Deemed assignments and landlord’s consent

Leases commonly deem there to be an assignment of the term of the lease if change in the principal shareholding of the tenant or the directors of the tenant takes place that that alters the effective control of the tenant. The landlord’s written consent is usually required to such an assignment. If there is a term in the lease that excludes the operation of s.144 of the Property Law Act 1958 the following question arises:  does the landlord have an absolute right to refuse consent or is it subject to any dutiesin considering whether to grant or withhold consent to the assignment? In Lindholm v Tsourlinis Distributors Pty Ltd [2011] FCA 195 Finkelstein J held at [49] that a landlord in considering whether to grant or withhold consent is “bound to act in good faith”.

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