Mulberry Homes (Hazel Grove) Limited v Scoto Limited & Anor [2026] EWHC 1339 (Ch)

[2026] EWHC 1339 (Ch)Case No PT-2024-MAN-000151IN THE HIGH COURT OF JUSTICEVenue BUSINESS AND PROPERTY COURTS IN MANCHESTERPROPERTY TRUSTS AND PROBATE LIST (ChD)Venue Manchester Civil Justice Centre1 Bridge Street WestVenue Manchester M60 9DJDate of hearing: Thursday, 23 rd April 2026Start Time: 14.13 Finish Time: 15.57
Before
HIS HONOUR JUDGE HODGE KC(Sitting as a Judge of the High Court)
Between
MULBERRY HOMES (HAZEL GROVE) LIMITEDClaimant(1) SCOTO LIMITEDDefendants(2) STOCKPORT METROPOLITAN BOROUGH COUNCILDefendant
MR GREVILLE HEALEY (instructed by Schofield Sweeney LLP, Leeds) appeared for ClaimantMR JAMAL DEMACHKIE (instructed by Hӓgen Wolf Limited, Leeds) appeared for First DefendantMR DAVID NUTTALL (instructed by Mills & Reeve LLP, Birmingham) appeared for Second Defendant
Approved JudgmentThis Transcript is Crown Copyright.  It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority.  All rights are reserved.Digital Transcription by Marten Walsh Cherer Ltd.,2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.Telephone No: 020 7067 2900. DX 410 LDEEmail: info@martenwalshcherer.comWeb: www.martenwalshcherer.comDate 2026-04-23
[1]This is my extemporary judgment on an application by the first defendant seller for summary judgment against the claimant purchaser in a claim for specific performance of an agreement for the sale of commercial property which includes leasehold premises at Melford Road, Hazel Grove in Stockport.[2]The application raises two interesting, and apparently novel, questions. The first is whether the provisions of Standard Commercial Property Condition 11.3, relating to consent to assign from a landlord, fall away if it becomes manifestly clear that consent has been wrongfully refused or delayed because, in such circumstances, consent to assign is no longer “required to complete the contract” of sale and purchase.[3]The second question is whether, prior to completion, a contracting purchaser of leasehold property has the necessary standing to apply for a declaration that consent to assign has been unreasonably withheld or delayed by the landlord.[4]For the reasons that follow, in my judgment, the first question is to be answered in the negative and the second in the affirmative sense.[5]The claimant is a special purpose vehicle created for the purposes of this specific property transaction. It is Mulberry Homes (Hazel Grove) Limited and is represented at this hearing by Mr Greville Healey (of counsel), instructed by Schofield Sweeney LLP. It is, or was, the contracting purchaser pursuant to the exercise of a right of pre-emption created by a pre-emption agreement dated 19th July 2019.[6]The land which is the subject-matter of the right of pre-emption comprises two parcels of freehold land and one parcel of leasehold land of which the second defendant, Stockport Metropolitan Borough Council, is the landlord. The second defendant is represented by Mr David Nuttall (also of counsel), instructed by Mills & Reeve LLP. He is neutral so far as the substantive summary judgment application is concerned.[7]The first defendant, which applies for summary judgment, is Scoto Limited. It is part of the Stagecoach Group which is the country's largest bus and coach operator. It is the owner of the three parcels of land and was the grantor of the right of pre-emption. It is represented by Mr Jamal Demachkie (also of counsel), instructed by Hägen Wolf Limited of Leeds.[8]The claim form was issued in the Property Trusts and Probate List of the Business and Property Courts in Manchester under case number PT-2024-MAN-000151 on 8th November 2024. The prayer for relief claims:(1) specific performance of the contract constituted by the exercise of the right of pre-emption, including an order that the first defendant execute a transfer in the form attached or alternatively as settled by conveyancing counsel;(2) further or alternatively, declarations that: (a) the second defendant's refusal of consent was unreasonable and/or was unreasonably delayed, and (b) the first defendant is entitled to assign the lease to the claimant, without the second defendant's consent;(3) further or alternatively, damages in lieu of specific performance and/or damages for breach of contract;(4) interest; and(5) costs.[9]The background to this claim is the service by the first defendant (to which I shall refer as ‘the seller’) on the claimant (to which I shall refer as ‘the purchaser’), on 19th October 2022, of the seller’s intention to sell the land. On 14th November 2022, the purchaser exercised its rights under the pre-emption agreement to acquire the land. The effect of this was that the parties entered into an agreement for the sale and purchase of the land for £1.525 million, with completion 20 working days thereafter. The completion date was 12th December 2022.[10]By clause 7.2.1 of the pre-emption agreement, the resulting sale contract incorporated the Standard Commercial Property Conditions (third edition). It is necessary for me to set these out in full. Condition 11 is headed ‘Leasehold Property’. Condition 11.3 is headed ‘Consents’. This reads as follows. “11.3.1:(a) The following provisions apply if a consent to let, assign or sub-let is required to complete the contract.(b) In this condition ‘consent’ means consent in the form which satisfies the requirement to obtain it. 11.3.2: (a) The seller is to: (i) apply for the consent at its expense, and to use all reasonable efforts to obtain it (ii) give the buyer without delay a copy of all correspondence with a reversioner (whether or not immediate) in relation to obtaining the consent (iii) give the buyer notice without delay on obtaining the consent (b) The buyer is to comply with all reasonable requirements, including requirements for the provision of information and references. 