ASSIGNMENT AND SUBLEASES

Question 0

What is an assgiment?

Answer 0

An assignment is a transfer of the residue of the term to an assignee.

Question 1

What are the rights involved in an assignment?

Answer 1

1. Between the Landlord and the Tenant there is privity of contract and privity of estate
2. Between the Tenant and the assignee, there is privity of contract
3. The assignee is not a party to the original lease, so there is no privity of contract between A and LL. There is however, privity of estate because the A holds an estate in the LL’s land.

Question 2

What obligations are enforceable against the Assignee?

Answer 2

1. Contractual obligations cannot be enforced against the Assignee, however, any breach of the lease, the Tenant is held responsible. The Assignee is liable to indemnify the original Tenant for any defaults: Moule v Garrett.
2. Any covenants that “touch and concern” the land can be enforced against the Assignee: Spencer’s case
3. Collateral covenants cannot be enforced: In Re Albermarle St

Question 3

What happened in In Re Albermarle St?

Answer 3

In original lease, the tenant was allowed to display advertising signs on some other land of the LL. It was effectively free advertising.
The assignee also wants to do this.

Courts held: it was not a covenant touching and concerning land, so it was a collateral covenant. The Assignee could not enforce this obligation.

Question 4

Can the LL assign the Reversion?

Answer 4

Yes.
This is essentially where the LL sells the land which is the subject of the lease.

s117 PLA: Benefits of Lessee that run with the reversion
s118 PLA: obligations of lessor’s covenant that run with the reversion.
These apply to the new Landlord.

Question 5

What is a sublease?

Answer 5

This is where the tenant grants a smaller leasehold less than that of the balance of the term of the lease to a subtenant

Question 6

What is the position of parties in a sublease?

Answer 6

1. There is privity of contract and estate between the LL and T1.
2. There is privity of contract and estate between T1 and T2.
3. There is no privity of anything between LL and T2.
4. If T2 breaches the sublease, T1 is automatically in breach of the head lease. It can be liable to termination.

Question 7

What are the covenants relating to Subleases and Assignnments?

Answer 7

s121 PLA: The tenant must:

1. Seek the Lessor’s consent; and
2. The consent cannot be unreasonably refused.

Question 8

What are the tests to see whether consent has been unreasonably refused?

Answer 8

1. What is the LL’s property interest- Pimms v Tallow Chandlers
2. Personality of assignee by reference to: Houlder v Gibbs
   Financial status
   Relevant business experience
3. Propose use of new premises- Daventry Holdings v Bacalakis Hotels
4. Objective test: whether a Reasoanble person would decide to allow assignment? - Daventry holdings
5. Subject matter of the lease

Question 9

Can the Tenant still assign or sublet where there has been no consent?

Answer 9

Yes, however the whole lease is liable to forfeiture.

In such a case, the LL must give a notice under s124 PLA.