What is reasonable?
In an article by Clyde & Co, the recent case of ANSA Logistics Ltd v Towerberg Ltd considered a common tenant’s covenant: “Not to assign, underlet or part with
possession of the demised premises or any part thereof without the previous
consent of the landlord, which consent shall not be reasonably withheld.”
ANSA approached the landlord in November 2011 to
ask for consent to underlet but the landlord refused. The landlord
also served a notice on ANSA forfeiting the lease for breach of
the alienation covenant. ANSA applied to the High Court for a
declaration, and the Court considered two questions:
–– Had ANSA parted with possession; and
––Was it reasonable for the landlord to withhold consent?
Firstly the Court decided that ANSA had not parted with
possession and so had not breached the covenant.
The landlord then gave a further reason for withholding
consent concerning Ford’s financial standing. The
Court found this to be unreasonable as only 11% of companies had a lower risk of failure at that time.
Read the full article here