This legal update discusses the case of Jacobs -v- Chalcot Crescent (Management) Company Limited [2024] EWHC 259 (Ch) which relates to an appeal against an order made in the County Court on the issue of whether a landlord had reasonably withheld its consent for alterations made by the leaseholder to his flat.  It is an interesting, alternative case to that included in our Legal Update here from earlier this year on the similar issue of withholding of consent for alterations.

It is a lesson in ensuring that correct advice is obtained before a decision is made to refuse (or to grant) consent - in this case for alterations - but also to be clear as to your position and to plead that clearly in pre-action correspondence and subsequent proceedings, should the matter reach that stage.

Background

Mr Jacobs (“the leaseholder”) was the leaseholder of Flat 4, 46 Chalcot Crescent, London, NW1 (“the Flat”) one of several flats contained within a converted terraced house (“the Building”).  On 23 August 2019 the leaseholder wrote to the landlord, Chalcot Crescent (Management) Company Limited (“the landlord”) requesting consent for alterations to be carried out to the Flat.  The lease contained a “qualified” covenant on the issue, meaning that whilst the tenant must seek and obtain the landlord’s consent prior to undertaking works, the landlord was precluded from acting unreasonably in withholding such consent.

The landlord responded to the request for licence on 18 September 2019 to confirm they would consider the application and had instructed a surveyor to review the works proposed.  Discussions then ensued ending 10 months later on 16 July 2020 when the landlord elected to refuse consent.  By this time the leaseholder had in fact already started and subsequently completed the works proposed. 

The landlord’s grounds for withholding consent included that they considered the proposed alterations to the layout to be “unsatisfactory in the context of fire safety and prejudices the fire safety of the block as a whole”.  This statement was not explained. 

Original decision in the County Court

The leaseholder issued a claim in the County Court for a declaration that consent for the alterations had been unreasonably withheld by the landlord. 

During the trial the landlord’s Surveyor, Mr Levy, submitted that he was concerned that the works would not comply with Building Regulations and would create an increased risk to the structure in the case of fire.  This latter point had not been pleaded by the landlord in the claim and so was a fresh point made in response to a question (about a different issue) made in oral submissions only.

The County Court Judge took account of the previously unpleaded structure point, notwithstanding that it had been introduced for the first time, and thus without notice, in the oral submissions only. As a result the County Court Judge considered that the landlord had not unreasonably withheld consent for the alterations.

The leaseholder appealed.

The Appeal

The leaseholder appealed the County Court’s decision in the High Court on five separate grounds.  The High Court found in the leaseholder’s favour on grounds 1 and 5 which were sufficient to overturn the previous ruling.

High Court decision

In deciding the appeal, the Court considered the reliance of the County Court Judge on the submissions of the Surveyor, Mr Levy, and specifically the structure point.  The Court explained that it cannot take an inquisitorial approach to a case.  Its role is adversarial deciding a case on matters pleaded and so matters previously not pleaded and introduced without notice should not be permitted to affect the outcome of the case.  Accordingly the County Court Judge had erred in relying upon the structural point introduced by Mr levy during his oral submissions.

Additionally, and a point pertinent for a landlord and their agents specifically, the Court was critical of the reliance of the landlord on the advice of the surveyor on its own where, as was the case here, the surveyor was not an expert in the specific field (fire safety) upon which he was advising the client was a risk.  The surveyor firstly had wrongly assumed the floor structure to be wood when in fact it was concrete and, secondly, accepted in his submission that he would concede the fire risk concerns upon advice to the contrary by an expert more qualified to advise on that issue.  The Court considered that the landlord should have granted consent conditional upon the leaseholder installing a fire safety mechanism (a misting system was suggested) to overcome the fire risk concerns

The Judge therefore considered that consent had been unreasonably withheld and so set aside the declaration made in the County Court order and replaced it with a declaration that consent was unreasonably withheld by the landlord.

Conclusion

This case highlights the importance for landlords of a number of things:

1. Upon request for licence (to alter or any other matter upon which licence should be requested) the landlord/RMC/RTM should seek legal advice on its role and the decision to be made.  In most cases the costs of that legal advice are to be borne by the leaseholder requesting licence and so often no cost will be incurred by the client.  Given that it really is a “no brainer”, advice should in any event be sought prior to the grant of licence on the often misunderstood case of Duval - see here and here;

2. Whilst those advising you on the legal aspects will assist with this, it is important to be clear that the advice being received from your lawyers and other experts involved is of the correct standard.  Accordingly, raise the question of the expert as to whether they are satisfied that they are suitably expert on a particular issue to advise upon it.  Don’t be afraid to raise the question and if the expert adviser is offended by it then be concerned;

3. If a matter does reach the point of the issue of a claim in the court/tribunal then be clear to plead all points upon which you will later seek to rely.  As was seen in this case (on appeal) the landlord was unable to rely upon points made after the event (albeit they were wrong anyway).

The Golden Rule applies here as strongly as it does in other cases - that is, if you don’t know something yourself then get good quality advice from those who do before acting.    

Disclaimer

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