Great Jackson Street Estates Ltd v Manchester City Council

HIS HONOUR JUDGE HODGE KC:

1. This Part 8 claim raises a number of interesting questions about the scope and application of a tenant’s qualified covenant against alterations. In particular, it raises the question whether the demolition of the buildings which presently stand on the demises premises - which it is common ground are disused and derelict - falls within the scope of that covenant; and, if so, whether the landlord’s refusal of consent to the demolition of those buildings was reasonable. Introduction

2. This is my extemporary judgment on the trial of a Part 8 claim issued on 22 January 2025 in the Property, Trusts and Probate List of the Business and Property Courts in Manchester under claim number PT-2025-MAN-000011.

3. The parties to this litigation are, respectively, the tenant and the landlord of commercial warehouse premises in the centre of Manchester. The defendant, Manchester City Council, is the freehold reversioner of the property. Together with other land, it is comprised in title number MAN51215. The claimant, Great Jackson Street Estates Limited, is the owner of the leasehold title, which is registered under title number GM407338. The property was originally comprised in a lease granted on 18 July 1978. That lease was varied by a deed dated 17 September 1985. Since one of the variations effected by that deed was to extend the term of the 1978 lease, the deed operated as a surrender and re-grant.

4. It is common ground that the property is ripe for redevelopment. It currently enjoys planning permission for the erection of two, 56-storey, residential tower blocks, with commercial units at ground floor level. That planning permission was granted on 20 November 2024, but it had been in contemplation for some considerable time before that date, and certainly at the time an application was made to the Lands Chamber of the Upper Tribunal for the modification of a considerable number of the covenants contained within the lease. That planning permission will expire on 20 November 2027 if it has not by then been implemented. Thus, less than 22 months remains to activate the planning consent.

5. There are three points of relevance in relation to that planning consent. First, in order to build out the development permitted by the planning permission, the parties will need to negotiate substantial variations to the terms of the claimant’s current tenancy. Indeed, those variations will effectively result in the surrender and re-grant of the existing lease because one of the necessary variations is an extension of the term of the lease. Second, the court needs to bear in mind the fact that the planning permission has only some 22 months left to run. Third, the planning permission contains a considerable number of pre-conditions, which are summarised in the defendant’s counsel’s skeleton. There is no evidence before the court that the claimant has done anything as yet to even move towards fulfilling any of those pre-conditions.

6. It is also common ground that the claimant has sought the defendant’s consent to the demolition of the two disused warehouse buildings that stand on the land demised by the lease, and that such consent has been refused. There is, however, a dispute about whether the relevant refusal occurred on 20 September 2024 (as the claimant contends), or on 13 January 2025 (as the defendant contends). By the claim form, the claimant seeks declarations that one or other of those refusals was unreasonable; and that the claimant is accordingly entitled to demolish the two disused warehouse buildings notwithstanding such refusal. The question whether the claimant is entitled to the declaratory relief it seeks will turn upon the correct interpretation of the terms of the lease, and upon the events which have happened.

7. The claimant is represented by Mr Timothy Dutton KC and the defendant by Ms Elisabeth Tythcott (of counsel). Both have produced detailed, and helpful, written skeleton arguments; and both have addressed me orally. I commend both counsel for the clarity, and the impressive nature, of their submissions, both written and oral. The lease terms

8. Although there are a number of other relevant provisions to which I shall shortly turn, central to this claim are two clauses of the 1978 lease which remain unaffected by the later deed of variation. These are clauses 2(vii) and 2(viii). Although not admissible as an aid to the interpretation of the lease by virtue of clause 6 (which provides that the marginal notes shall not affect the construction of the lease), sub-clause 2(vii) is summarised in the margin as, “Not to add to or alter buildings”. Clause 2(vii) is a tenant’s covenant as follows: “Not without the consent in writing of the Lessors which shall not be unreasonably withheld… to make any addition to the said buildings nor any improvements or alterations in the same nor any change in the character design or appearance of the same or of any addition thereto nor without the previous consent in writing of the Lessors which shall not be unreasonably withheld to erect or maintain or suffer to be erected or maintained upon the said plot of land any building erection wall or fence of any kind whatsoever other than and except the said buildings and if any consent shall be given under this sub-clause to carry out all such additions improvements or alterations in accordance with plans sections elevations and specifications to be prepared by a Registered Architect (who shall supervise the work throughout to completion) and with materials previously approved of in writing by the Lessors.”

9. The other clause of particular relevance is sub-clause 2(viii). The marginal note describes this as “Use of land and buildings”. Clause 2(viii) is a tenant’s covenant: “Not to use the said plot of land for any other purpose than as the site of the said buildings nor without the consent in writing of the Lessors use or permit to be used the said buildings other than as a light industrial building or buildings or wholesale warehouse or repository or warehouses or repositories for any purpose.”

10. When interpreting the 1978 lease, it is to be noted that the parcels clause (at page 245 of the hearing bundle) defines the land demised by the lease as “the said plot of land”. Further, the expression “the said buildings” is used as a defined term whose meaning as addressed in clause 1. So far as material, this states: “TOGETHER WITH (by way of demise and not of exception) the buildings with the outbuildings forecourt hedges fences and other appurtenances thereto recently erected at the expense of the Lessee on the said plot of land (all of which together with any alterations or additions thereto are included in the expression ‘the said buildings’ hereinafter used).”

11. A number of other terms of the lease have also been relied upon by the defendant at various times when seeking to justify its refusal of consent: First, there is clause 2(iv). This is a tenant’s covenant by which the lessee is obliged to keep “the said buildings” in good repair and condition, and to yield them up to the lessor at the end of the term. The second is clause 2(v). This is a tenant’s covenant by which the lessee is obliged to decorate any fences, railings, etc and the outside of “all buildings” on the said land on a four yearly cycle and to decorate the inside of “all buildings” on the said land on a seven yearly cycle. The third is clause 2(vi). This is a tenant’s covenant by which the lessee is obliged to look after any parts of the land on which no building is constructed.

12. There are three further points to bear in mind in relation to the 1978 lease: (1) the later deed of variation does not purport to vary any of the tenant’s covenants as set out in clause 2 of the lease; (2) clause 5 of the deed of variation introduces a new clause 4(iv) into the 1978 lease by which, in the event that the lessee (with the landlord’s consent) has demolished and rebuilt or replaced “the said buildings”, the lessee is entitled to call on the lessor to grant a new lease of the property for an extended term of 26 years; (3) the terms of the claimant’s lease do not include any express covenant not to commit waste.

13. In his oral reply, Mr Dutton KC pointed to a number of tenant’s covenants which would continue to operate with practical effect after any demolition of the buildings. The covenants he identified were clauses 2(iii), (iv), (vi), (xiii), (xvi), (xvii), (xviii) and (xxi). In particular, Mr Dutton emphasises that the user covenant (clause 2(vii)) will continue to apply to any new replacement buildings erected on the demised premises. It is no part of Mr Dutton’s case that clause 2(vii) falls away. Background facts

14. The background to the present application is fully set out at paragraphs 1 to 17 and 20 to 23 of the judgment of the Lands Chamber of the Upper Tribunal on the claimant’s application to modify certain of the covenants in the lease, which was handed down on 8 August 2023, following a hearing (on 5 and 6 July 2023) before Judge Martin Rodger KC, Deputy Chamber President, and Mr Peter McCrea FRICS FCIArb. That judgment bears the neutral citation number [2023] UKUT 189 (LC) . The background facts are also summarised at paragraphs 2 to 9 of the judgment on appeal of Asplin LJ (with whom Baker and Nugee LJJ both agreed) in a judgment handed down on 19 May 2025 bearing the neutral citation number [2025] EWCA Civ 652 .

15. In his skeleton argument, Mr Dutton KC considers the background facts under two separate headings. The first is those up to the handing down of the Lands Chamber’s decision in August 2023, and the other heading addresses developments since that date. So far as the background facts up to August 2023 are concerned, these are uncontroversial. The site comprises an area of approximately 1.49 acres which is situated between the Mancunian Way inner ring road to the south and Great Jackson Street to the north. The only buildings on the site are the two warehouses, which date from the 1970s. The 1978 lease was granted following their erection. The 99 year term of that lease was subsequently extended so as to be calculated from 29 September 1984. It is therefore due to expire on 29 September 2083. It therefore has less than 58 years presently unexpired.

16. The lease is now owned by the claimant, which is a special purpose vehicle with no assets other than its lease of the site. There are in evidence dormant accounts of the claimant company for the year ended 28 February 2025. These show current assets of £1, represented by cash at bank or in hand. The claimant is said to be part of a substantial group of companies which operates under the name ‘Commercial Property Centre’ (or ‘CPC’). This is controlled by a Manchester-based property investor, Mr Aubrey Weis. CPC acquired the site not long after the lease was extended in 1985; and it was transferred to the claimant in April 2019.

17. Both warehouses were let until about 2008 but since then they have remained unoccupied, although it is said that they are available to let in the sense that photographs exhibited to Mr Hassan’s witness statement, and taken in September 2025, show a letting board outside one of the warehouses. From my own brief inspection of the exterior of the warehouses when I went around the site shortly after sunrise yesterday (Wednesday, 28 January), that sign is still present. However, there is no evidence of any active steps having been taken to market the premises. Given their present state, as viewed by me from the exterior, and as shown on the photographs, there would seem to me to be little real prospect of letting the existing warehouses in their present condition.

