Proxima GP Prop Ltd v Dr Thomas D McGhee
Decision date: 6 February 2014
Neutral citation: [2014] UKUT 59 (LC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal considered whether a landlord may charge for consenting to an tenant's underletting and for registering an underlease, and whether the sums demanded were reasonable. The Upper Tribunal held the First-tier Tribunal was wrong to deny the landlord's entitlement to charge; on the facts £95 (including VAT) was a reasonable sum for considering the consent application and the LVT's section 20C order was set aside. The Tribunal also analysed the statutory basis (s.19(1)(a) of the 1927 Act and Schedule 11 to the 2002 Act) for such charges.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
A landlord may make grant of consent conditional on payment of a reasonable sum for legal or other expenses connected with the consent under s.19(1)(a) of the 1927 Act; a charge for considering consent to underlet can amount to a "variable administration charge" under Schedule 11 to the 2002 Act and is recoverable only to the extent it is reasonable, an unreasonable sum operating to release the tenant from the covenant in relation to that underletting.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal observed that a fee for registering a document (paragraph 27 registration) is not an administration charge "for or in connection with the grant of approvals" under Schedule 11(1)(a) and so is not a variable administration charge within that provision; it also noted that landlords should not use consent covenants as a source of profit and that negotiated longer-term "global licences" may differ from one-off approvals for these statutory purposes.