The guarantor of an original tenant under the lease remains liable after the disclaimer the lease on insolvency. The disclaimer operates to determine the lease altogether with the result that the landlord’s reversion is accelerated. ‘In order to determine these rights and obligations it is necessary, in the nature of things, that the landlord’s obligations and rights, which are the reverse side of the tenant’s rights and obligations, must also be determined. If the tenant’s liabilities to the landlord are to be extinguished, of necessity so also must be the landlord’s rights against the tenant. The one cannot be achieved without the other. Disclaimer also operates to determine the tenant’s interests in the property, namely the lease. Determination of a leasehold estate has the effect of accelerating the reversion expectant upon the determination of that estate. The leasehold estate ceases to exist.’ Prospective overruling was not yet a principle known in English law.
Lord Nicholls of Birkenhead
Gazette 27-Mar-1996, Times 23-Feb-1996, [1997] AC 70, [1996] 1 All ER 737, [1996] 2 WLR 262, [1996] BPIR 595, [1996] 1 EGLR 94, [1996] 2 BCLC 234, [1996] NPC 28, [1996] UKHL 19, [1996] BCC 636, [1996] 15 EG 103, [1996] EG 32
Bailii
England and Wales
Citing:
Appeal from – Hindcastle Ltd v Barbara Attenborough Associates Ltd and Others CA 6-Jul-1994
A disclaimer of a lease on insolvency of the tenant leaves the original Tenant and his Security or guarantor liable as well as any intermediate assignees. ‘In order to determine these rights and obligations it is necessary, in the nature of things, . .
Overruled – Stacey v Hill CA 1901
The surety for performance of the tenant’s covenants under the lease which was ‘to remain in force concurrently with the lease for a period of five years’ was discharged by the disclaimer of the lease by the insolvent tenant’s liquidator. The lease . .
Cited by:
Cited – In Re Park Air Services Plc; Christopher Moran Holdings Ltd v Bairstow and Another HL 4-Feb-1999
The tenant company went into liquidation, the receiver disclaimed the lease, and the landlord claimed compensation under the Act. The question concerned how the compensation was to be calculated.
Held: Where a solvent tenant under an onerous . .
Cited – Park Air Services Plc; Christopher Moran Holdings Limited v Bairstow and Ruddock CA 1-May-1997
If a lease is determined or treated as determined in a winding up or in a bankruptcy, the landlord is entitled to prove in principle for all the rent and other payments which he would have been entitled to recover from the tenant for the residue of . .
Cited – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .
Cited – Shaw v Doleman CA 1-Apr-2009
The landlord had taken a guarantee of the lease from the tenant when granting a licence to assign to the new tenant. That new tenant had become insolvent and the liquidator had disclaimed the lease. The court considered the position under Hindcastle . .
Cited – Basch v Stekel and Another CA 25-Jul-2000
The deceased had given a guarantee of the tenant’s covenant given by his company under a lease. The court was asked whether the obligations under the guarantee survived his death after he company was wound up.
Held: Chadwick LJ explained the . .
Cited – Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd SC 3-Jul-2013
Virgin Atlantic Airways Ltd sought to recover damages exceeding 49,000,000 pounds for the infringement of a European Patent which did not exist in the form said to have been infringed. The Technical Board of Appeal of the European Patent Office had . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant, Insolvency
Leading Case
Updated: 01 November 2021; Ref: scu.81389