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Breach of covenant preventing assignment

10 November 2014 #Real Estate


In Singh v Dhanji [2014], a landlord refused to grant to the tenant licence to assign a 15 year lease of premises used as a dental practice unless the tenant:

  1. remedied alleged breaches of covenant,
  2. notified the landlord that he could inspect the premises to ensure that the breaches had been remedied, and
  3. ceased trespassing onto the landlord’s adjoining property.

The alleged breaches of covenant arose out of refurbishment works at the premises carried out without consent including the moving of two partition walls, and the replacement of dental chairs, sinks and flooring. The tenant sought a declaration that the landlord had unreasonably withheld consent to assign.

The trial judge found that the allegation that the tenant had been in breach of covenant was not proved, but that even if it had been, the breaches were so minor that they did not affect the value of the landlord’s reversion so as to justify refusing consent to assign. Accordingly, the landlord was in breach of its statutory duty to give consent to the assignment under section 1 of the Landlord and Tenant Act 1988. The tenant was awarded damages in the sum of £183,000 plus interest These were assessed on the basis of the difference between the price that would have been obtained for an assignment in 2007, (which was based on offers they received in May and August 2007) and the current value of the lease.

This case shows how it is crucial if a Landlord is delaying or withholding consent on the grounds of a breach of covenant that the breaches of covenant are clearly established and proved and not of a minor nature.

Clarkslegal, specialist Real Estate lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Real Estate matter please contact Clarkslegal's real estate team by email at realestate@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Simon Ralphs

Simon Ralphs
Partner

E: SRalphs@clarkslegal.com
T: 020 7539 8049
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