18. By 2007, the council, in its capacity as the local planning authority, had come to recognise that the area previously given over to light industrial and commercial uses on either side of Great Jackson Street was in decline and in need of regeneration. That area was first included as a distinct district, with its own development framework, in the council’s 2007 Development Plan. This forms part of the current City Centre Strategic Plan, published in 2016. Under that framework, the area bisected by Great Jackson Street, and bounded by Chester Road and the River Medlock to the north and west, and by Mancunian Way to the south of the site, is to become a new, high quality residential neighbourhood. The site is designated as Plot G on the framework master plan, and was originally earmarked as a location for three new high-rise residential buildings.

19. The claimant has been working on its own detailed proposals for the redevelopment of the site since 2017. That resulted in the application for planning consent, which was submitted in December 2020, for the construction of two 56-storey residential tower blocks. That had reached an advanced stage, albeit that planning permission had not been granted by the time of the Upper Tribunal’s decision.

20. It has for some time been appreciated by both parties to this litigation that implementation of the planning permission, once granted, will face a number of obstacles. These are identified at paragraph 14 of the Lands Chamber’s decision. First, the unexpired term of the lease is too short to enable any flats that may be completed to be sold on mortgageable leases. Second, the lease includes a suite of covenants which prevent the redevelopment of the warehouses without the defendant’s consent as landlord. Third, the defendant is willing to consent to the redevelopment, but only on terms which the applicant considers unacceptable (although similar terms have apparently been accepted by other developers). There are a number of high-rise, residential developments presently under construction in the immediate area of the demised premises.

21. The motivation underlying the claimant’s application under section 84 of the Law of Property Act 1925 (as amended) was to address the second of these problems. The claimant sought the modification, or discharge, of various covenants - eleven in all - within the lease so as to enable the development to be carried out without its landlord’s consent. Those covenants included the user and alteration covenants.

22. At the time the section 84 application came on for trial, the position was that: (a) the defendant had offered to grant the applicant a new lease of the site for a term of 250 years, but the claimant considered the proposed terms to be onerous, and thought they would be unacceptable to any potential funder or investor in the project; (b) despite protracted negotiations, the parties had so far been unable to reach agreement on terms acceptable to them both; (c) although not willing to consent to the proposed works being carried out under the terms of the existing lease, the defendant remained willing to negotiate the terms for the grant of a new building lease to the claimant.

23. The application under section 84 was heard on 5 and 6 July 2023. The application was refused, for reasons which are set out in the Lands Chamber’s decision. The effect of that decision is that the claimant continues to hold the property on the terms of the 1978 lease, as varied by the later deed.

24. I turn then to developments since August 2023. In summary, these are the appeal from the Upper Tribunal’s decision, and the grant of planning permission on 20 November 2024. The landmark events in relation to the appeal may be briefly summarised as follows: On 4 January 2024, the Upper Tribunal refused permission to appeal. On 26 April 2024, Arnold LJ gave permission to appeal. His reasons read as follows: “Despite the force of the points made by the respondent, I consider that the appellant has a real as opposed to a fanciful prospect of successfully arguing that the tribunal erred in law in its approach to ground (aa). Although the tribunal stated that it would have exercised its discretion adversely to the appellant in any event, if the appellant succeeds on jurisdiction the appellant also has a real prospect of successfully arguing that the tribunal exercised its discretion on a flawed basis.”

25. The appeal was heard by the Court of Appeal on 30 April 2025. The appeal was dismissed, essentially for the same reasons identified by the Upper Tribunal. The issue on the appeal was identified at paragraph 1 of the leading judgment of Asplin LJ: “The central issue in this appeal is whether restrictive covenants in a lease provide the lessor, which is also the planning authority, with practical benefits of substantial value or advantage to it for the purposes of section 84(1) (aa) and section 84 (1A) of the Law of Property Act 1925 … in enabling the lessor to prevent a proposed development from going ahead in an uncontrolled manner. The lessor’s concern is that the proposed development might not be completed in a timely fashion or not completed at all. This arises in a context in which only 60 years of the unexpired term of the lease remain and negotiations for a new building lease, subject to stringent conditions, have faltered.”

26. The gist of the Court of Appeal’s reasoning can be distilled from paragraph 48 of the judgment: “Having heard the evidence, the Upper Tribunal made an evaluative judgment in relation to all the relevant elements in order to determine whether there was jurisdiction to discharge or modify the covenants under section 84(1) (aa). As [leading counsel for the respondent council] pointed out, it found at [42] that the council has a legitimate strategy in continuing to influence the use of the land on the fringe of the city centre and to secure its orderly and appropriate development. The Upper Tribunal stated that there was no reason why that interest in the promotion and protection of the site should not be furthered through the leasehold covenants in addition to through the statutory planning process. It was ‘fully satisfied’ that the council wishes to ensure that the site is developed in the manner proposed by Great Jackson subject to appropriate safeguards to ensure that it is ‘commenced in timely fashion and not left incomplete’ and that that was a facet of the control over the use of the site which the covenants were intended to afford to the council.”

27. There is only one other part of the judgment which I would wish to cite. That is from paragraph 7, where Asplin LJ is summarising the effect of the first of three groups of restrictions which prevent the applicant from carrying out development without the council’s consent, but do not stipulate that the council may not refuse its consent unreasonably. At paragraph 7(c), Asplin LJ describes the user covenant (clause 2(viii)) as one that: “Prohibits the use of the site other than for the two warehouses. It also prohibits the use of the buildings, without the consent of the council, other than as light industrial buildings or wholesale warehouses or repositories for any purpose.”

28. The Court of Appeal refused permission to appeal to the Supreme Court on 9 June 2025. On 30 October 2025 the Supreme Court (Lord Hodge, Lord Leggatt, and Lady Simler), refused further permission for any further appeal. The effect is that the Court of Appeal’s decision now stands. The application for licence to demolish

29. It is common ground between the parties that an application for landlord’s consent to demolish the buildings has been made, and that it has been refused. But there is a dispute whether the application was made, and refused, in September 2024 (as Mr Dutton KC submits), or whether the application was made in December 2024 and refused in January 2025 (as Ms Tythcott submits). The date when the application was refused is one of the issues in this litigation because the correspondence indicates that the defendant’s reasons for not wanting to give consent may have differed between those two dates.

30. The relevant correspondence is to be found at pages 293 to 304b of the hearing bundle. It falls into two main areas. The first concerns an application for consent which is said to have been made in a letter by the claimant’s solicitors, Walker Morris, on 11 September 2024. The defendant council replied to that letter on 20 September 2024. This refused consent on the grounds that demolition of the buildings would result in a breach of the user clause under the current lease.

31. Walker Morris replied on 26 September 2024 noting the defendant’s refusal of consent to allow the claimant to implement the proposed planning permission. It invited the defendant to set out in full the reasons why it says that the proposed demolition works would breach the user covenant in the lease. The letter reminded the defendant that the alterations covenant was a qualified one, and that consent could not be unreasonably withheld. The letter continues: “As we hopefully made clear in our letter dated 11 September 2024, our client is seeking consent to carry out those steps, limited to those necessary to implement the planning consent, once granted. Absent a satisfactory response in the next 7 days, our client will make a formal application for consent under the terms of the lease, and where consent continues to be withheld, it will have no choice but to seek declaratory relief, together with substantial damages and costs. We would remind you of the urgency here, given the current deadline to avoid non-determination arising is 18 October 2024.”

32. That letter had been preceded by Walker Morris’s letter of 11 September 2024, in which they had written: “To ensure that our client does not breach the terms of the lease, and that those terms do not delay/bar the commencement of the works that are necessary to preserve the planning consent, we are instructed to seek consent pursuant to the lease to take such steps and carry out such works as are necessary to implement the planning consent.” That letter had concluded by suggesting that consent could be dealt with by way of a formal licence. The claimant agreed to meet the defendant’s reasonable legal costs incurred in relation to that licence, capped at £2,000 plus VAT. They had asked for consent by 4pm on 13 September as the licence would need to be documented by the beginning of the following week.

33. There was no response from the defendant to Walker Morris’s follow up letter of 26 September 2024. Walker Morris therefore wrote again on 11 December 2024. They referred to the previous correspondence. At paragraph 4, Walker Morris stated that there was no further explanation provided or written reasons put forward following their letter of 20 September. They added: “Your client cannot now rely on additional reasons.” In answer to a question from the bench, Mr Dutton KC accepted that that statement was not strictly accurate as a matter of law, although he recognised why the writer might have inserted it. Mr Dutton accepts that the defendant can rely on additional reasons for refusal of consent, provided that they did indeed operate on the defendant’s mind at the time that refusal was communicated. This is not a case of an application for consent, or licence, to assign or underlet demised premises, which is governed by a special statutory regime under the Landlord and Tenant Act 1988 .

