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Landlord and tenant
Court of Appeal
14 October 2004
Pill, Jonathan Parker and Hooper LJJ
[2004] EWCA Civ 1306
[2005] 05 EG 204
Landlord and tenant - Landlord and Tenant (Covenants) Act 1995 - Landlord covenant - Release on assignment - Lease excluding named landlord's liability after assignment of reversion - Covenant otherwise expressed as binding successors in title - Whether personal covenant - Whether an agreement to release in advance of assignment - Whether agreement excluded by section 25(1) - Whether landlord remaining liable after assignment
In March 2002, the appellant landlord granted, in its capacity as a lessee by the assignment of a headlease, three subleases of commercial premises to the respondent tenants in consideration of substantial premiums. The subleases defined the landlord as being the person for the time being entitled to the reversion to the subleases. They also contained, at clause 6, covenants by the landlord for quiet enjoyment and to pay the rent reserved by the headlease. The latter covenant was subject to a proviso that the appellant would not remain liable after it had disposed of its interest in the property. The appellant subsequently assigned its reversionary headlease interest to P. The freeholder then commenced proceedings for forfeiture of the headlease for non-payment of rent. Since forfeiture of the headlease would automatically bring the subleases to an end, the respondents applied for relief from forfeiture. They also claimed damages against the appellant and P for non-payment of the headlease rent. The appellant argued in the county court that it was not liable to pay the headlease rent by reason of the proviso to clause 6, and that it had not been necessary for it to apply for a release within the meaning of the Landlord and Tenant (Covenants) Act 1995. The judge dismissed this defence. He concluded that the clause 6 proviso fell foul of section 25(1) of the 1995 Act, as an agreement to release in advance, and that the release procedure had not been implemented. The appellant appealed, contending that: (i) the covenant in clause 6 did not constitute a landlord covenant, as defined by section 28(1), for the purposes of the release procedure in section 6; and (ii) it was a personal covenant and...