CDLC Pty Ltd v Capital Estate Developments Pty Ltd

CDLC Pty Ltd and Pouring Pty Ltd, sublessees of premises owned by Capital Estate Developments Pty Ltd, sought to sell their businesses but required the landlord’s consent to assign the leases. Capital refused consent and sought to terminate the leases. The ultimate issue is the reasonableness of the landlord’s withholding of consent. The Court considered a preliminary issue concerning how to assess reasonableness and what material is relevant to that assessment. The plaintiffs argued that the evidence to be put before the Court was confined to the material facts that the landlord knew at the time. Capital argued that the admissible material was not so confined and that it could rely on other reasons to withhold consent than those given to the plaintiffs. The Court concluded that the answer depends on the ground relied upon for refusal. If the ground relied upon at the time falls within s 100(2) of the Leases (Commercial and Retail) Act 2001 (Leases Act), then the reasonableness of the refusal is to be determined by reference only to information of which the landlord was aware when it refused consent. If the ground relied upon for refusal at the time concerns an objective fact or circumstance, then the reasonableness of the refusal is to be determined by reference to information of which the landlord was aware when it refused consent, and further information of which the landlord was not aware when it refused consent, but which existed at that time. The Court does not take into account any fresh material that did not exist at the time. Costs are reserved, and the parties are directed to confer and provide a list of available dates for hearing for the remainder of 2023.