34. The letter went on to refer to the grant of planning consent, on 20 November 2024. It stated that the claimant denied that the proposed demolition of the existing derelict industrial buildings would amount to a breach of the user covenant under the lease; therefore the letter dated 20 September unreasonably withheld consent, and the defendant was said to be in breach of the terms of the lease. The letter continued (at paragraph 7): “Our client is now entitled to seek declaratory relief, damages and costs. Our client’s strong preference is not to have to commence legal proceedings. However, our client finds itself in the invidious position of having been granted permission to develop the property (at considerable financial cost to our client) but where your client is now refusing to allow it to implement that consent. That is a perverse stance and it is patently unreasonable to place our client in such a position. Indeed, it is difficult to understand why your client is taking this stance, unless it is seeking to secure some collateral purpose or advantage.” At paragraph 10, the letter stated that the claimant clearly required certainty regarding the implementation of the planning consent and therefore had no option but to consider making an application for declaratory relief, damages and costs. The letter concluded: “We would therefore request that your client reconsiders its position and grants consent in principle within the next 7 days and where we look forward to receiving a draft licence for consideration.”

35. The council responded by way of a letter from its principal lawyer dated 23 December 2024. That set out a number of reasons for refusing consent. The letter concluded: “We note what you say in your letter of 26 September 2024 about making a formal application for permission to demolish the existing buildings in order to implement the planning consent and, if refused, an application to court for declaratory relief, substantial damages and costs. Any such proceedings, absent that formal application, would therefore be premature.”

36. That letter led to a further letter from Walker Morris, sent on Christmas Eve, 24 December 2024. That letter rejected any suggestion that the letter of 11 September had not constituted an application for licence under clause 2(vii) of the lease. It also made the point that anyone reading the defendant’s letter of 20 September would have understood it to be a refusal of that application. It went on to state that no sensible person in the defendant’s position would have regarded the letter of 26 September as offering to treat the earlier application as not having been made. It invited the council to concede that consent for the demolition works had already been sought and refused. In the event that that confirmation was not forthcoming, the claimant would maintain that consent had already been sought and refused by the letter of 20 September.

37. However, and without prejudice to that contention, the claimant thereby sought consent to the works identified in the letter of 11 September. It sought a response by 14 January 2025, given the imminence of the Christmas break. The claimant would hold off issuing proceedings until that date, and so the defendant had until that date in which to confirm that the claimant might proceed with the demolition works. Should the defendant fail to do so within that time, the claimant would issue proceedings without further reference to the defendant. In those proceedings, the claimant’s primary case would be that the council, by its letter of 20 September, had unreasonably refused consent; and the claimant’s fallback position would be that the failure to give consent in response to the letter of 24 December constitutes a further unreasonable withholding of consent.

38. The defendant’s response to that letter was given on 13 January 2025 in another letter written for the city solicitor. The letter referred to Walker Morris’s letter of 24 December as containing the claimant’s formal application for a licence pursuant to clause 2(vii) of the lease. The letter stated: “Our client is unable to consent to this application, and therefore withholds its consent, owing to the fact that your client’s application falls outside of the scope of the powers contained within clause 2(vii) to alter the demised premises. Your client’s application is not for a licence to alter the demised premises but for a licence to destroy them. It is noted that neither you nor your client have provided us or our client with plans sections elevations and specifications prepared by a registered architect and nor have you provided the materials your client proposes to use for our client’s prior written consent both of which conditions are clearly set out in clause 2(vii). Furthermore, we and our client consider that your client’s intention to demolish the premises would, if carried out, constitute a voluntary waste and would also put your client in breach of its obligations under the terms of the lease not least in relation to clauses 2(iv), clause 2(v), clause 2(vi) and clause 2(viii). Further still you have done nothing to address the issues we raised in our letter of 23 December 2024 which remain live and have contributed to our client’s decision to withhold its consent for the licence your client seeks. Yet further neither we nor our client are satisfied that this application is genuine in the sense that its purpose is to enable your client to take a step to implement its planning permission and thereby safeguard its position. We explained in our letter of 23 December 2024 that such a drastic step would not be and is not required. We also explained in our letter of 23 December 2024 the prejudice that would be caused to our client in the event that the buildings were destroyed by demolition. We, and our client, are drawn to the conclusion that this application may well be a tactic on the part of your client to exert pressure on ours to achieve a collateral purpose, that is to say to gain a commercial and/or negotiating advantage in relation to the terms of any new lease that may be granted in respect of the premises by our client. We do not need to remind you that the courts are astute to guard against such activity and rightly deprecate it. Finally we should address the point you raise in the first paragraph of your letter of 24 December 2024 for the sake of completeness. You refer that ‘No sensible person’ in our client’s position would treat the ‘application’ made in your letter of 11 September 2024 as not having been made. We disagree. It could not be clearer that your letters of 11 and 26 September 2024 were informal exchanges intended or designed to ascertain our client’s position should your client decide to make a formal application for a licence pursuant to clause 2(vii) otherwise there was no need for you to refer to the making of a formal application at the end of your letter of 26 September 2024.”

39. At paragraph 22 of his skeleton argument, Mr Dutton urges that the defendant’s reasons for refusing consent to the proposed demolition of the warehouses seems to have developed in the period between September 2024 and January 2025. He sets out the course of that development. The issues in the case

40. There are two overarching issues between the parties. The first is whether the defendant’s refusal of consent to demolish was within the bounds of reasonableness. If so, and if it was unreasonable, the second is whether the claimant is entitled to demolish the two warehouses under the terms of the lease (as varied). As will become apparent, however, the determination of those two issues requires the resolution of two prior, and subsidiary, issues.

41. In his skeleton argument, Mr Dutton summarises the rival contentions in the case in the following way. First, the claimant contends that: (i) the only restriction which the lease imposes upon works such as the demolition of the warehouses is to be found in the covenant in clause 2(vii) of the lease; (ii) that covenant forbids the execution of such works without the landlord’s consent; but, in terms, that is subject to an express proviso that consent is not unreasonably to be withheld; (iii) landlord’s consent having been unreasonably withheld, the claimant is entitled to demolish the buildings.

42. Mr Dutton understands the defendant to challenge this contention at two stages. First, it contends that the demolition of buildings does not fall within the scope of clause 2(vii) at all. Rather, such works are absolutely prohibited, either by the repairing obligations imposed by clause 2(iv) of the lease (with reliance also being placed upon other sub-clauses) and/or by an obligation at common law not to commit waste. If, however, the demolition of the buildings does fall within the scope of clause 2(vii), the defendant denies that its refusal of consent under that clause was unreasonable.

43. Mr Dutton submits - in my judgment correctly - that the resolution of those issues is a process involving four steps: (1) One needs to identify what works fall within the scope of clause 2(vii) of the lease; that is an exercise in contractual interpretation which does not turn on oral evidence. (2) Deciding when consent to demolish was refused. Was it by the defendant’s letter of 20 September 2024, or by its letter of 13 January 2025? Again, that is an issue which does not turn on any oral evidence but, rather, on the correct interpretation of the relevant correspondence. (3) Having identified the date when consent was refused, one needs to identify whether such refusal was reasonable. That breaks down to two sub-issues: (a) what were the reasons that led the defendant to refuse consent; and (b) whether a reasonable person in its position might have refused consent for those reasons, or for some of them. That essentially is a matter to be determined on the oral evidence of the defendant’s witness of fact, Mr David Norbury. (4) This step arises if the court is satisfied that consent to the demolition work has been unreasonably withheld. It requires the court to consider whether, although not prohibited by clause 2(vii), the works would be wrongful, either on the basis that demolition of the buildings would constitute a breach of the repairing covenant in clause 2(iv) of the lease, or on the basis that demolition of the buildings would be a tortious act of waste. The evidence

44. No written evidence was filed in support of the claim. The Part 8 claim form was accompanied by brief details of the claim, although (as Mr Dutton acknowledges in paragraph 3(a) of his skeleton argument), the brief details of claim make no reference to the deed varying the lease or, consequently, to the surrender and re-grant of the original lease. Notwithstanding the absence of any witness statement in support of the claim, the defendant filed a witness statement, dated 5 March 2025, from Mr David Norbury, the strategic lead for development in Manchester city centre.

45. The claimant filed evidence in answer from Mr Nissim Hassan, dated 12 September 2025. He is an asset manager for Combined Property Control, who are described as in-house managing agents for the property. Although he does not say so in his witness statement, it would appear from the dormant company accounts that he is a director of the claimant company. Mr Hassan’s evidence is largely peripheral to the issues in the case. Its real weight is said to lie in the 55 pages of photographs which he exhibits at pages 133 to 187 of the hearing bundle. These show views of the interior and exterior of the two warehouses, and of the surrounding site, as at September 2025. The photographic images of the exterior appear to correspond to my visual perception of those parts of the site which I travelled around yesterday morning.

46. Mr Norbury filed a second witness statement in answer to Mr Hassan’s statement. That is dated 25 September 2025. Due to difficulties in returning from the United States of America (no doubt caused by the current appalling weather on that subcontinent), Mr Hassan was unable to attend trial and be cross-examined on his witness statement. It was, however, accepted as hearsay evidence under the Civil Evidence Act; and I bear it in mind. Mr Norbury was called as a witness; and he gave evidence for some one hour and 45 minutes, either side of the luncheon adjournment on the first day of the hearing (Tuesday, 27 January).

47. With his characteristic fairness, Mr Dutton described Mr Norbury as an impressive witness. Mr Dutton did not seek to challenge his honesty, although he commented that it was a curious feature of the defendant’s letter of 20 September 2024 that it identified only one reason for withholding consent to the demolition of the buildings. Before Mr Norbury went into the witness box, Ms Tythcott indicated that she would wish to ask him questions on two issues: first, who was the decision-maker in relation to the withholding of consent to demolition; and, secondly, as at 20 September 2024, what, if any, other factors had dictated the refusal of such consent? There was no opposition to Ms Tythcott asking those questions.

