Responsible or respectable?
25 February 2014
It is a common provision within alienation clauses within commercial leases that consent to an assignation or sub-letting will not unreasonably be refused or delayed in the case of a proposed assignee or sub-tenant who is “respectable and responsible”. What, however, do those words mean in the case of a corporate entity?
In his Opinion, issued today, in the case of Burgerking Limited v Castlebrook Limited  CSOH 36, Lord Tyre provides an answer to this question and some useful guidance generally in respect of the question of unreasonable withholding of consent. The landlord successfully argued that a newly incorporated company could not be said to be either respectable or responsible when it had never traded. In particular, the landlord’s argument that it was impermissible to seek to attribute to the new company the characteristics of its beneficial owner or other companies operated and controlled by that beneficial owner.
Lord Tyre’s opinion may be found here: http://www.scotcourts.gov.uk/opinions/2014CSOH36.html
David Thomson, of Axiom Advocates, appeared for the successful landlord.
[ Back to news page ]