45 It is difficult to understand why the defendant would not agree to Sonic's proposal of 8 February 2002 or at least further negotiate the terms of the proposed lease to Sonic. It could have achieved rental of the upstairs to Sonic for six years as opposed to one year to PSPL. If the defendant also consented to the plaintiff subletting to Sonic that portion previously occupied by the optometrist for use as a pathology collection clinic it would not have disadvantaged the defendant. It would still have had Sonic as a tenant upstairs at a negotiated rental. Even if Sonic applied to sublet some or all of that portion of the upstairs premises, that burden would fall on Sonic, not the defendant, to find an acceptable sublessee.
46 On 18 March 2002 the defendant applied to reopen its case to call evidence from Mr Peter Dan, a principal of the defendant. Over objection, I allowed the defendant to reopen and Mr Dan was cross-examined on his affidavit filed in court on 18 March 2002. Mr Dan gave evidence that the proposal put to Sonic on 15 February 2002 was inconsistent with what he had instructed Lane were the defendant's wishes. Mr Dan said that the restriction on Sonic utilising the downstairs premises as a pathology collection clinic was not intended. If that is true Sonic has never been informed that the defendant was willing to consent to it being a sub-tenant of the plaintiff on the basis that it also took a lease of the upstairs. Certainly the plaintiff was not advised of this by the defendant at any time until it heard it in Mr Dan's cross examination.
47 Mr Hammerschlag SC submitted that if Mr Dan's evidence is to be accepted the refusal to consent to the proposed sublease to Sonic was unreasonable because such a condition had nothing to do with the landlord and tenant relationship between the defendant and the plaintiff nor the use to which the premises would be put pursuant to the lease between the plaintiff and the defendant. He submitted that I would not accept Mr Dan's evidence having regard to the evidence given by Lane. That evidence was that Lane discussed the proposal of 15 February 2002 with the defendant and that it was the defendant who did not want Sonic vacating upstairs and going downstairs. According to Lane that was the reason the condition was imposed in the 15 February proposal.
48 A not dissimilar set of facts is found in Tomlin J's judgment In re Gibbs v Houlder Brothers and Company Limited's Lease. Houlder Bros and Company Limited v Gibbs [1925] 1 Ch 198 affirmed on appeal [1925] 1 Ch 575 (CA). In that case the defendants had demised to the plaintiffs premises known as 10 Market Street Sheffield for a term of 21 years from 29 September 1908. The plaintiffs covenanted that they would not during such term without the consent of the defendant assign, sublet, or part with the possession of the demised premises or part thereof, "such consent not to be withheld unreasonably in the case of a respectable and responsible person or corporation".
49 In June 1924 the plaintiffs agreed to assign the premises to Roneo, Ld. (Roneo) for the residue of the term subject to the consent of the defendant. Roneo was a yearly tenant from the defendant of 12 Market Street adjoining the premises the subject of the lease. By letter dated 18 June 1924 addressed to the plaintiffs' manager, the defendant expressed its unwillingness to consent to the proposed assignment on the grounds that such assignment would result in Roneo determining the tenancy of 12 Market Street. A subsequent letter stated "my sole reason for withholding my consent is on the reasonable ground that by the assignment I should lose Roneo as good tenants of no.12 and because I should gave great difficulty in finding any tenant for no.12".
50 Tomlin J said that the real question was to identify the considerations to which the court is entitled to have regard when considering whether or not a particular reason for refusal is justified within the meaning of the clause (at 201). After analysis of the relevant cases Treloar v Bigge [1874] L.R 9 EX. 151; Barrow v Isaacs & Son [1891] 1 QB 417; Governors of Bridewell Hospital v Fawkner (1892) 8 T.L.R. 637; Bates v Donaldson [1896] 2 QB 241; Harrison, Ainslie and Co. v Barrow-In-Furness 63 L.T. 834; In re Winfrey and Chatterton's Agreement [1921] 2 Ch 7. Tomlin J said at 209;
…it is by reference to the personality of the lessee or the nature of the user or occupation of the premises, that the Court has to judge of the reasonableness of the lessor's refusal. It is quite true that the injury threatened or apprehended to the lessor may be in respect of something which has nothing to do with the lease of the demised premises; it may be in relation to other property of which he is the owner, but the danger must come from the nature of the user or occupation or from the personality of the assignee. In the present case what is the real reason of the refusal? The real reason is not one which had anything to do with the personality of the lessee, or with the user or occupation of the premises; the real reason is that the lessor wants to prevent the assignee from giving up other premises of which he is also lessor; in other words, his real purpose in refusing an assignment is not in relation to the demised premises at all, but in relation to other property, and to bring pressure to bear on the assignee not to give up a tenancy of different premises belonging to him.
51 Tomlin J concluded that the refusal was unreasonable and that in the circumstances the lessee was free to assign the interest in the lease. On appeal Pollock M.R agreed with Tomlin J's judgment both in its reasoning and in the conclusions (at 581). The Master of the Rolls noted that the lessor had frankly avowed that there was no objection to Roneo as a respectable and responsible person or corporation and that the sole reason operating upon the defendant's mind was "something extraneous to the relation of landlord and tenant, something extrinsic from the lessee, and something which is wholly personal to the lessor" (at 583). Warrington LJ was of the same opinion and said, at 584:
The proposed assignee happens to be tenant to himself of a shop in the same building, and adjoining that which is the subject of the lease, and the lessor is convinced on what I will assume to be sufficient ground, that if the proposed assignee is allowed to take the assignment of the plaintiff's shop, the subject of the lease, he will give up the other shop, and the lessor will have considerable difficulty in finding a new tenant therefor. It is on that ground that the lessor has refused his consent. That is on a ground having no reference to the personality of the proposed assignee, and having no reference to the effect of the proposed assignment on the user and occupation of the demised premises.
52 Sargant LJ was of the same opinion and said, at 588:
In the present case the reason for refusing has nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the demise. The sole reason is that if the property is allowed to be assigned to the new tenants, the new tenants, in respect of a tenancy of a completely different property which they hold from the lessor, will probably desire to terminate their tenancy of that other property. In my judgment that is a reason wholly dissociated from, and unconnected with, the bargain made between the lessor and the lessees under lease that we have to consider, and is, from that point of view, a purely arbitrary and irrelevant reason.