48. Mr Norbury explained that this was a collective decision made by himself in consultation with the director and assistant director, the latter of whom was his immediate line manager, and in consultation also with the council’s legal team. Mr Norbury also explained that there were other reasons for the refusal of consent that were operative as at 20 September 2024. He said there were ongoing discussions concerning the development of the site and also the appeal that was then outstanding in the Court of Appeal following the decision of the Lands Chamber. If consent to demolition had been given, the defendant was concerned about the fear of prejudicing that appeal.

49. Mr Norbury was then cross-examined by Mr Dutton KC. He agreed that the site was ripe for high density residential development. He accepted that the buildings had not been let for a number of years, and that they would not be easy to let in their present condition. He acknowledged the force of the argument that it would be questionable to spend money on putting the existing buildings into repair. He accepted that there were valid reasons for the claimant’s wish to demolish them. He accepted that the levelled site, following demolition, would be no more of an eyesore than the existing buildings. He accepted that since negotiations between the claimant and the defendant had become protracted, it would make good sense not to let the planning consent lapse. He said that demolition was one way of achieving that.

50. Mr Norbury explained that the decision to refuse consent to demolition was one that had been made working in collaboration with his director, the assistant director (to whom he reported), and colleagues in the legal team. He was the liaison point with the solicitors; and it was he who reported what they had to say to his director and his line manager. I find that Mr Norbury was the channel of communication between the relevant parties who had made their decision collectively.

51. Mr Dutton made the point that the warehouse buildings had not been used for some years. Mr Norbury’s response was that the buildings were there; it was just that they were not being used under the terms of the lease. He accepted that there was no suggestion that the property would be used for any unlawful use under the lease. The question in the negotiations which was concerning the defendant was whether the claimant would accept any licence for alterations which included a right of forfeiture.

52. After taking advice from the council’s legal department, the view was taken that if the defendant were to consent to demolition, it should have agreed to the modification of the covenants because giving consent to demolition would be contrary to the terms of the lease. That conclusion that was reached collectively, with significant legal input, was that if the defendant were to consent to the demolition, so that there were no longer any buildings on the site, that would impact upon the appeal to the Court of Appeal.

53. Mr Dutton put to Mr Norbury the various reasons for refusing consent to demolition which he had distilled from the defendant council’s three relevant letters. As regards the breach of user at reason one, Mr Norbury’s view was that if the site was incapable of being used because the buildings had already been demolished, then the site could no longer be used for the purposes permitted by the lease. He accepted that the buildings were not being used at the present time, but they were still physically there; it was simply that they were not being used.

54. As regards reason three - the lack of clarity about what the claimant planned to do once the buildings were demolished and about funding both the development and the demolition - Mr Norbury accepted that there was no suggestion that the claimant would use the property for any unlawful purpose under the lease. The defendant’s real concern was if the claimant should start demolition and then did not finish the job. Mr Dutton suggested that that concern could properly be addressed by including a right of forfeiture in any formal licence for alterations. Mr Norbury’s response was there was a real question as to whether the claimant would accept any licence for alterations which included a right of forfeiture.

55. So far as the fourth suggested reason was concerned - that the claimant was seeking to leverage its position - Mr Norbury’s response was that the request for consent to demolition was simply a tactic designed to invalidate the existing lease.

56. So far as the effect of the demolition on the section 84 appeal was concerned, Mr Norbury’s attitude was that if the buildings were no longer in existence, there would be nothing to enforce the covenants in the lease against. The defendant’s view was that if they consented to demolition, they would have to consent to the modification of the covenants; and if they did that, then all the covenants would become unenforceable.

57. Mr Norbury told the court that the council had not sought advice on the specific point that demolition of the building would impact upon the appeal; but he said that it had come out in the course of their discussions. He said: “That was the conclusion we reached collectively, with significant legal input”. He said that to himself, it was obvious that if there were no buildings on the site, the covenants would cease to be capable of being complied with. They had come to the decision with the legal team that if they gave consent, that would imperil the appeal.

58. So far as reason six - that planning permission could be implemented in other ways - was concerned, Mr Norbury made the point that the defendant had specifically referred the claimant to section 56 of the Town and Country Planning Act. He said that it was not for the land owner to advise the developer as to what was required to implement the planning permission. He indicated that there were less intrusive works than demolition which were available to the claimant in order to implement the planning consent. He referred to the fact that on other sites planning consents had been implemented by drilling pile foundations and by making drainage connections. He commented that the defendant did not know how the tower blocks on this site were to be constructed. Mr Norbury did accept the need to achieve certainty before the planning permission should lapse; but he said that implementation of the planning permission was not a concern of the defendant, as land owner.

59. As regards reason eight - that the council might, if demolition took place or was embarked upon, need to re-grant a lease of the property - Mr Norbury made the point that any re-geared lease that might be granted with a view to redevelopment would normally include milestones for development. Normally, those would include provisions for forfeiture in the event of breach. Mr Norbury said that in the instant case, forfeiture for breach had proved unacceptable to the claimant so they had been discussing the fallback of reinstatement of the original lease, if development milestones were not met. That, he said, would not be possible if the buildings were no longer there on site.

60. It was put to Mr Norbury that in that event there could simply be a requirement for reinstatement of the demolished buildings. Mr Norbury’s response to that was that if the development were not completed, the most likely reason would be financial in nature. In those circumstances, he said that the defendant council could not be confident about the ability of the claimant to fulfil any liability to reinstate.

61. In relation to reason nine - relating to the failure to offer any undertaking in costs - it was put to Mr Norbury that the defendant had never asked for any such undertaking. Mr Norbury did not demur from that proposition. Mr Dutton indicated that he had deliberately not asked Mr Norbury about any of reasons two (demolition is not alteration), seven (no construction methodology or programme of works supplied), or ten (demolition would be unlawful), because those were essentially issues of law.

62. I accept Mr Dutton KC’s characterisation of Mr Norbury as an impressive witness. I find that he was entirely honest. I have already indicated that I find that the decision to refuse consent to demolition was a collective decision in which Mr Norbury played a prominent part as the principal channel of communication. I accept all that he says about the reasons adopted by the council for refusing consent.

63. I also find, consistently with Mr Norbury’s evidence, that as at 20 September 2024, there were three reasons, and three reasons only, that were operative in the mind of the defendant council. The first was the fact that, in their view, demolition of the buildings would result in a breach of the user clause under the current lease (reason one). The second was that the council was concerned that the claimant was seeking to leverage its position by demolishing the existing buildings and leaving the property a derelict wasteland, with the intention of extracting from the defendant council a re-geared lease, on the most favourable terms to the claimant, so as to avoid leaving the property as an eyesore for the next 60 years (reason four).

64. Contrary to observations I made to Mr Dutton when he produced his agreed list of reasons for the council’s refusal of consent on the morning of the second day of the trial, having re-read my notes of the hearing, I acknowledge that Mr Norbury did refer to ongoing discussions concerning the development of the site in answer to questions from Ms Tythcott in chief. This was not something that emerged only in cross-examination, although it was developed during that part of the forensic process. I find that that reason operated on the mind of the council at the time it refused consent to demolish on 20 September 2024.

65. I also accept that both in-chief and in cross-examination, Mr Norbury was clear that the effect of granting consent to demolition on the section 84 appeal (reason five) was firmly in the defendant’s mind when it refused its consent to demolish on 20 September. So I find that reasons one, four, and five all operated upon the mind of the defendant on 20 September 2024. However, there is no evidence that any of the other reasons operated on the council’s mind at that time, rather than at the later dates in December 2024 and January 2025. The scope of clause 2(vii) of the lease (the covenant against alterations)

66. There was no dispute as to the principles which the court must apply when interpreting any contractual provision, such as clause 2(vii) of this lease. In that regard, I was taken to the summary by Leggatt LJ at paragraph 20 of Minera Las Bambas SA v Glencore Queensland Ltd [2019] EWCA Civ 972 : “In short, the court’s task is to ascertain the objective meaning of the relevant contractual language. This requires the court to consider the ordinary meaning of the words used, in the context of the contract as a whole and any relevant factual background. Where there are rival interpretations, the court should also consider their commercial consequences and which interpretation is more consistent with business common sense. The relative weight to be given to these various factors depends on the circumstances. As a general rule, it may be appropriate to place more emphasis on textual analysis when interpreting a detailed and professionally drafted contract such as we are concerned with in this case, and to pay more regard to context where the contract is brief, informal and drafted without skilled professional assistance. But even in the case of a detailed and professionally drafted contract, the parties may not for a variety of reasons achieve a clear and coherent text and considerations of context and commercial common sense may assume more importance.”

67. Mr Dutton emphasises that clause 2(vii) applies to the making of any addition to the said buildings, to any improvements or alterations to or in the same, and to any change in the character, design or appearance of the same, or of any additions thereto. He submits that the objective meaning of those words is not difficult to identify. The works which fall within the scope of the covenant include any works which result in any change to the buildings currently erected on the property and/or any change to their character, design or appearance.

68. Mr Dutton submits that it is hard to conceive of any works which would more obviously alter a building and its appearance than works which wreak its destruction. If a building is demolished, it would be quite false to say that the building is unaltered. With that in mind, Mr Dutton submits that it is obvious that unless there is some contextual reason why clause 2(vii) should be construed restrictively, the proposed demolition works fall within the scope of the covenant. He also emphasises that this is a professionally drafted lease, and not a brief, informal contract, drafted without skilled professional assistance.