11.3.3: Where the consent of a reversioner (whether or not immediate) is required to an assignment or sub-letting, then so far as the reversioner lawfully imposes such a condition: (a) the buyer is to: (i) covenant directly with the reversioner to perform and observe the tenant’s covenants and the conditions in the seller’s lease or (in the case of a sub-letting by the seller) in the new sub-lease (ii) use reasonable endeavours to provide guarantees of the performance and observance of the tenant’s covenants and the conditions in the seller's lease or (in the case of a sub-letting by the seller) in the new sub-lease (iii) execute or procure the execution of the licence (b) the seller, in the case of an assignment, is to enter into an authorised guarantee agreement. 11.3.4: Neither party may object to a reversioner’s consent given subject to a condition: (a) which under section 19(1A) of the Landlord and Tenant Act 1927 is not regarded as unreasonable, and (b) which is lawfully imposed under an express term of the lease. 11.3.5: If any required consent has not been obtained by the original completion date: (a) the time for completion is to be postponed until five working days after the seller gives written notice to the buyer that the consent has been given or a court has declared that consent has been unreasonably withheld (b) the postponed date is to be treated as the completion date. 11.3.6: At any time after six months from the original completion date, either party may rescind the contract by notice to the other, if: (a) consent has still not been given, and (b) no declaration has been obtained from the court that consent has been unreasonably withheld. 11.3.7: If the contract is rescinded under condition 11.3.6 the seller is to remain liable for any breach of condition 11.3.2(a) or 11.3.3(b) and the buyer is to remain liable for any breach of condition 11.3.2(b) or 11.3.3(a) but condition 10.2 is to apply as if neither party is in breach of contract. 11.3.8: A party in breach of its obligations under condition 11.3.2 or 11.3.3 cannot rescind under condition 11.3.6 for so long as its breach is a cause of the consent being withheld.” (a) The following provisions apply if a consent to let, assign or sub-let is required to complete the contract. (b) In this condition ‘consent’ means consent in the form which satisfies the requirement to obtain it. (a) The seller is to: (i) apply for the consent at its expense, and to use all reasonable efforts to obtain it (ii) give the buyer without delay a copy of all correspondence with a reversioner (whether or not immediate) in relation to obtaining the consent (iii) give the buyer notice without delay on obtaining the consent (b) The buyer is to comply with all reasonable requirements, including requirements for the provision of information and references. Where the consent of a reversioner (whether or not immediate) is required to an assignment or sub-letting, then so far as the reversioner lawfully imposes such a condition: (a) the buyer is to: (i) covenant directly with the reversioner to perform and observe the tenant’s covenants and the conditions in the seller’s lease or (in the case of a sub-letting by the seller) in the new sub-lease (ii) use reasonable endeavours to provide guarantees of the performance and observance of the tenant’s covenants and the conditions in the seller's lease or (in the case of a sub-letting by the seller) in the new sub-lease (iii) execute or procure the execution of the licence (b) the seller, in the case of an assignment, is to enter into an authorised guarantee agreement. Neither party may object to a reversioner’s consent given subject to a condition: (a) which under section 19(1A) of the Landlord and Tenant Act 1927 is not regarded as unreasonable, and (b) which is lawfully imposed under an express term of the lease. If any required consent has not been obtained by the original completion date: (a) the time for completion is to be postponed until five working days after the seller gives written notice to the buyer that the consent has been given or a court has declared that consent has been unreasonably withheld (b) the postponed date is to be treated as the completion date. At any time after six months from the original completion date, either party may rescind the contract by notice to the other, if: (a) consent has still not been given, and (b) no declaration has been obtained from the court that consent has been unreasonably withheld. If the contract is rescinded under condition 11.3.6 the seller is to remain liable for any breach of condition 11.3.2(a) or 11.3.3(b) and the buyer is to remain liable for any breach of condition 11.3.2(b) or 11.3.3(a) but condition 10.2 is to apply as if neither party is in breach of contract. A party in breach of its obligations under condition 11.3.2 or 11.3.3 cannot rescind under condition 11.3.6 for so long as its breach is a cause of the consent being withheld.”[11]Although it does not have any impact in the present case, it does seem to me that condition 11.3.5(a) may be ambiguous in that it is not entirely clear whether, if any required consent has not been obtained by the original completion date, and there is a declaration that consent has been unreasonably withheld, the time for completion is to be postponed until(a) five working days after that declaration is made, or(b) five working days after the seller has given written notice to the buyer that the court has declared that the consent has been unreasonably withheld. As I say, that ambiguity is of no relevance on the facts of the present case.[12]I should also explain that the concluding words of special condition 11.3.7, providing for condition 10.2 to apply as if neither party was in breach of contract, merely means that the deposit is to be returned to the purchaser on the footing that the termination of the contract of sale and purchase is without any fault on the part of the contracting purchaser.