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Lawbite: Not all or nothing … the test of reasonableness

  • United Kingdom
  • Construction and engineering
  • Real estate dispute resolution
  • Real estate litigation

25-07-2018

No.1 West India Quay (Residential) Ltd v East Tower Apartments Ltd [2018] EWCA Civ 250

The Court of Appeal has overturned the High Court’s decision and confirmed that where two out of three of the landlord’s reasons for refusing consent to assign were reasonable, the decision itself was reasonable.

The landlord, No. 1 West India Quay (Residential) Ltd, had put forward three reasons to explain its refusal to consent to an assignment of its tenant, East Tower Apartments Ltd’s interest. The High Court found that whilst two out of the three reasons were reasonable that did not make it reasonable to refuse consent.

The Court of Appeal disagreed. It considered that the theme running through the authorities in this area of the law was that “if the decision would have been the same without reliance on the bad reason, then the decision (looked at overall) is good”. It also found this to be consistent with other areas of the law such as in contractual disputes, where a contracting party can rely on a good reasons for asserting a breach by the other party, even where it originally put forward good and bad reasons.

The key question is “.. whether the decision to refuse consent was reasonable; not whether all the reasons for the decision were reasonable..”.

Key points

  • Widely reported upon at the time, the case in the High Court (itself an appeal) was worrying to landlords who had always proceeded on the basis that it was the overall decision which needed to be reasonable rather than each component reasons.
  • The case should not, however, be taken to be saying that provided that you have one good reason to refuse consent you will always be seen as having been reasonable in doing so. Here a key factor for the Court was that it considered the reasons given by the landlord to be free-standing reasons each of which had causative effect, and two of them were reasonable.
Anna Bevan-Jones, Principal Associate

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