69. Mr Dutton submits that in determining whether there is any contextual reason why the clause should be construed restrictively, the court must consider how the natural meaning of clause 2(vii) sits in the context of the lease’s other provisions. He accepts that had the terms of the claimant’s lease included a covenant not to commit waste, then it might well be that that would have justified interpreting clause 2(vii) so as to apply only to some, but not all, alterations.

70. He refers to an example of that to be found in the case of Duvall v 11-13 Randolph Crescent Ltd [2020] UKSC 18 , reported at [2020] AC 845 . There a lease contained both a qualified covenant against alterations (in clause 2.6) and an absolute covenant not to commit waste (in clause 2.7). Were those two provisions to be given their natural interpretation, at least some activities would fall within the scope of both covenants. Were both to be given their natural interpretation, the same activity might be one which the lease both permitted and forbade. Viewed through the spectrum of the alterations covenant, works could be done if permission was given, or could not be withheld; but viewed through the spectrum of the covenant not to commit waste, works would be absolutely prohibited.

71. In such a case, it was the view of the Supreme Court that the two covenants should be construed so as to avoid any such conflict. That was done by holding that it was only routine alterations and improvements which fell within the scope of the alterations covenant; and that the covenant not to commit waste was limited to such works as did not fall within the scope of the alterations covenant. Reference was made to paragraphs 31 and 32 of the judgment of Lord Kitchin, with whom the rest of the Supreme Court agreed. Mr Dutton emphases that that reason for giving a restricted meaning to the term “alteration” has no application in the present case because the terms of the claimant’s lease do not include any express covenant not to commit waste. Mr Dutton emphasised that any covenant must be construed in the context of the lease as a whole.

72. He submits that there is no other reason for giving “alteration” any restrictive meaning. First, there is nothing inherently odd in the idea that any physical changes to the demised premises fall within the scope of a qualified covenant against alterations. Second, in the present lease, the expression “the said buildings” is defined in such a way as to refer to those buildings that stand on the property from time to time. Third, clause 4(iv) of the 1978 lease (as varied) expressly contemplates that “the said buildings” may be demolished at some point during the term, and may be replaced with one or more buildings that may be very different from those which stood there before. The clause expressly refers to the grant of landlord’s consent to such works. Mr Dutton says that that is clearly a reference to the grant of consent under clause 2(vii). That, he says, clearly indicates that the alterations which fall within the scope of clause 2(vii), as properly construed, include works which wreak substantial changes to the properties’ character.

73. Ms Tythcott emphasises the full extent of clause 2(vii) and, in particular, the words: “… and if any consent shall be given under this sub-clause to carry out all such additions improvements or alterations in accordance with plans sections elevations and specifications to be prepared by a Registered Architect … and with materials previously approved of in writing by the Lessors.” She submits that that points against the application of clause 2(vii) to works of demolition. She says that the need for plans, sections, elevations, and specifications, and the need for approval of materials, sits ill with any extension of clause 2(vii) to works of demolition. She submits that the very essence of clause 2(vii) is to ensure that the buildings remain in situ, and maintain their current character, design, and appearance for the duration of the lease. She says that there is no scope whatsoever for construing clause 2(vii) as extending to works of demolition, at least if they are not accompanied by immediate replacement or rebuilding.

74. Ms Tythcott also submits that if the buildings are demolished, they can obviously no longer be used in accordance with clause 2(viii) of the lease. Further, if the buildings were to be demolished, the claimant would be in breach of the repairing covenant in clause 2(iv) of the lease. Indeed, by demolishing the buildings, the claimant would effectively be destroying the very purpose of the lease. If consent to demolition were given, the demised premises would no longer be in existence. She goes so far as to submit that following demolition, the claimant would be relieved of all obligations under the lease, save in relation to the payment of rent. In her skeleton argument, Ms Tythcott had made reference to the impact upon the rent review proceedings; but in the course of her brief oral opening, Ms Tythcott acknowledged that no reliance should be placed upon that in view of the disregard of any alterations in the rent review assumptions.

75. At paragraph 34 of her skeleton, Ms Tythcott acknowledges that at common law, a tenant can only be prevented from altering the demised premises in the absence of an express covenant prohibiting alterations if either the alterations amount to waste, or they would be in breach of an express repairing obligation. It seems to me that it follows from this that if demolition is not within the scope of clause 2(vii), then it is not prohibited by the lease unless it would amount to waste or would be in breach of the express repairing covenant at clause 4(iv).

76. In her oral submissions, Ms Tythcott emphasised that the latter part of clause 2(vii) clearly predicates an alteration which nevertheless clearly envisages a continuing physical presence on site, involving previously approved materials. It requires the tenant to maintain some form of buildings on site. The new clause 4(iv), inserted by the deed of variation, provides for replacement buildings in accordance with plans and specifications; but it makes no variation to the user clause, so it clearly contemplates two replacement warehouse buildings.

77. Given clause 4(iv), I think that Ms Tythcott recognised that she could not persist in the argument that clause 2(vii) has no application to demolition in all circumstances. However, she submitted that what was not within the scope of clause 2(vii) was demolition without any related rebuilding. What was clearly contemplated by the lease was demolition as a preliminary to the replacement of what was there before with similar types of building, and consistently with the permitted user in clause 2(viii).

78. Ms Tythcott submits that the entire destruction of the subject matter of the lease is not within the scope of clause 2(vii). She submits that in those circumstances, such demolition is nevertheless prevented by the law of waste, and by the operation of the tenant’s repairing covenant in clause 2(iv). She submits that demolition on its own falls outside the scope of clause 2(vii). It was never in the reasonable contemplation of the parties to this lease that the existing buildings would be demolished and never replaced. That, Ms Tythcott submits, is clear not only from the latter part of clause 2(vii), but also from the opening words of clause 2(viii), which is a covenant “not to use the said plot of land for any other purpose than as the site of the said buildings”.

79. Mr Dutton’s response to that is that that is simply a negative prohibition against using the plot of land otherwise than as the site of the said buildings, and imports no positive obligation to use the land for that purpose. The land can simply be allowed to remain vacant, cleared, and unused. He emphasises the acceptance by Mr Norbury that there is no suggestion that the land would be used for any unlawful purpose under the lease if the buildings were to be demolished; they will remain as a cleared site.

80. Mr Dutton returned to the scope of clause 2(vii) in his reply. He pointed to Ms Tythcott’s acceptance that demolition falls within the scope of clause 2(vii) provided it is associated with the construction of a replacement building or buildings. Mr Dutton refers to Ms Tythcott’s reliance upon the combined effect of clauses 2(vii) and 2(viii). She seeks to argue that clause 2(viii) imposes a positive obligation to retain the buildings on site, or some buildings in replacement for them. But, Mr Dutton says, that is not what clause 2(viii) says. It clearly imposes only a negative obligation. On the natural reading of clause 2(vii), demolition falls within its scope; and it is bizarre to say that a tenant can with consent alter the buildings on the demised premises but not demolish them. He referred to all the other covenants that would continue to operate if the existing buildings were demolished, and the land were a cleared site. He seeks to refute Ms Tythcott’s submission that the claimant would be relieved of all obligations under the lease, save in relation to the payment of rent.

81. On this issue, I prefer the submissions of Mr Dutton to those of Ms Tythcott. It seems to me that the wording of clause 2(vii) is entirely clear. It extends not only to the making of any addition to the buildings, or any improvements to or alterations in the same, but also to any change in the character, design, or appearance of the same, or any addition thereto. The concluding words, it seems to me, are to be qualified by the necessary application of the words “so far as applicable”.

82. I reach that conclusion because, first of all, it is clear from clause 4(iv) (as inserted by the deed of variation) that the parties had in mind the construction of replacement buildings at some time during the course of the lease. It seems to me that the parties would have clearly regarded such replacement buildings as falling within the scope of clause 2(vii), and as requiring landlord’s consent. It seems to me that it is entirely artificial to say that clause 2(vii) applies to the demolition of buildings provided they are replaced, but not to the demolition of buildings without any replacement.

83. Further, if clause 2(vii) does not apply to the replacement of buildings, then unless there is something else in the lease, or the general law, which would operate to prevent such demolition, then the tenant would be free to demolish the buildings without the need for landlord’s consent. It seems to me that it is most unlikely that the parties intended the restriction on the tenant’s ability to demolish buildings to be found either in the general common law of waste or in the repairing covenant in the lease. The repairing covenant applies to whatever (if anything) is on the land at the time; and, for reasons that I will come to shortly, I do not consider that, as a matter of general law, a repairing covenant operates in all the circumstances to prevent the demolition of the subject matter of the demise.

84. It seems to me that, at heart, Ms Tythcott conflates two different things by relying upon the user provisions in the lease. What she does is to seek to rely upon the user covenant as qualifying the clear wording of the covenant in clause 2(vii) when, in my judgment, the true relevance of the user covenant is that it may operate by way of affording valid reason to a landlord for withholding consent to “alterations”, which term would extend to the demolition of any buildings on site. It seems to me that that is the proper way of viewing the relationship between clauses 2(vii) and 2(viii) of the lease.

