Tindall Cobham 1 Ltd & Ors v Adda Hotels (An Unlimited Company) & Ors [2014] EWCA Civ 1215 (05 September 2014)

Tindall Cobham 1 Ltd & Ors v Adda Hotels (An Unlimited Company) & Ors [2014] EWCA Civ 1215 (05 September 2014)

Clause 3.14.6(b) of the leases, which required the tenant to procure a continuing guarantee from the existing guarantor on assignment to an associated company, is void under section 25 of the Landlord and Tenant (Covenants) Act 1995 as it frustrates the Act's operation. The entire proviso to clause 3.14.6 is invalidated, leaving a simple qualified covenant against assignment. The landlord cannot require a new guarantor as a condition of consent to assignment to an associated company.

Citation
[2014] EWCA Civ 1215
Parties
Respondents: Tindall Cobham 1 Limited & Others; Appellants: Adda Hotels (an unlimited company) and Others
Jurisdiction
England and Wales
Judgment Date
05 September 2014
Procedural Posture
Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (chancery Division)
Outcome
Appeal dismissed in part; judge's order varied by deleting sub-paragraphs 1(b)-(e) but otherwise upheld.
Legal Topics
Assignment of Leases, Guarantees in Leases, Landlord and Tenant (covenants) Act 1995, Landlord and Tenant Act 1927, Anti Avoidance Provisions, Severance of Contract Terms
Landlord and Tenant Law Contract Law Assignment of Leases Guarantees in Leases Landlord and Tenant (covenants) Act 1995 Landlord and Tenant Act 1927 Anti Avoidance Provisions Severance of Contract Terms

Case Brief

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Parties

Tindall Cobham 1 Limited & Others

Respondents

Adda Hotels (an unlimited company) and Others

Appellants

Procedural Posture

Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (chancery Division)

Legal Issues

  1. 1 Whether clause 3.14.6(b) of the hotel leases is invalidated by section 25 of the Landlord and Tenant (Covenants) Act 1995
  2. 2 Whether the landlord can require a new guarantor as a condition of assignment to an associated company
  3. 3 Proper construction of clause 3.14.6 in light of anti-avoidance provisions

Ratio Decidendi

Clause 3.14.6(b) of the leases, which required the tenant to procure a continuing guarantee from the existing guarantor on assignment to an associated company, is void under section 25 of the Landlord and Tenant (Covenants) Act 1995 as it frustrates the Act's operation. The entire proviso to clause 3.14.6 is invalidated, leaving a simple qualified covenant against assignment. The landlord cannot require a new guarantor as a condition of consent to assignment to an associated company.

Court Disposition

Appeal dismissed in part; judge's order varied by deleting sub-paragraphs 1(b)-(e) but otherwise upheld.

Orders

  • Sub-paragraphs 1(b)-(e) of the High Court order deleted.
  • Otherwise, the High Court order stands.