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Ruff Justice: implying reasonableness in applications for consent

A management company’s refusal of consent to keep a pet in a flat gives us an opportunity for bad puns and gives landlords ‘paws’ for thought.

After Mr and Mrs Kuehn bought a leasehold flat in East London, only one thing stood in the way of their dream home: a leasehold covenant not to keep pets without the consent of the management company, Victory Place Management Company (VPMC).  Applying what it called “a blanket ban” on dogs except in special circumstances, VPMC refused consent for the Kuehns to keep Vinnie the terrier in their new flat. When the Kuehns refused to remove Vinnie, VPMC issued proceedings in the County Court, where the judge found in VPMC’s favour, ordering an injunction for Vinnie’s removal. The Kuehns appealed, arguing that VPMC’s refusal of consent was unreasonable.

But the covenant in the Kuehns’ lease that prohibited any “dog bird cat or other animal or reptile” from being kept in the flat without the consent of VPMC, didn’t require VPMC to act reasonably, so why was the reasonableness of VPMC’s decision in question here?

The answer is that, in order to prevent the abuse of contractual discretion, the courts may imply terms into a contract where a decision making power lies in one party’s sole discretion. Here, the parties accepted that there was an implied term that VPMC must take into account relevant considerations, and ignore any irrelevant factors. The judge also suggested that he would have implied a term that the decision itself must not be irrational or unreasonable, had he been asked to consider that question in the appeal.

The Kuehns argued that VPMC had failed to consider the relevant factors, having made a pre-determined decision, but this argument found little favour with the judge. The policy reflected the views of the majority of the tenants, an entirely relevant factor, and VPMC had shown willing to consider any evidence of the Kuehns’ alleged exceptional circumstances (evidence which they had failed to provide). The appeal was dismissed: VPMC had acted reasonably and so Vinnie must go.

This case may have been about one couple’s canine companion, but commercial and residential landlords should take note: the same principles could be applied to applications for consent to assign, underlet or alter. Not only will landlords need to bear in mind the specific statutory duties in relation to acting reasonably, but landlords may also find courts implying additional reasonableness requirements. Regardless of whether they are required to act reasonably under the terms of the lease or their statutory obligations, landlords should always ensure that they follow a due and proper process for considering applications for consent, taking all relevant factors into account, else they may risk having their decision overturned in court.

Case:  Victory Place Management Company Ltd v (1) Florian Kuehn (2) Gabrielle Kuehn [2018]