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The Court of Appeal has upheld a decision from last summer that a licence for alterations entered into without joining in a guarantor or obtaining its consent operated to release that guarantor.
This is based on the common law rule that a variation to a principal contract (without the guarantor’s consent) releases the guarantor unless it is self-evident that the variation was insubstantial or non-prejudicial to the guarantor.
The alterations covenant in this case was absolute (so no alterations were contemplated at the time the lease was granted). By giving consent to the tenant’s alterations, the landlord had potentially increased the burden on the guarantor (in particular, the alterations significantly increased the tenant’s repairing obligations). The guarantor had not consented to this and was therefore released from liability.
Whilst there is no new law here, the case is a useful reminder for landlords to ensure that they make guarantors a party to all licences, variations and supplemental lease documents.
Break rights have proved a fertile source of litigation over the last few years. More often than not, tenants have found themselves on the wrong end of the decisions. However, a Court of Appeal decision yesterday has bucked that trend.
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One of the requirements for tenants to contract out of the security of tenure regime contained in the Landlord and Tenant Act 1954 is that they make a simple or statutory declaration before entering into the lease.
Landlords should reconsider summary judgment if a Part 26A restructuring plan is pending.
A landlord’s claim for summary judgment to recover rent and service charge arrears accrued since the start of the pandemic against a non-essential retailer succeeded. Like London buses, a second such case has followed hot on its heels.
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