Over Taylor Biggs

The Lease of the shop in Petersfield, Hampshire in question was granted in 2004 for 10 years.  One year after the grant, the Lease was assigned to a Company and the original Tenant agreed to guarantee the obligations whilst the Company was Tenant under an AGAt.

The Company went into liquidation.  The Liquidator disclaimed the Lease on 31 October 2007.  The Insolvency Act 1986 clarified that a disclaimer would only discharge the liability of the Company under the Lease and would not affect any obligations owed by other parties.

The Tenant here argued that the disclaimer had released her from liability by reference to the actual wording of the AGA itself.  She agreed that this gave the Landlord a contractual remedy if the current Tenant defaulted and there was no further liability once the Company had been released as a result of the disclaimer.

The Court of Appeal pointed out that if the parties had wanted to make the Guarantee obligations under the AGA terminate on disclaimer, the parties were free to negotiate that and to include it within the AGA.

The right to require the original Tenant to accept a new Lease was in addition to the right to call on the original AGA liability.  The Landlord and Tenant (Covenants) Act 1995 did not intend that the right to require a new Lease to be taken by the AGA Guarantor was to exclude the right to enforce the AGA obligations.  There was nothing in the content of the AGA to suggest this was the intention of the parties.

Accordingly, unless there is an express release of liability, the Guarantee will be treated as continuing notwithstanding disclaimer.

Gabriella Shaw v Hazel Doleman [2009] Court of Appeal