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Disclaimer
Guarantor obligation to take new lease
The lease contained a clause giving the landlord the right, should the lease be disclaimed, to require the guarantor to take a new lease of the demised premises. The guarantor tried to get out of the obligation by arguing that the notice requiring the guarantor to take the new lease fell foul of s2 of the Law of Property (Miscellaneous) Provisions Act 1989. The judge rejected this argument applying Spiro v Glencrown Properties Ltd (1991). Section 2 applies to the contract (in the lease) containing the option but it does not apply to the exercise of that option. The fact that this was a put option (i.e. exercised by the grantor/lessor) and not a call option (i.e. where the option is exercised by the grantee/purchaser as in Spiro) was irrelevant.
The guarantor also tried to get out of taking the new lease by arguing that the landlord had forfeited or taken a surrender by granting a tenancy to another company. The judge held on the facts that there had been no intention to grant a new tenancy. This argument therefore also failed.
Active Estates Ltd v Parness [2002] EWHC 893; [2002] 36 EG 147 (Ch D, Neuberger J).
Articles:
Guaranteed results by Sandi Murdoch Comment on Active Estates Ltd. (Estates Gazette, 5 October 2002, p168).
The options are foreclosed by Sandi Murdoch Further comment on Active Estates Ltd (Estates Gazette, 12 October 2002, p 175)
"Beyond the shadow of a doubt" by Nigel McClea and John Martin, Pinsent - Discusses the need to reconsider the drafting of standard lease guarantee provisions in light of Active Estates. In particular, the article suggests that such clauses should deal with forfeiture separately from disclaimer with more detailed terms (Estates Gazette, 11 January 2003, p98).
Life after disclaimer by Simon Woodhead, Eversheds A discussion of the problems that arise on disclaimer (following liquidation of the tenant) as a result of the awkwardness of the legislation. (Estates Gazette 22 May 2004, p146).
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