[13]Under clause 19.1 of the lease, the seller required the landlord’s consent to assign the leasehold land, such consent not to be unreasonably withheld. It is common ground that, as a result, the agreement for sale and purchase constituted by the exercise of the right of pre-emption was, at its inception, subject, by standard condition 11.3.1(a), to the following provisions of standard condition 11.3. One of the questions I have to consider is whether the sale and purchase agreement remained so subject.[14]The seller first requested the landlord’s consent to the assignment by email on 16th November 2022. This was refused by the landlord on 16th December 2022. This was some four days after the original completion date. It therefore seems to me clear that the provisions of condition 11.3.5 had already become engaged, so as to postpone the date to be treated as the completion date “until five working days after the seller gives written notice to the buyer that the consent has been given or a court has declared the consent has been unreasonably withheld”.[15]One of the questions I have to decide is whether that extended completion date persisted after the refusal of consent on 16th December 2022, or after a later refusal of consent, on 13th March 2023, made in response to a second email request on 24th January 2023, and reiterated by letter on 23rd February 2023.[16]It is the purchaser’s case that both consents were manifestly unreasonable, and also that the second refusal had been unreasonably delayed. By letter dated 19th June 2023, the seller purported to rescind the sale and purchase agreement pursuant to the provisions of standard condition 11.3.6. The seller contends that that put an end to the sale and purchase agreement and that that, of itself, should be sufficient to entitle it, on this summary judgment application, to an order of this court dismissing the claim against it on the footing that there is no longer any subsisting contract of which the court should order specific performance.[17]After the issue of the claim form, on 8th November 2024, there was the usual exchange of pleadings, including the service by the seller on the second defendant landlord of a notice seeking an indemnity against, or contribution to, the purchaser's claim against the seller. There was then an application for security for costs, which was eventually conceded by the purchaser. There followed a costs and case management conference before District Judge Banks on 26th September 2025. By that time, the seller had already canvassed an application for summary judgment.[18]It was against that background that District Judge Banks made his order of 26th September 2025. Paragraphs 2 and 3 were headed ‘Summary Judgment Application’. Paragraph 2 provided that the seller was to make any proposed application for summary judgment by no later than 5 pm on 24th October 2025, and the parties were to explore the possibility of alternative dispute resolution during that period. Paragraph 3 provided that should an application for summary judgment be made, the claim should be stayed, save in respect of that application; and the dates for compliance with the following case management directions were not to apply. Revised dates for those directions were to be ordered by the court, preferably agreed by the parties in advance, on conclusion of the summary judgment hearing, if required.[19]The court then approved a list of issues. These were divided into two categories, the first of which (the Category A issues) related to matters other than damages and indemnity and the second of which (the category B issues) related to damages and the extent of the second defendant’s liability to indemnify or otherwise pay damages to the seller as a result of any sums that the seller might be found liable to pay to the purchaser. There were no less than 14 category A issues, of which number 11 was whether the first defendant seller was entitled to rescind the sale and purchase agreement or was prohibited from doing so, either because it was in breach of contract, or due to an implied term.[20]The seller duly issued its present summary judgment application on 14th October 2025. That was supported by the second witness statement of its solicitor, Mr Matthew Pugh, of the same date. Although the matter had originally been listed for the hearing of the summary judgment application on 22nd December 2025, that hearing was adjourned to today (23rd April 2026). Against that background, it is a little surprising that the purchaser's evidence in answer was only served on 13th April 2026, in the form of the second witness statement of its solicitor, Mr Richard Edward Jobes, bearing that date.[21]I had the opportunity of pre-reading the witness evidence before this hearing started, at 10.30 this morning. There is, as one would expect on a summary judgment application, no real dispute as to the background facts, at least so far as relevant to this application. In his witness statement, Mr Jobes, for the purchaser, takes issue with what he describes as the lateness of this summary judgment application; but I am satisfied that there is no substance in those objections, which were not pressed before me on behalf of the purchaser by Mr Healey.[22]The summary judgment application had been canvassed before the first case management hearing, as evidenced by paragraphs 2 and 3 of the order made by the district judge at that hearing. The parties are still at a very early stage of this litigation, which has been stayed pending the determination of this summary judgment application, so no party has been incurring substantial costs in seeking to bring this matter to trial since the hearing before the district judge.[23]I am entirely satisfied that this summary judgment application can properly be determined at the present hearing. I have been reminded of the principles laid down by Lewison J in Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch) at paragraph 15, which have later been approved by the Court of Appeal, and are set out at paragraph 24.3.2 (at pages 656-7) of the current (2026) edition of volume 1 of Civil Procedure.