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Consent to assign not unreasonably delayed

21 September 2012

E.ON UK Plc v Gilesports Ltd [2012] EWHC 2172 (Ch)

E.ON was Gilesports' landlord of a retail shop. Gilesport sought to assign the lease and requested E.ON's consent by email. The email did not state that there was an urgency in respect of the transaction. Gilesports provided financial information in respect of the assignee on 9 May 2008 and proceeded to complete the assignment on 28 May 2008 notwithstanding the fact that E.ON's consent had not yet been given. Gilesport did not tell E.ON that the assignment had taken place and in 2009 the assignee went into administration. E.ON served notice on Gilesport under section 17 of the Landlord and Tenant (Covenants) Act 1995, seeking to recover arrears of rent from Gilesport as former tenant. Gilesport argued that, as it had not given an authorised guarantee agreement, it had no further liability. E.ON claimed that the assignment had been unlawful and therefore had not released Gilesport from liability under the 1995 Act. Gilesport's position was that E.ON had unreasonably delayed in giving its consent to the assignment and it was therefore lawfully entitled to assign.

The court found in favour of E.ON. There was no provision in the lease that consent to an assignment was not to be unreasonably delayed. Therefore, Gilesport would need to rely upon the statutory duty not to unreasonably delay under the Landlord and Tenant Act 1988. However, that duty only arose where an application for consent had been made in accordance with the terms of that Act. The judge considered that service by email was not sufficient to trigger the application of the Act.  E.ON was not therefore under a duty not to unreasonably delay. In any case, the judge did not consider that the 11 working day period between E.ON receiving the accounts and Gilesport proceeding with the assignment was an unreasonable one, particularly in circumstances where Gilesport had not suggested that there was an urgency in respect of the application or that it was subject to any particular deadline. Therefore, E.ON had not been guilty of unreasonable delay and so the assignment had been unlawful which meant that Gilesport remained liable under the lease.

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