Sequent Nominees Ltd (formerly Rotrust Nominees Ltd) (Appellant) v Hautford Ltd (a company registered in the British Virgin Islands) (Respondent) [2019] UKSC 47

1 November, 2019

The Supreme Court handed down its long awaited judgment in the Hautford case on 30 October 2019 providing an unexpected boon for landlords of commercial real estate.  The court held that Appellant landlord was reasonable in withholding consent to the tenant making a planning application for change of use, as required under the lease, where such change would significantly enhance the tenant’s enfranchisement prospects.  In a narrow 3 to 2 decision, Lord Briggs who gave the leading judgment, considered the proposed change of use and consequential enfranchisement rights would give rise to damage to the landlord’s reversion.  This was central to the relationship of landlord and tenant and accordingly the principles set out in the 2001 leading House of Lords decision of Ashworth Frazer had been satisfied.  The landlord’s refusal to give consent was not unreasonable.

 

Anna Favre, Partner in the Residential Estates team of CPG comments:

 

“This case marks a landmark victory for both the Appellant and commercial landlords at large.  The SC decision amounts to a reversal in a recent trend of decisions suggesting withholding consent to alter, assign and change use on grounds of an enfranchisement risk is not a reasonable ground for refusal. The implications of this case are therefore far reaching and provide a valuable weapon in the landlord’s legal armoury”.