85. So, for those reasons, and for the further reasons explained more fully by Mr Dutton KC, I find that the application to the landlord to demolish the two buildings presently on site fell within the scope of clause 2(vii) of the lease. When was the landlord’s consent refused?

86. Mr Dutton addresses this question at paragraphs 31 through to 34 of his skeleton argument. Ms Tythcott addresses the same matter at paragraphs 25 and 26, and paragraph 37, of her skeleton. Ms Tythcott emphasises that neither the lease, nor section 19(2) of the Landlord and Tenant Act 1927 , prescribe any particular process by which a tenant is to apply for, and the landlord respond to, a request for consent to alterations to demised premises. She draws my attention to observations of Carnwath LJ, speaking for the Court of Appeal, at paragraph 19 of his judgment in NCR Ltd v Riverland Portfolio No 1 Ltd [2004] EWCA Civ 312 . She submits that in light of those observations, a degree of formality should attend any request for consent to additions, alterations, or improvements to demised premises because serious legal consequences flow from such a request.

87. Carnwath LJ stated that a clear distinction needed to be drawn between informal exchanges, both internally and between the parties, and the formal process of application and decision contemplated by the Landlord and Tenant Act 1988 in relation to applications for consent to assignment. It was said to be in all parties’ interests that there should be free exchanges, with a view to reaching an agreed solution, without the parties prejudicing their respective positions under the Act . The serious legal consequences resulting from the statutory scheme require that the process of application and decision should be subject to a reasonable degree of formality.

88. Ms Tythcott recognises that those observations were uttered in a case where the statutory scheme applied to the request for landlord’s consent. Here, the statutory scheme does not apply; but she submits that a request for consent nevertheless alters the nature of the bargain between the parties, and is therefore also required to be subject to a reasonable degree of formality. It does seem to me that there may be a difference in degree between the level of formality required in a case to which the statutory scheme applies, and to one, such as the present, where it does not. But in any case, the real focus must be on the terms of the actual correspondence and the letter said to constitute the request for consent to alterations.

89. Here, the second paragraph on the second page of Walker Morris’s letter of 11 September 2024 clearly states: “We are instructed to seek consent pursuant to the lease to take such steps and carry out such works as are necessary to implement the planning consent.” It concludes by suggesting that such consent be dealt with by way of a formal licence; and includes agreement for the claimant to meet the defendant’s reasonable legal costs. It states that “the licence will need to be documented by the beginning of next week”.

90. The letter written in response to that is short. In the letter of 20 September 2024, written by the principal lawyer of the defendant council for the City Solicitor, it is said: “We are now in a position to formally reply to your belated request for consent to demolish the buildings currently erected on the premises under the terms of the existing lease. We are refusing consent on the grounds that demolition of the buildings would result in a breach of the user clause under the current lease.”

91. In my judgment, nothing can be clearer. Walker Morris were asking for consent to demolish the buildings. The defendant council treated the letter from Walker Morris as seeking such consent; and they refused such consent, giving a reason for such refusal. If there were no subsequent relevant correspondence, I have no doubt that any court would conclude that consent had been sought and refused. How does the subsequent correspondence affect the matter?

92. Walker Morris’s letter of 26 September expressly notes the refusal of the council to allow the claimant to implement the planning permission. It refers to the council’s letter as stating that consent will not be provided because the demolition works will breach the user covenant; but it says that the council does not elaborate on that. It asks the council to set out in full the reasons why it says that proposed demolition works would not breach the user covenant. The letter does go on to say that, absent a satisfactory response, the claimant will make a formal application for consent under the terms of the lease, and, where it continues to be withheld, the claimant will have no choice but to seek declaratory relief, together with substantial damages and costs.

93. I agree that that letter is somewhat curious. Ms Tythcott submits that the correspondence needs to be read as a whole. She submits that the last paragraph on the first page of the letter of 26 September 2024 is instructive when it uses the words “formal application for consent”. She says that if the previous application had been intended to be a formal application, there would have been no need to include that paragraph. She submits that clearly a decision had been taken by the claimant to give the council a further opportunity to consider its position. The letter expressly invites the council to reconsider and to respond because, Ms Tythcott says, the claimant does not wish to rely upon its strict legal rights.

94. Ms Tythcott also submits that when the defendant received the letters of 11, and then 24, December 2024, the clock was effectively set back to zero. As a result, consent was not formally refused until 13 January 2025. That is because the claimant had asked the council to reconsider the position, and was clearly no longer relying upon either its letter of 11 September or the defendant’s response of 20 September. Of course, that ignores the clear statement in the letter of 24 December that the claimant will maintain that consent had already been sought, and was refused by the letter of 20 September. The consent to the works sought in the letter of 24 December was expressly stated to be “without prejudice” to that contention.

95. As I have said, looking at the two letters of 11 and 20 September on their own, there was a clear request for consent, which was refused. The letter of 26 September invited the defendant to reconsider its position; but there is no agreement, estoppel, or election which, in my judgment, would operate to prevent the claimant from relying upon the earlier, and clear, refusal of consent which had been communicated in the defendant’s solicitors’ letter of 20 September.

96. At no point did the claimant state that it would not treat the 20 September refusal as being of no effect. At best, the 26 September letter can be construed as an offer to treat the first request as effectively a dummy run. However, that offer was not accepted by the defendant because it never responded to the letter of 26 September. The next relevant letter was Walker Morris’s letter of 11 December, which clearly operated to withdraw any subsisting offer, and required consent in principle within the next seven days.

97. I cannot regard the letter of 26 September as either: (1) amounting to a binding agreement not to treat the 20 September refusal as such; or (2) giving rise to any estoppel since: (a) there was no representation not to treat the 20 September refusal as being of no effect, and, in any event; (b) the defendant never acted upon any representation to its detriment. Nor can I regard the letter of 26 September as amounting to an irrevocable election between inconsistent remedies, under which the claimant was irrevocably electing to treat the refusal of consent as of no effect. There is nothing in the correspondence to state, or to imply, that the claimant will not rely upon its strict legal rights, at least if the defendant fails to give its consent in principle.

98. Thus, I am satisfied that the operative refusal is that of 20 September 2024. It follows that only reasons one, four and five are relevant to the reasonableness of the defendant’s refusal of consent. That is because the evidence is that only those reasons operated upon the mind of the defendant council as at 20 September 2024. However, it is appropriate that I should deal with the reasonableness of all of the reasons put forward by the council for refusing consent to demolition. Was the defendant’s refusal of consent unreasonable?

99. The relevant legal principles are summarised at Woodfall: Landlord and Tenant at paragraphs 11.262 and 11.263, and (by analogy) at paragraphs 11.128 and 11.138 to 11.139. At the beginning of the second day of this hearing, Mr Dutton KC produced a list of ten reasons that had been advanced from time to time for refusing consent to demolition. These need to be considered against the law which is set out in Ms Tythcott’s skeleton argument at paragraphs 28 through to 33.

100. Ms Tythcott begins by referring to Lord Bingham’s selection of three principles as worthy of special emphasis in his judgment in Ashworth Frazer v Gloucester City Council [2001] UKHL 59 , reported at [2001] 1 WLR 2180 , at page 2182. It is unnecessary for me to set these out in any detail, but they emphasise two matters of particular relevance in the present context. The first is that the question whether the landlord’s conduct is reasonable or unreasonable is one of fact, to be decided by the tribunal of fact. Reported cases may be of illustrative value; but in each case the decision rests on the particular facts of the particular case, and care must be taken not to elevate a decision made on the facts of one particular case into any principle of law. The second guideline principle is that the landlord’s obligation is simply to show that his conduct was reasonable, and not that it was right or justifiable.

101. The most helpful statement of the principles is probably that of Peter Gibson LJ (with the agreement of Longmore LJ) in Iqbal v Thakrar [2004] EWCA Civ 592 at paragraphs 26 and 27. In restating these principles, I make the correction of a typographical error in the first of them. The principles were stated by Peter Gibson LJ as follows: (1) The purpose of the covenant is to protect the landlord from the tenant effecting alterations and additions which damage the property interests of the landlord. (2) A landlord is not entitled to refuse consent on grounds which have nothing to do with his property interests. (3) It is for the tenant to show that the landlord has unreasonably withheld his consent to the proposals which the tenant has put forward. Implicit in that is the necessity for the tenant to make sufficiently clear what his proposals are, so that the landlord knows whether he should refuse or give consent to the alterations or additions. (4) It is not necessary for the landlord to prove that the conclusions which led him to refuse consent were justified, if they were conclusions which might be reached by a reasonable landlord in the particular circumstances. (5) It may be reasonable for the landlord to refuse consent to an alteration or addition to be made for the purpose of converting the premises for a proposed use even if it is not forbidden by the lease. But whether such refusal is reasonable or unreasonable depends on all the circumstances. For example, it may be unreasonable if the proposed use was a permitted use and the intention of the tenant in acquiring the premises to use them for that purpose was known to the freeholder when the freeholder acquired the freehold. (6) While a landlord need usually only consider his own interests, there may be cases where it would be disproportionate for a landlord to refuse consent having regard to the effects on himself and on the tenant respectively. (7) Consent cannot be refused on grounds of pecuniary loss alone. The proper course for the landlord to adopt in such circumstances is to ask for a compensatory payment. (8) In each case it is a question of fact, depending on all the circumstances whether the landlord, having regard to the actual reasons which impelled him to refuse consent, acted unreasonably.

