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
BLP real estate disputes partner Roger Cohen summarises a recent court decision about whether or not a landlord had accepted a lease surrender by the way it handled “jingle mail”, a letter returning the keys, from the administrators of the insolvent tenant. Jingle mail is a tactic used by administrators. The landlord argued successfully that ,on this occasion, the tactic failed.
From 6 April 2016, debtors in England and Wales who wish to enter bankruptcy will need to apply online and will no longer be able to petition the Court. The final form statutory instruments to introduce the necessary changes were published on 22 February 2016.
Rise in FRC investigations
Whilst there is evidence that, especially in the retail market, the number of store closures and resulting empty units is at its lowest level since a peak in 2012, high profile announcements such as that of BHS mean that they are still a reality. The Court has, with this decision, provided a timely reminder of the principles of surrender by operation of law of which landlords, tenants and guarantors should be mindful.
Summary
Having successfully obtained judgment for your client in a case where your firm of solicitors is acting under a conditional fee agreement (CFA), it is only natural that thoughts will turn to the firm’s own impending financial reward. But the terms of a CFA, negotiated at the outset of the case, can prove to be a barrier to their underlying commercial purpose: payment by result.
A recent Scottish Inner House decision provides an overview of the approach to be taken in Scotland to interpreting performance bonds. The decision notes that the degree of compliance required when making a call may be strict, or not so strict, depending on the construction of the bond. The court’s decision also refers to the commercial purpose of the bond being key and may suggest that a more lenient approach to performance bonds is to apply in Scotland.