Can A Lease Guarantee Survive A Lease Assignment?

The High Court has confirmed that an unlawful assignment by an original tenant (T1) (whose obligations had been guaranteed by a surety (G)) to a new tenant (T2) could be assigned back to T1 without the guarantee being nullified by the anti-avoidance provisions of the Landlord and Tenant (Covenants) Act 1995 (the 1995 Act). This judgement¹ given on 16 January 2015 turns, as is often the case, on quite a specific set of facts, but it does provide further useful guidance on what is permitted under the 1995 Act and what, by contrast, risks being declared unlawful, with the potential to devalue the landlord's interest.

The facts (two very similar cases were heard together) were as follows: T1 (whose obligations G had guaranteed) had, assigned the lease to T2 in breach of its covenants in the lease. The fact that the assignment was unlawful meant that T1 and G were not released from their obligations at the point at which the lease was assigned to T2. All parties wanted to