Forfeiture of lease — Tenant in administrative receivership — Assignment of lease — Guarantees — Application by appellant to strike out claim for relief on ground respondent unwilling to give guarantee required by lease — Whether entitled to insist upon personal guarantees from receivers — Whether receivership affecting legal position — Appeal dismissed
The appellant was the landlord, by assignment, of a shop of which the respondent was the underlessee. The underlease was not to be assigned without the landlord’s consent, which was not to be unreasonably withheld. Prior to any assignment, the respondent was required to provide the landlord with an authorised guarantee agreement (AGA), within the meaning of section 16 of the Landlord and Tenant (Covenants) Act 1995, in a form reasonably required by the landlord.
The respondent went into administrative receivership. The appellant forfeited the lease, but the respondent applied for relief from forfeiture in order to assign the benefit of the underlease to a third party. The appellant insisted that an AGA be given by both the respondent and, personally, by its administrative receiver. The respondent objected to the latter requirement.
The appellant applied to strike out the respondent’s claim for relief from forfeiture, on the ground that the latter had refused to deliver the AGA as required by the underlease. The master dismissed the strike-out application, and the appellant appealed.
Held: The appeal was dismissed.
The lease required the respondent to execute and deliver an AGA prior to assignment. The AGA that the respondent was willing to execute would have fallen within section 16 of the 1995 Act, had the respondent not gone into administrative receivership. The appellant’s objections could only have been as to the form of the agreement, and, even then, only if such objections had been reasonable. The fact that the respondent was in administrative receivership did not alter that position. The AGA proposed by the respondent fell within the meaning of section 16 and within the definition in the underlease. It followed that the only objection open to the appellant was that it was not in such form as the appellant reasonably required. Whether the appellant’s insistence upon personal guarantees was reasonable was a question of fact to be decided by the trial judge, and did not lend itself to resolution on a strike-out application.
Mark Wonnacott (instructed by DLA Piper Rudnick Gray Cary UK LLP) appeared for the appellant; Timothy Morshead (instructed by Stevens Drake solicitors, Crawley) appeared for the respondent.
Sally Dobson, barrister
