Yadda Yadda Adda (Again)

The case involving Adda Hotels really is the case that keeps on giving. The thrust of the litigation concerns whether a guarantee of an assignee by the same guarantor of the assignor is valid. To date the case has been fast-tracked through the Court of Appeal. Morgan J in the High Court has now determined further issues arising from that litigation. The decision highlights the inherent problems in giving effect to the Landlord and Tenant (Covenants) Act (the Act).

The law in practice

From a commercial perspective, it would seem straightforward - a tenant wants to assign to an inter-group company and its landlord is happy for the assignee to become the tenant so long as the same parent guarantees the assignee (a repeat guarantee). Every party is keen for this to happen and it makes perfect commercial sense.