102. In the present case, Ms Tythcott draws the court’s attention in particular to principle (5): it may be reasonable for the landlord to refuse consent to an alteration or addition to be made for the purpose of converting the premises for a proposed use even if it is not forbidden by the lease.

103. At paragraph 27, Peter Gibson LJ went on to say that the court considers two questions. First, what was the actual reason for refusing consent? This is a subjective enquiry directed to finding out what was in the mind of the landlord at the time of the refusal of consent. The second question is an objective enquiry, directed to the question whether the reason in the landlord’s mind was reasonable or unreasonable. I have already addressed the first of these two questions when reviewing Mr Norbury’s evidence.

104. I now turn to the second of those two questions: the objective enquiry whether the reason in the landlord’s mind was reasonable or unreasonable. On that, I have had the benefit of oral submissions from both Mr Dutton and Ms Tythcott. I have borne those oral submissions firmly in mind, having re-read my notes for the purposes of preparing this extemporary judgment overnight.

105. I emphasise a point made at paragraph 31 of Ms Tythcott’s skeleton argument, although it is not a matter which Mr Dutton disputed. In the context of a covenant against alterations, such as the present, the landlord is not confined to the reasons for withholding or refusing consent that were communicated to the tenant, provided they were reasons that actually influenced him at that time. I accept the decision of McCombe J, after a full review of the authorities, to that effect at paragraphs 39 and 40 of his decision in Kalford v Peterborough City Council [2001] EGCS 42. A full transcript of that decision, handed down on 16 March 2001, was included within the authorities bundle.

106. The first of the reasons for refusing consent was set out in the letter of 20 September 2024: “We are refusing consent on the grounds that demolition of the buildings would result in a breach of the user clause under the current lease.” Mr Dutton disputes that the demolition would result in any breach of the user covenant in the lease. If the buildings are demolished, the property will become a bare site, and the council has no reason to think that it will be used for any purpose whatsoever whilst it remains a bare site. The obligation imposed by clause 2(viii) is a positive one. It can only be broken if some physical activity on the land constitutes one or more of the forbidden users. If no use is made of the site, it cannot be said that the tenant is in breach. It will simply not be using the property.

107. Mr Dutton submits that this reason is vitiated by a legal error. It assumes that the covenant imposes some positive obligation of user on the tenant. The defendant cannot point to any activity which it suspects that the claimant may carry out on the land which would constitute a breach of the user covenant. The defendant makes the legal error of assuming that “no use” is a breach of covenant. Merely looking after the property in its cleared state is not a use. Excluding trespassers, for example, is simply a compliance with the user covenant because it ensures that no one else will be using the premises for a purpose in breach of clause 2(viii). The point was encapsulated at paragraph 7(c) of Asplin LJ’s judgment on appeal from the Lands Chamber where she characterised clause 2(viii) of the lease simply in terms of a prohibition. Thus, as a matter of law, Mr Dutton says that this is not a good reason.

108. Ms Tythcott submits that the whole point of clause 2(viii) is that the site is to remain as the location for two light industrial buildings. If it is not being used as the site of such buildings, the claimant is in breach of covenant in allowing the land to stand vacant. Ms Tythcott submits that it is implicit in the construction of clause 2(viii) that there are both positive and negative obligations: either the buildings have to be retained, or they should be replaced. They cannot be demolished without any replacement for them. In any event, Ms Tythcott says that principle (5) in Iqbal applies here. The landlord wants to preserve the existing position; he want to retain the existing buildings on the site. It is perfectly reasonable for the landlord to say that he wants the buildings to remain.

109. Ms Tythcott referred in her oral submissions to observations of Slesser LJ in Lambert v FW Woolworth & Co [1938] 1 Ch 883 to the effect that many considerations - aesthetic, historic or even personal - may be relied upon as yielding reasonable grounds for refusing consent. The wider the connotation given to the idea of improvement, the more necessary it may be that the landlord should have his protection. In a case of demolition, the landlord should have greater protection in order to preserve his reversion. This is not a bad reason at all. The landlord is entitled to require the tenant to comply with the strict terms of the lease. He is entitled to say: “We want you to abide by the user clause. As it is, the lease comprises a plot of land occupied as the site of two buildings; and we want that to remain the case.”

110. In his reply, Mr Dutton says that this does not take matters very far. Here, everyone knew the premises are to lie empty after demolition and will not be used. However, the fact is that they are not being used now, before demolition. These are redundant buildings. They are described as such by the Lands Chamber in, for example, paragraphs 1 and 3 of their decision. Demolition has no effect on how the premises are used. It will be easier to protect the property from trespass and ne’er-do-wells - the term used by Ms Tythcott - until the land is developed if the site is cleared of all buildings. There is no suggestion that there will be any breach of the user covenant. The premises will simply not be used at all once the buildings have been demolished.

111. Those are the competing submissions. In normal circumstances, I would have been prepared to accept that the landlord was acting reasonably in refusing consent to demolition on the ground that this would be contrary to the spirit, if not the letter, of the user clause in clause 2(viii) of the lease. I can see force in Mr Dutton’s submission that clause 2(viii) is negative and not positive in nature. Strictly, that may be correct as a matter of the literal construction of the clause. However, it also seems to me clear that the true spirit of the clause, divided as it is into two constituent elements, is that the plot of land is not to be used otherwise than as the site of the said buildings; nor, without the consent in writing of the lessors, are the buildings to be used otherwise than as light industrial buildings or warehouses.

112. It is clearly contrary to the spirit, if not the letter, of the clause for the land to be maintained as a cleared site. Ms Tythcott seems to me to conflate the constructions of the alterations clause (clause 2(vii)) and the user clause (clause 2(viii)). In my judgment, clause 2 (vii) applies to the demolition of any existing buildings on the site; but clause 2(viii) clearly contemplates that the land will be used as the site of buildings, whether those that are presently there or those that are to be constructed in the future. It is clearly contrary to the spirit and intent of the lease for the land to remain, for any length of time, as a cleared site. That is what the tenant is proposing.

113. In normal circumstances, I consider that it would be reasonable to withhold consent on that ground; but these are not normal circumstances. It is common ground that the existing buildings are redundant, and they are derelict. It seems to me that it is unreasonable to withhold consent to their demolition, particularly where such demolition is required in order to ensure that the extant planning consent is implemented before it lapses after three years. So it seems to me - and I find - that the council was unreasonable in withholding consent on this ground. Whether or not there would be a breach of the literal meaning of clause 2(viii), it would clearly be acting contrary to its spirit to demolish the buildings that are on the plot of land without replacing them. But, in the particular circumstances of this case, I find that it is unreasonable for the landlord to withhold consent on this ground.

114. In other circumstances, this is a case that would fall within the fifth of the principles identified by Peter Gibson LJ in Iqbal v Thakrar : where it would be reasonable for the landlord to refuse consent to an alteration, even if it would not lead to a result that is strictly forbidden by the lease. But in the particular circumstances of the derelict nature of these buildings, and their redundancy, I find that it is unreasonable for the defendant to refuse its consent to their demolition. Had these buildings still been in use as light industrial buildings or warehouses, then I would have found that the defendant’s refusal to consent to their demolition was reasonable; but they are not, and there is no reasonable prospect that they ever will be.

115. I accept the claimant’s evidence and case - which was not disputed by Mr Norbury, and the force of which was recognised by him - that it would not make any financial sense to spend £1.4 million, or thereabouts, in reinstating the warehouses, rather than £100,000 in demolishing them. It is clear that at some point in time, even if only after the expiry of the lease in 60 years from now, this site is going to be redeveloped as residential accommodation. There is no point in spending over £1 million in putting the premises back into lettable condition. I am satisfied that they are not in a lettable condition at the present time. The reasonable course is to demolish them, particularly when that will prevent the lapsing of the planning consent.

116. I turn then to reason two: demolition is not alteration. I have already addressed this point when dealing with the scope of clause 2(vii). In light of my finding on that point, this is not a good reason for withholding consent.

117. So far as reason three (lack of clarity) is concerned, this, of course, did not operate on the mind of the defendant as at 20 September 2024 and so is not a reason on which the defendant can place any reliance in light of my findings as to the date when the defendant refused its consent. However, I would not consider any of the elements of this reason to be of any validity. The first element is that the claimant gave no information about what it planned to do with the buildings once demolished. Here, Mr Norbury had no suspicion that, following their demolition, they might be used in any undesirable way. The common expectation was that the land would remain a cleared site, bare of buildings.

118. So far as concerns about the ability to fund a major redevelopment are concerned, that is not relevant because the application was to demolish and not to redevelop. So far as the funding of the demolition works themselves is concerned, I accept that the defendant entertained genuine concerns about having a half completed demolition project on the site. However, I accept Mr Dutton’s submission that the appropriate response to that concern was not to withhold the landlord’s consent to the demolition of the buildings altogether, but to address the matter in the licence to carry out alterations.

119. Mr Dutton took me to a precedent from the Encyclopaedia of Forms and Precedents which would adequately address such matters. The solution is to require a covenant to complete the demolition, with a right of forfeiture of the existing lease in the event of any breach and/or to require the provision of a suitable guarantee from a financially appropriate company within the same group of companies as the claimant.

