Cross Lease Dispute
This involved a long-running dispute involving the Goldsburys who withheld consent to their neighbours, the Turners, replacing an existing dwelling on their property which was subject to the terms of a cross-lease.
Most cross-leases provide that alterations cannot be made (or new structures erected) without the prior consent of the other parties. This consent cannot be unreasonably withheld.
The Turners owned the property at the front of a four-way cross-lease. The Goldsburys owned two properties to the rear. The Turner’s property was derelict, and they sought the Goldsburys’ consent to demolish and erect a modern building in its place. There were also issues with recurring flooding and so they wanted to ‘lift’ the property.
The Goldsburys refused to consent to the works, arguing (amongst other things) that their sea views would be impacted. The Goldsburys were only agreeable to a rebuild within the same footprint as long as there was no greater intrusion into the commonly owned airspace.
The Turners referred the dispute to arbitration, where the arbitrator ruled that the Goldsburys’ withholding of consent was not unreasonable, and that it was not unreasonable to withhold consent for demolition where the dwelling was not uninhabitable and the proposal was to extend the existing footprint.
The Turners responded by applying to the High Court for a partition order, separating the Turners’ property from those of the Goldsburys under the cross-lease. Section 339 requires consideration of factors in section 342, including any hardship that would be caused by not making an order in comparison with the hardship that would be caused to any other person if an order was made. The High Court declined to make an order; the Turners then appealed to the Court of Appeal.
In a somewhat surprising move, the Court of Appeal placed greater emphasis on the relationship breakdown between the parties, the previous ‘intransigence’ and stubbornness of the Goldsburys about the development plans and the overall hardship to the Turners. Due to these facts and that the parties had reached an impasse, the court found it was necessary to grant a partition order subject to conditions to be determined by the High Court.
The Court of Appeal usefully confirmed that the test as to whether consent was unreasonably withheld under a cross-lease was to consider whether a reasonable lessor would withhold consent in the particular circumstances, and whether the lessor reasonably believed the proposed use would injure its interests.
If you are a party to a cross-lease and find yourself in a situation where you want to redevelop or are at odds with your neighbour, please be in touch and we can advise you on your options.
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