[24]I bear in mind, in particular, that on a summary judgment application the court may give summary judgment against a claimant if it considers that the party has no real prospect of succeeding on its claim, and that there is no other compelling reason why the case should be disposed of at a trial. The court must consider whether the claimant has a realistic, as opposed to a fanciful, prospect of success. A realistic claim, in this sense, is one that carries a degree of conviction. That means a claim that is more than merely arguable. In reaching that conclusion, the court must not conduct a mini-trial. In reaching its conclusion the court must also take into account not only the evidence actually placed before it on the application for summary judgment, but also such further evidence as can reasonably be expected to be available at trial.[25]Of particular relevance, in the present context, is principle (vii). It is not uncommon for an application under CPR Part 24 to give rise to a short point of law or construction. If the court is satisfied that it has before it all the evidence necessary for the proper determination of that question, and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. I am satisfied that that is the case here.[26]Since Mr Healey, for the purchaser, founds his case upon the proposition that the council landlord's refusal of consent to assign was manifestly unreasonable, it seems to me that I must approach this summary judgment application on the footing that that will be a matter that is established at trial. Of course, I make no finding to that effect; but it seems to me that that is the proper basis upon which I should approach this application. It is against that background that I turn to the submissions advanced in support of, and in opposition to, the present application.[27]For the seller, Mr Demachkie submits that the basis for its summary judgment application is simple. If the seller validly rescinded the sale and purchase agreement, then the purchaser cannot obtain specific performance, nor can it claim damages instead. Its claim, as pleaded against the seller, must fail. Mr Demachkie submits that the effect of standard condition 11.3 is simple. The seller was required to obtain the landlord council’s consent. That consent had not been obtained by the original completion date of 12th December 2022 so, by condition 11.3.5, the original completion date was postponed until five working days after the seller gave written notice to the buyer that the consent had been given, or a court had declared that consent had been unreasonably withheld.[28]By standard condition 11.3.6, after six months from the original completion date - that is to say, by 12th June 2023 - and in the absence of any landlord’s consent, or the obtaining of a declaration from the court that consent had been unreasonably withheld, either party could then rescind the sale agreement. That was duly done by the seller by its notice of rescission. on 19th June 2023.[29]Standard condition 11.3.7 then addresses the consequences of that rescission. It reserved both parties’ rights to pursue a claim in damages for any breaches of conditions 11.3.2 and 11.3.3 if one or other party was in breach of its obligations concerning landlord's consent; and it treated the rescission as though neither party was at fault, so the deposit was returned to the purchaser under standard condition 10.2.[30]Mr Demachkie points out that the purchaser seeks to circumvent the clear effect of standard condition 11.3 by contending two matters in its particulars of claim. The first is that because the council landlord was in breach of its obligation not unreasonably to withhold consent, the seller became entitled to assign without consent; and, in such circumstances, the provisions of standard condition 11.3 no longer applied to the proposed assignment to the purchaser as it was no longer the case that consent was “required” to complete the sale and purchase agreement. It is said that, as a result, standard condition 11.3.6 ceased to apply, and the notice of rescission was therefore of no effect.[31]Second, it is said that because the seller was in breach of its obligation to complete the sale and purchase agreement, it cannot rely upon its own breach to entitle it to terminate the contract. Mr Demachkie contends that both of these points are wrong in law. He contends that under the terms of the lease, any assignment required the landlord's consent, such consent not to be unreasonably withheld.[32]Mr Demachkie recognises that under the Landlord and Tenant Act 1998, the landlord owed its tenant a duty to provide consent to assign within a reasonable period of time, save where it was reasonable to refuse such consent. However, both the 1998 Act and the Landlord and Tenant Act 1927, which is also of potential relevance, regulate rights between landlord and tenant, and not between seller and purchaser. In support of that proposition, reference is made to the leading judgment of Auld LJ in Aubergine Enterprises Limited v Lakewood International Limited [2002] EWCA Civ 177, reported at [2002] 1 WLR 2149, at paragraphs 40 and 41. Those paragraphs also emphasise the need for certainty in the present context. Quoting from paragraph 40:
“Parties to an assignment of a lease require certainty as between themselves as to the legal consequences of concluding their transaction, in particular as to the quality of title. It is true that that may be achievable in the end by recourse to litigation against an unreasonably recalcitrant landlord or against each other. But the purpose of a well-drawn contract of assignment is to achieve as near certainty as possible in the act of completion and without resort to the burden of uncommercial and time-consuming litigation whether as between assignor and assignee or by one or both of them against a third party, the landlord.”