120. I accept the distinction that Mr Dutton draws between the principle of consent to demolition and points of detail in implementing such consent. These were reasonable concerns, but ones which should not have been addressed by an outright refusal of consent, but rather by proposing conditions to be incorporated within the terms of a formal licence. The fact that resistance might have been anticipated is no reason for an outright refusal, rather than a refusal to approve the terms of the licence when this is put forward.

121. So far as reason four, which did operate as at 20 September is concerned, this is the concern that the claimant was seeking to leverage its position by demolishing the existing buildings and leaving the property a derelict wasteland. The concern was that the application was a tactic on the part of the claimant to exert pressure on the defendant to achieve an improved commercial and negotiating advantage in relation to the terms of any re-geared lease that might be granted.

122. I do not understand the concerns expressed. The real concern was that demolition would leave the site effectively as derelict wasteland; but in that regard the defendant would be in no worse position than the site currently presents. I also accept Mr Dutton’s submission that concerns about the condition of the cleared site can appropriately be addressed by conditions requiring landscaping to be contained within any licence for alterations.

123. Ms Tythcott submitted that there was a perfectly proper reason for the court to infer that demolition was intended to put pressure upon the defendant in an attempt by the claimant to gain the upper hand in negotiations for the lease. The reason she gave was that if there was nothing on the site, it would become a magnet for trespassers and ne’er-do-wells and would thereby put pressure on the council to agree terms for its redevelopment.

124. It seems to me that at the moment the site is already a potential magnet for trespassers and ne’er-do-wells. The doors to the two units appear to be open, and there was some visual indication that there had been a fire, albeit minor, in one of the units. I do not see that clearing the site of these redundant buildings would put any additional pressure on the council to agree to the redevelopment of the site.

125. The fifth reason is the effect of demolition on the section 84 appeal. Again, this is a consideration that did affect the mind of the council at the time refusal was first communicated on 20 September 2024. The concern here is that the council’s position in the forthcoming appeal, for which permission had by then already been granted, would be severely, if not fatally, compromised. That is said to be on the basis that there would be nothing left for the defendant to protect by means of the covenants contained in the lease.

126. However, the appeal proceeded on the footing of the finding by the Lands Chamber that the buildings were redundant. The Lands Chamber nevertheless took the view that the covenants in the lease gave the council the ability to exercise control over the way the property was redeveloped, and that that ability was of substantial value. I cannot see that giving consent, under the terms of a covenant in the lease, to the demolition of buildings on site which were accepted to be redundant would in any way have impacted upon the outcome of the appeal.

127. The prospects of the claimant succeeding on the appeal had nothing to do with the condition of the buildings, and whether the redundant buildings were there or not The Lands Chamber had proceeded on the basis that it was satisfied that the buildings were redundant, and there was no cross appeal by the council against that finding. The appeal proceeded on the common footing that the buildings were redundant. The focus of the section 84 application was not on the clearance of the site, but on what was to happen when the site was eventually cleared.

128. I also accept Mr Dutton’s submission that there are plenty of covenants in the lease that would have continued to apply to the site even after demolition of the buildings standing upon it. I cannot accept the submission that all of the covenants would have disappeared, other than the covenant for payment of rent, if there were no longer any buildings on the site to which they attached. I reject Ms Tythcott’s submission that no reasonable landlord would have consented to the demolition of the building on the site in light of the pending appeal to the Court of Appeal.

129. Reason six is that the planning permission could be implemented in other ways. The short answer to this is that the council never identified any lesser works, or series of works, that would have been capable of implementing the planning consent. Mr Norbury accepted that demolition was one way of achieving the implementation of the planning consent. I accept Mr Dutton’s submission that it is better to be safe than sorry, and preferable to ensure that there can be no doubt that the planning consent has been implemented. The way to achieve that is to demolish these redundant buildings. Mr Norbury’s suggestion of pile foundations seems to me to have no proper application to the circumstances of the present case. So far as drainage connections are concerned, I cannot really see what could have been envisaged in regard to that.

130. I do not accept Ms Tythcott’s submission that it is not enough for the claimant simply to say that it will go for the nuclear option of demolition in light of the terms of the lease. Whilst there may have been no obligation upon the defendant, as landlord, to assist the tenant in implementing the planning consent, if asked for consent to demolition it should not withhold its consent to that without good reason. In my judgment, there was no good reason here. I also do not accept that in terms of any renegotiated, re-geared lease, it would be impossible to re-grant a lease of the site if there were no buildings on it. That is a matter for the negotiated solution. That deals with reason eight.

131. So far as reason seven is concerned (the failure to provide any construction methodology or programme of works), that was not a precondition to any application for consent. It was a matter that was properly to postdate the grant of consent. Again, that is a matter properly to be addressed when negotiating a licence for alterations, and not a reason for withholding consent to demolition totally. In any event, it did not operate upon the mind of the defendant at the relevant time.

132. So far as the failure to offer unconditional undertakings for the defendant’s reasonable costs (reason nine) is concerned, the fact is that in the initial letter requesting consent an undertaking, capped at £2,000 plus VAT, was offered. If the defendant considered that to be unacceptable, it should have put forward some counter-proposal. A refusal to give consent on that ground, without having invited a greater undertaking in terms of value, is clearly unreasonable.

133. I have already dealt with reason ten in finding that demolition is within the scope of clause 2(vii) of the lease. Having arrived at that conclusion, it seems to me that it is the answer to Ms Tythcott’s submissions that demolition would constitute voluntary waste, and would put the claimant in breach of its obligations under other terms of the lease, not least the repairing covenant in clause 2(iv). I accept Mr Dutton’s submissions that many other covenants in the lease, in addition to that relating to payment of rent, would continue to apply after the demolition of the existing buildings on site.

134. Ms Tythcott relies on observations of HHJ Rich QC in Devonshire Reid Properties v Trenaman [1997] 1 EGLR 45 at page 46D. There, sitting as a member of the Lands Tribunal, Judge Rich stated that in his judgment a covenant to repair and maintain raises a duty not to destroy, wholly or partly; and a proposal to do so is a breach of such a covenant. I accept Mr Dutton’s submission that one should approach that statement with some scepticism and care if it is to be treated as a general proposition of law of universal application. I prefer the views of Mr Bernard Livesey QC, as expressed in Hannon v 169 Queen’s Gate Ltd [2000] 1 EGLR 40 at page 43, that this approach is too rigid. Mr Livesey considered the logic behind the principle stated by Judge Rich to be “suspect”, and the principle to be “faintly absurd” at the present time. He was inclined not to follow Trenaman on that point.

135. I accept that whether an express repairing covenant implies a duty not to destroy must depend on the construction of the lease, taken a whole. Not every alteration or destruction of premises will amount to a breach of the covenant to repair. One must look at the terms of the lease as a whole, and have regard to what the parties to the lease should be taken as having contemplated as permissible. That involves considering the existence and terms of any covenant against alterations.

136. Where there is a covenant not to make alterations without consent, such consent not to be unreasonably withheld, it seems to me that if consent is given, or if it is unreasonably withheld, then any work falling within the scope of the alterations covenant cannot be treated as a breach of the covenant to repair. The covenant to repair will apply to the premises as so altered. If there are no buildings there, then the covenant to repair will apply to the cleared site. It will extend to any replacement buildings so constructed. I note that both 169 Queen’s Gate and Devonshire Reid Properties involved landlord’s covenants which fell to be construed uninfluenced by the impact of any covenant against alterations or its terms.

137. It seems to me that similar considerations apply to the argument that the demolition would involve actionable waste. I accept the proposition that if a tenant does something which is permitted by the terms of the lease, then the doing of that act cannot constitute waste. The express terms of the lease here qualify the duty not to commit waste.

138. I hold that in cases where the terms of a tenancy contain a code, such as that at clause 2(vii) of the present lease, which identifies the circumstances in which physical changes may be made to the property, a physical change made in accordance, and in compliance, with that code is not to be regarded as waste. The case of Lambert v Woolworth , relied upon by Ms Tythcott, and also the case of 11-13 Randolph Crescent are distinguishable on the basis that in those cases there were express covenants not to commit waste. The correct interpretation of the lease in each of those cases therefore involved attempting to reconcile apparently conflicting provisions in a way which would make the lease work as a consistent whole. That is very different from the present case.

139. So, for all of those reasons, whether I look at the position as at 20 September 2024 - as I find I should - or if I look at the position as at the time of the last refusal on 13 January 2025, and whether I consider the reasons individually or cumulatively, I come to the conclusion that the landlord acted unreasonably in refusing consent to the demolition. I reach that conclusion with a measure of some regret for this reason: that had the landlord not peremptorily refused consent, but had indicated consent in principle, but subject to the terms of a licence for demolition, there might well have been considerable restraints imposed upon the manner in which the claimant tenant was to set about demolishing the buildings on site.

140. This case demonstrates the need for landlords, when considering refusing consent to demolition, or other alterations, to draw a clear distinction between refusing consent in principle, and indicating a willingness to grant consent, subject to conditions to be contained within an appropriately drafted licence for alterations. It emphasises the dangers to a landlord of a blanket refusal, rather than consent in principle, but subject to appropriate conditions.

141. So that concludes this extemporary judgment, which I am afraid has taken now some three hours and 20 minutes. (For proceedings after judgment see separate transcript) (This Judgment has been approved by HHJ Hodge KC.) Digital Transcription by Marten Walsh Cherer Ltd 2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Telephone No: 020 7067 2900 DX: 410 LDE Email: [email protected] Web: www.martenwalshcherer.com