Liability of original lessee

Citation

(1999), "Liability of original lessee", Property Management, Vol. 17 No. 2. https://doi.org/10.1108/pm.1999.11317bab.006

Liability of original lessee

Liability of original lessee

Beegas Nominees Ltd v. BHP Petroleum Ltd; Sevington Properties Ltd v. Adams [1998] 31 EG 96

Another case concerning the continuing liability of the original lessee under the arrangements prior to those contained in the Landlord and Tenant (Covenants) Act 1995 relating to ‘‘new’’ leases.

In this case, to put the facts as simply as possible, premises were let to BHP in 1981 for a term of 25 years at the initial rent of £210,000 p.a. In 1985 the lease was assigned to Sevington, Sevington’s parent company Land Securities plc giving the then landlord a direct covenant for the rent. Later in the same year the lease was assigned to Clive Lewis and Partners (later renamed SSPI) and in 1991 SSPI agreed a ‘‘stepped’’ rent review involving annual increases in rent rising from £355,000 to £395,000. In 1995 Beegas acquired the reversion. In February 1996 SSPI went into liquidation. The Court of Appeal held that the arrangements for the ‘‘stepped’’ rent review provisions went outside the terms of the original rent review provisions so that the original lessees were not liable for the increases accounted for by the ‘‘stepped’’ rent review arrangements, but that otherwise both BHP and Sevington remained liable on their original covenants.

As regards the liability of sureties where for future proceedings had been compromised without prejudice to the right of the landlords to proceed further against the sureties, see Ivory Gate Ltd v. Spetale [1998] 27 EG 139.

The law is stated as it is understood to be up to 1 January 1999.