[33]Mr Healey relies upon a passage in the following paragraph (paragraph 41), pointing out that the “negation of the contractual requirement of consent” was not the issue on the appeal before the court in Aubergine Enterprises. That was because the seller’s contentions were not that, in the circumstances, consent had become unnecessary. Its case was that the landlord had granted consent, or that the landlord and the parties had agreed that the matter could proceed to completion before tying up all of the legal formalities. That was a case in which, although no formal consent had been given by the landlord, it had made it clear in writing that the landlord would be prepared to consent to the proposed assignment. In those circumstances, the Court of Appeal, upholding the decision of the lower court, held that a buyer’s notice purporting to rescind the contract on the grounds that no consent had been provided was ineffective to put an end to the contract of sale and purchase.[34]Mr Demachkie emphasises that the purchaser confuses the impact of an unreasonable refusal of consent, or unreasonable delay in providing landlord’s consent, as between landlord and tenant and as between vendor and purchaser. Mr Demachkie recognises that if a landlord unreasonably refuses consent, the tenant is entitled to ignore any covenant in the lease prohibiting alienation, and may assign the lease without any fear of being in breach of covenant. That has been the law since Treloar v Bigge in 1874. Thus, in such circumstances, the tenant is free to assign without any repercussions as regards the landlord under the alienation covenants in the lease. Although that may govern the matters between landlord, in this case the second defendant council, and the tenant - in this case, the first defendant seller - however, it does not impact upon any contract of sale as between the seller and the purchaser.[35]Mr Demachkie relies upon statements in the relevant practitioner’s works to the effect that if a landlord unreasonably refuses consent, the vendor cannot compel a purchaser to complete: see Emmet & Farrand on Title at paragraph 5-078. Conversely, and of more relevance to this case, in such circumstances, a purchaser cannot compel the vendor to complete: see Aldridge on Leasehold Law, at paragraph 8.016; and Woodfall: Law of Landlord and Tenant, at paragraph 16-018.[36]Mr Demachkie also places reliance upon statements of Goff J in the case of Lipmans Wallpaper Limited v Mason & Hodghton [1969] 1 Ch 20 at pages 37 to 39. Mr Demachkie notes Mr Healey’s reliance upon the decision of Maugham J in the case of Curtis Moffat Limited v Wheeler [1929] 2 Ch 224. Mr Demachkie distinguishes that case on the basis that it does not go as far as the proposition for which Mr Healey contends. There the court held that the defendant vendor could be compelled by a decree of specific performance to complete in favour of a specified nominee of the contracting purchaser. However, Mr Demachkie points out that in that case there was a specific finding by the judge that the landlord had consented, albeit informally, to an assignment to that nominee. Mr Demachkie submits, in my view correctly, that the case is no authority for the proposition that a seller can be compelled to complete the sale of a leasehold property in favour of a contracting purchaser in circumstances where the seller’s landlord has refused its consent to such an assignment. Those were not the facts of Curtis Moffat Limited v Wheeler.[37]In my judgment, the most that Mr Healey can pray in aid are observations of Maugham J that it might well be that if the landlord had refused his consent to the proposed assignment on grounds reasonable or unreasonable, there could be no specific performance. with a possible exception if the grounds alleged were so unreasonable that the lessee might clearly assign to the proposed assignee without consent. That observation was clearly obiter and unnecessary on the facts of the case before the judge. In my judgment, those observations do not derogate from the clear statements in the practitioner’s works, and in the analysis of Goff J in the Lipmans Wallpaper case, that specific performance cannot be ordered against a seller in circumstances where the landlord has refused its consent to the proposed assignment unless there is a declaration of the court that such consent has been unreasonably withheld or delayed.[38]As a matter of general law, I would not accept the proposition that the effect of an unreasonable withholding of consent, or unreasonable delay in providing consent, to an assignment has the effect of entitling a purchaser to specific performance of a sale and purchase agreement where consent is required under the terms of the lease. The statutory effect of an unreasonable refusal of consent under section 1(3) of the 1988 Act does not, in my judgment, remove the need for either formal written consent, or a declaration of the court that consent has been unreasonably withheld or delayed.