A rare High Court decision on an unopposed lease renewal under the Landlord and Tenant Act 1954 has underlined the importance of robust and thorough expert evidence – and the dangers of getting this wrong.

Landlords typically have a number of obligations to fulfil, such as maintaining, repairing and providing insurance for the property the tenants inhabit. If the landlord is a company at risk of insolvency, however, or an individual nearing bankruptcy, then it is not safe for leaseholders to assume that these obligations will be met or that the freehold interest will necessarily pass to them. Leaseholders need to be aware of what they must do in such a situation in order to acquire the freehold interest from the landlord.

Due to the introduction of new tax legislation on 6th April 2016, distributions made to shareholders of companies undergoing Members’ Voluntary Liquidation (MVL) are now treated as income (rather than capital) and are taxed accordingly.

Recent developments in landlord and tenant law concerning the position of the outgoing tenant’s guarantor on the assignment of the lease can only be described as ‘bonkers’. A few years ago, the Good Harvest and House of Fraser cases confirmed that a parent company could not guarantee both of its subsidiaries on an intra-group assignment. Last month, in the EMI case, the High Court has confirmed that the assignment of a lease to the tenant’s guarantor is similarly void.

Happy anniversary

From 6 April 2016 an application for an individual resident in England and Wales to go bankrupt will be an online procedure (in Northern Ireland, the changes will apply from November 2016). This change was brought about by the Enterprise and Regulatory Reform Act 2013.

A debtor will complete an online application to be reviewed by a newly created “Adjudicator”, where previously an application was made in person to the Court. As a result of the changes the court will only be involved in a minority of cases involving an appeal or a post-order application, thus freeing up court time.

Summary

Editor’s Note: Our good London colleague Ed Marlow recently published this as a Bryan Cave client advisory.

The case of K/S Victoria Street v House of Fraser (Stores Management) Ltd in 2011 clarified several important points under the Landlord and Tenant (Covenants) Act 1995 relating to the release of covenants and the responsibilities of tenant and guarantor on assignment of a lease.

In giving the judgement for K/S Victoria Street Lord Neuberger commented obiter that the anti-avoidance provisions of the 1995 Act may prevent an assignment from a tenant to its guarantor, even if both parties wished it.

Key point

• Purely voluntary redress payments are not caught by a paragraph 99 charge

The facts

The BHS CVA is now in effect following a successful ‘yes’ vote on 23 March 2016 when 95% of creditors voted in favour of the proposals.