Resident Owned Landlord Company Defeated in Court Due to Unreasonable Conduct of Directors

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Brecher’s property litigation team has secured a win in the County Court for tenants claiming against their landlord on the basis of the landlord’s unreasonable refusal to grant consent for works to the tenants’ demised property. Not only were the tenants awarded a declaration that they were entitled to carry out the proposed works without any further permission from the landlord, but they were also awarded indemnity costs. The case serves as an important reminder to resident-owned landlord companies that, when considering applications for consent from tenants, they must act as a reasonable landlord would and put aside the personal preferences the company’s directors may hold in their capacity as leaseholders and residents.

The claimants were the tenants of a 999-year lease of a flat plus a separate garden. They had obtained planning permission to erect a 1-bedroom bungalow in the garden and sought the landlord company’s consent to carry out the works under the terms of the lease, which provided that before erecting any buildings on their property, the tenants must obtain the landlord’s consent. The effect of s.19(2) of the Landlord and Tenant Act 1927 is that such consent is not to be unreasonably withheld where the proposed alterations amount to improvements.

The directors and members of the landlord company were the leaseholders/residents of the other flats within the building. They refused the tenants’ application on various grounds, none of which appeared to have any genuine correlation to the landlord company’s reversionary interest in the freehold of the property. Of particular note is that the individual directors of the landlord company admitted on the witness stand that the board had effectively pre-determined their decision to refuse consent prior to the application being made as they did not want the tenants to erect the bungalow and that they would have withheld consent whatever the nature of the tenants’ proposed works.

Following a five-day trial, the judge found that the landlord company had unreasonably withheld and refused its consent to the works, and the tenants were entitled to carry out those works. In reaching his decision, the judge criticised the approach of the directors of the landlord company and their legal advisors, who had not dealt with the application as a reasonable landlord would but instead had allowed their personal preferences and feelings towards the tenants and the previous owner of the flat and garden to cloud their judgment. The tenants were also awarded their costs on an indemnity basis because of both the landlord’s/directors’ unreasonable conduct and their refusal to accept a Part 36 offer to settle that the tenants had made early on in the dispute.

The outcome of this case demonstrates the importance of directors of resident-owned freehold companies ensuring they approach such applications with their ‘reasonable landlord’s hat’ on rather than that of a resident/neighbour who does not want certain works to take place. This was an expensive lesson for those individuals, with costs being awarded on an indemnity basis.

If you require any advice on a landlord and tenant dispute, please do not hesitate to contact theĀ property litigation team, who can assist.

This article is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this article may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.

Andrea Camero

Trainee Solicitor

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