[39]Mr Healey also submitted that the observations in the Lipmans Wallpaper case must be read in the context of the fact that in that case the landlord's refusal had been manifestly reasonable. He also points to the fact that the case pre-dated the 1988 Act. He submits that if a refusal is manifestly unreasonable, or if it is entirely clear that consent has been unreasonably delayed, then the seller can be compelled to complete the transfer of the leasehold property by the court. In my judgment, that is not the position under the general law of vendor and purchaser.[40]In the present case, however, the matter is governed by the terms of the Standard Commercial Property Conditions of Sale, third edition. Whatever the position at common law or in equity, that position is, in my judgment, regulated in the context of the present sale and purchase agreement by those special conditions. Standard condition 11.3 makes express provision for what is to occur if the landlord's consent is required to complete the contract of sale and purchase.[41]Mr Demachkie, for the seller, contends that the standard conditions make express provision for what is to happen if the parties consider that the landlord has unreasonably refused or delayed its consent. Either party may apply to the court for a declaration, whereupon the completion date is postponed until after the court declares that consent has been unreasonably withheld. On the facts of the present case, consent had not been refused by the original completion date, and therefore standard condition 11.3.5 was engaged, and operated to postpone the completion date in accordance with paragraph (a).[42]For the purchaser, Mr Healey contends that clause 11.3.1(a) applies only if consent to assign “is required to complete the contract”. Once consent was unreasonably withheld, consent was no longer “required”, and therefore condition 11.3 ceased to be engaged. In support of his argument, Mr Healey relies upon observations of Mr Simon Gleeson, sitting as a deputy judge of the Chancery Division, in Gabb v Farrokhzad [2022] EWHC 212 (Ch) at paragraphs 54 and 59. At paragraph 54 the deputy judge said that:
“If the landlord does unreasonably withhold consent, the obligation [not to assign] ceases to bite, and the tenant is therefore free to assign without consent and may seek a declaration to that effect.”
[43]The deputy judge went on to cite from the judgment of Romer LJ in Woolworth v Lambert [1937] Ch 37 at page 53 to the effect that: "… if the landlords unreasonably withhold their consent, then there is no covenant on the part of the lessees at all relating to the subject-matter, because the words ‘such consent not to be unreasonably withheld’ import a condition into the covenant so that the covenant is conditional upon the consent not being unreasonably withheld; the result being that, when a licence or consent is unreasonably withheld, there is no covenant on the part of the lessee at all, the condition not having been fulfilled.” It is clear from paragraph 59 of the same judgment that an unreasonable delay in granting consent has the same effect. In either case, the tenant can simply assign without further reference to the landlord, and without being in breach of any obligation owed to the landlord.[44]Mr Healey recognises that an unreasonable refusal or delay entitles the tenant to seek a declaration to that effect. He says, however, that that is a remedy that is only available to the tenant, and not to its proposed assignee, at least until the assignment in question has been completed.[45]Mr Gleeson points to the decision of Ungoed-Thomas J in Theodorou v Bloom [1964] 1 WLR 1152. There the landlord had unreasonably delayed in consenting to an assignment so the prospective assignee took the assignment and then applied for a declaration that the tenant had been entitled to assign without the landlord's consent. At pages 1153-4, Ungoed-Thomas J held that the assignee was the proper person to apply for a declaration in such circumstances, and that the assignor was not even a necessary party to the proceedings. As Mr Healey says, that case is authority for the proposition that once the assignee has taken the assignment, then because there is now privity of estate between itself and the landlord, the assignee can apply for a declaration.[46]Mr Healey relies upon footnote 12 to paragraph 11.128 of Woodfall on Landlord and Tenant where, having referred to Theodorou v Bloom as a case in which the assignment had actually been completed, so that the lease was vested in the assignee, the editors go to say: It is considered that an intending assignee, even one who has contracted to acquire the lease, probably does not have locus standi to seek a declaration until the assignment has been completed.[47]No authority is cited for that suggestion. Mr Demachkie submits that that is inconsistent with the statement at paragraph 26.451 of Emmet & Farrand on Title. The passage reads:
“It was, and presumably remains, open to the assignee to apply for a declaration that the consent has been unreasonably withheld without joining the assignors of the lease as parties.”
