate management. Orange subsequently withdrew its interest, but then took an assignment of an adjoining unit, with RSA's consent, from another tenant in the centre. By this action Clinton contended that RSA had unreasonably withheld its consent to the proposed under-letting, contrary to s.1(3) of the 1988 Act.
(1) RSA owed a duty to Clinton under s.1 of the Act. (2) Having heard expert valuation evidence, the court was satisfied that the proposed rental payable by Orange was at the relevant time the best rack rental reasonably available on the market. The terms offered by Orange were the best produced after extensive exposure of the premises to the open market. (3) Whatever the reasonableness of RSA's refusal to consent to the change of use, the fact remained that if it had persisted in that refusal, Orange would have been confronted with the problem of how and whether to proceed. In that circumstance there was no evidence on which the court could properly conclude that, even if RSA had not unreasonably withheld its consent to the under-letting, the ultimate result would have been any different.