[48]I do not consider that that is support for Mr Demachkie’s argument. It refers to the assignee and not to the prospective assignee. At best, it is ambiguous as to whether it is referring to the point in time at which the assignment has been completed. The reference to Theodorou v Bloom would suggest that the editors had in mind the point in time when the assignment had completed, and there is therefore privity of estate between the assignee and the landlord. So I do not take the view that there is any difference between the statements in Woodfall and in Emmet & Farrand.[49]However, although there would appear to be no authority on the point, I am entirely satisfied that, as a matter of principle, a contracting purchaser has the necessary standing to apply for declaratory relief against a landlord, even in advance of completion of the sale of the leasehold interest. In such a case, of course, it would be necessary for the contracting purchaser to join the seller as a party to the litigation, either as a joint claimant or as a co-defendant, so that the existing tenant would be bound by the result to the same extent as its landlord and the contracting purchaser and prospective assignee.[50]I am satisfied that Theodorou v Bloom does not decide the point. It did not need to do so because the assignment in this case had been completed. But if one looks at the matter from the point of principle, and the general law relating to the grant of declaratory relief, it seems to me quite clear that a prospective assignee, as the contracting purchaser, clearly has sufficient interest to apply for a declaration that consent to an assignment to itself is being unreasonably withheld or refused or delayed.[51]I am satisfied that the matter falls entirely within the principles identified by Aikens LJ in his judgment in Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387, [2010] 1 WLR 318, at paragraph 120. Although Aikens LJ's judgment was a dissenting one so far as the result was concerned, I do not consider that there was any dissent on this point; and his judgment has been referred to by the Court of Appeal with approval in at least one later case, that of Milebush Properties Limited v Tameside Metropolitan Borough Council [2011] EWCA Civ 270, [2011] PTSR 1654. The principles were summarised at paragraph 120 of the Rolls-Royce case, as follows:
“(1) The power of the court to grant declaratory relief is discretionary. (2) There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant. (3) Each party must, in general, be affected by the court’s determination of the issues concerning the legal right in question. (4) The fact that the claimant is not a party to the relevant contract in respect of which a declaration is sought is not fatal to an application for a declaration, provided that it is directly affected by the issue ... (5) The court will be prepared to give declaratory relief in respect of a friendly action or where there is an academic question if all parties so wish, even on private law issues ... (6) However, the court must be satisfied that all sides of the argument will be fully and properly put. It must therefore ensure that all those affected are either before it or will have their arguments put before the court. (7) In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised? In answering that question, it must consider the other options of resolving this issue.”
[52]Applying those principles to the present and contemplated cases, I am entirely satisfied that a contracting purchaser of a leasehold interest has the necessary standing, even before completion, to seek a declaration as to the reasonableness of a withholding or refusal of consent to assign. In such a case, however, not only the landlord, but also the existing tenant, must be a party to the proceedings, so as to be bound by the decision. Indeed, the correctness of that principle is exemplified by the instant proceedings, as I have already explained during the course of argument. The prayer for relief in the present case, to which the contracting purchaser (as claimant) and the landlord are both parties, together with the existing tenant (and contracting seller), includes a claim for a declaration that the landlord’s refusal of consent was unreasonable and/or was unreasonably delayed, and that the seller is entitled to assign the lease to the purchaser without the landlord's consent. There is no reason why a claim for such relief should have been open to the present claimant - the purchaser - only after the seller had purported to rescind the contract of sale and purchase. There is no reason why the purchaser should not have been able to pursue such a claim whilst the contract was, on any view, still subsisting.[53]When this was put to Mr Healey he submitted that six months would not be long enough to obtain declaratory relief. Six months is the period set out in the Standard Commercial Property Conditions. It could, of course, have been the subject of variation, by way of special condition in the contract. It could have been extended to nine, 12, 15, or any other number of months; it was not. No doubt the drafter of the Standard Commercial Property Conditions envisaged that with directions for a speedy trial, any dispute as to the reasonableness of refusing or withholding consent could be determined within a six-months timeframe.[54]So I am entirely satisfied that, contrary to Mr Healey's submissions, the Standard Commercial Property Conditions are workable in the sense for which Mr Demachkie contends. Mr Healey submitted that one must construe the conditions against the known background at the time the right of pre-emption was exercised. This was that the landlord was seeking to engineer a surrender of the lease, so that it could redevelop its subject-matter as land for an ambulance station. Mr Healey submits that the court should approach the construction of the standard conditions with that factual background in mind. I reject that submission for two reasons. First, as Mr Demachkie points out, the incorporation of the Standard Commercial Property Conditions into the sale and purchase contract that was constituted by the exercise of the right of pre-emption was mandated by the original pre-emption agreement. That dates back to 19th July 2019. If and in so far as extrinsic background evidence is admissible as an aid to construction of the pre-emption agreement, then one must look to evidence available to both parties as at July 2019, and not at the later date when notice was given under the pre-emption agreement, and the grantee of the right of pre-emption chose to exercise its right of purchase. In any event, these are Standard Commercial Property Conditions, which have fallen to be applied in many commercial transactions over the years since they were first formulated in their present iteration.[55]Mr Demachkie referred me to paragraph 7.44 of the current edition (the eighth) of Lewison: The Interpretation of Contracts. This reads:
“Since a standard form is designed for use in a wide variety of transactions, there is less room for the interpretation of the form to be influenced by the background facts applicable to any particular transaction.”
[56]Turning to the interpretation of the standard condition 11.3, it seems to me that Mr Healey's suggested construction is both contrary to the express wording of the condition but also to the underlying commercial realities. Mr Healey invites the court to conclude that condition 11.3.1(a) ceases to apply as soon as consent to assign is unreasonably withheld or delayed on the footing that that consent is no longer “required” to complete the contract. The first answer to that is that the condition reads:
“The following provisions apply if a consent to let, assign or sub-let is required to complete the contract.”
It does not say “so long as such a consent is required to complete the contract”. In my judgment, it is looking at the position at a single moment in time. There may be an issue as to whether that single moment is the date of the contract or the original completion date. What is clear to me is that one should be looking to a single point in time no later than the original completion date. That can be illustrated by the facts of the present case.[57]The original completion date was 12th December 2022. At that time, the landlord's consent to assign was required because there was a clause in the lease that required such consent, and such consent had not by that point in time either been obtained or refused or withheld, in the sense that an unreasonable period of time had elapsed since such consent was requested. It follows that, in accordance with standard condition 11.3.5, the required consent had not been obtained by the original completion date, and therefore the time for completion was to be postponed. Clause 11.3.5 provides, in such circumstances, for the time during which the postponed date is to be treated as the completion date. It is postponed until five working days after the seller gives written notice to the buyer that the consent has been given, or a court has declared that consent has been unreasonably withheld.[58]On the facts of the present case, no such consent was ever given, and no court has ever declared that consent has been unreasonably withheld. Thus the completion date continued to be postponed. That remained the case until the notice of rescission was given in accordance with condition 11.3.6. That provides that at any time after six months from the original completion date, i.e., on or after 12th June 2023, either party might rescind the contract by notice to the other if consent had still not been given (which it was not), and no declaration had been obtained from the court that consent had been unreasonably withheld. The standard conditions are entirely workable. It was open to the purchaser to apply to the court for appropriate declaratory relief. No such application was made, and no such declaration was obtained; and therefore it was open to the seller to rescind the contract.[59]Mr Healey accepts that not all refusals of consent, or not all delay in giving consent, would operate to disengage the provisions of clause 11.3.1. His submission is that a “manifestly” unreasonable refusal of consent, or a “manifest” delay in giving consent is required before condition 11.3.1(a) is disapplied. That, as Mr Demachkie points out, would run counter to the requirement for commercial certainty. As Mr Demachkie again points out, there is no distinction in the standard condition between a refusal and a “manifest” refusal of consent. There is no suggestion that the degree of unreasonableness of the withholding of consent has any relevance to the application of the standard conditions.[60]I agree with Mr Demachkie that his construction provides the degree of commercial certainty that one would expect from the drafters of the Standard Property Conditions. On his construction, which I am entirely satisfied is the correct one, the parties to a contract for the sale of a leasehold property will know, at any time after six months from the original completion date, that they can put an end to the contract by giving notice of rescission. That provides a source of clarity.[61]On Mr Healey's approach when was completion due? Was it after consent was unreasonably withheld? Was it after there was an unreasonable delay in giving a decision on whether or not to give the landlord's consent? By what mechanism was a new contractual date for completion inserted into the sale and purchase agreement?[62]I have no doubt whatsoever that Mr Demachkie's construction of standard condition 11.3 is the correct one. I cannot construe 11.3.1(a) as applying only if and so long as a consent to let, assign or sub-let is required to complete the contract. In my judgment, such a construction is not consistent with condition 11.3 as a whole; nor would it be consistent with the requirements of commercial certainty required in property transactions.[63]So, for all of those reasons, I am satisfied that this is a case in which there is no real prospect of the purchaser succeeding on the claim, nor is there any other compelling reason why the case should be disposed of at trial.[64]As I say, I have approached this application on the footing that the landlord's refusal of consent was manifestly unreasonable. There is no reason why there should be any factual investigation at trial. So I therefore grant the application for summary judgment. That concludes this extemporary judgment. - - - - - - - - - - - (This Judgment has been approved by the Judge.) 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