UK: Tindall Cobham 1 Limited & Ors v Adda Hotels & Ors [2014] EWCA Civ 1215

Last Updated: 15 September 2014
Article by Emma Humphreys


A lease provision requiring the tenants' guarantor to guarantee the assignee in the event of an intra-group transfer (and obliging the landlord to consent to such an assignment) fell foul of the anti-avoidance provision at section 25 of the Landlord and Tenant (Covenants) Act 1995.


This case concerned the assignment of a number of leases, which were completed without the landlord's consent. At first instance, the Defendants (comprising the tenants, their assignees and the tenants' guarantor) argued that there was no requirement to seek landlord's consent under the terms of the leases. This interpretation of the lease provisions was rejected at first instance and was not appealed.

The focus of the appeal was the relevant covenant within the leases relating to intra-group transfers of the leases. This stated that such a transfer required the landlord's prior consent, but it also contained a proviso that consent would be given where two conditions were satisfied. The first condition required the tenants to give notice of the transfer within ten working days of completion. The second condition was as follows:

"...the Tenant shall procure that the Guarantor and any other guarantor of the Tenant shall covenant by deed with the Landlord in the terms set out in the Sixth Schedule..."

The Defendants submitted that the guarantee requirement was void because it breached the anti-avoidance provisions in section 25 of the Landlord and Tenant (Covenants) Act 1995 - as interpreted in the case of K/S Victoria Street v House of Fraser (Stores Management) Limited (2011). The tenants therefore considered that they were only required to give notice of the intra-group assignment in accordance with the first condition. The landlords argued against this, pointing out that the result would be to allow the leases to be assigned (even on the day they were granted) to essentially worthless shell companies and the guarantor – a company of substance – to be released from its liability.

First instance decision

The judge accepted the landlord's argument that the clause should be construed so as to enable the landlord to require the outgoing tenant to provide a new (and suitable) guarantor for the incoming tenant, or else to create a free-standing entitlement (without the offending second condition) for the landlord to refuse consent to an intra-group assignment.

Decision on appeal

The Court of Appeal recognised the importance of seeking to construe a document so as to make it legally effective and to produce the most commercially workable version of the contract. However, it also emphasised that such an approach should not be used as a method to avoid the consequences of legislation being applied to a contract.

In the Court's view, the second condition required any existing guarantor of the tenants' obligations under the lease to provide a new guarantee in respect of the assignee. The court rejected the argument that the provision required the assigning tenants also to procure a new guarantor.

Turning to the effect of section 25 on the lease restriction relating to intra-group assignments, the Court noted that the section invalidates any contractual provision which frustrates the operation of the 1995 Act and that this was the effect of the second condition in the lease here. The court was not persuaded by the arguments from either party as to the operation of section 25 in these circumstances. Patten LJ stated that section 25 ought to be interpreted generously to ensure that the operation of the Act is not frustrated, either directly or indirectly. He accepted that legislation which operates to avoid the whole or a part of a contract might result in a "capricious and uncommercial" legal position for the parties, possibly even changing the parties' legal relationship from that which they had intended and negotiated. However, the Court emphasised that there was no reason to apply the legislation in that way when other alternatives are available, particularly since the wording of section 25 indicates that no more of the relevant agreement should be invalidated than is necessary. Patten LJ felt there should be "a balanced approach to invalidation which, whilst neutralising the offending parts of the contract, does not leave it emasculated and unworkable".

The Court felt that the "obvious solution" so as to respect the structure of the contract and give effect to section 25 was to regard the whole of the proviso within the covenant as being avoided by the legislation. The result of this was to leave the covenant as requiring the landlords' consent for an intra-group assignment of the Leases, without applying either of the specified conditions. However, this is not the end of the story since - in light of the deeming provision at section 19 of the Landlord and Tenant Act 1927 - the adjusted covenant is subject to an implied proviso that the landlords' consent is not to be unreasonably withheld.


In one sense, this is a straightforward judgment: it gives a common sense interpretation of a contractual clause and directly applies a statutory anti-avoidance provision. However, it is interesting to see the Courts' continuing reluctance - particularly at appellate level - to imply terms into leases.

The case is a useful reminder that the courts will tend to interpret the anti-avoidance provisions of the 1995 Act generously to ensure that the Act is not frustrated and it may come as a shock to some landlords that parts of their leases - designed to protect their interests - may be disregarded by the Courts.

Going forward, landlords will no doubt be wary of the Court of Appeal's warning that its application of these anti-avoidance provisions may sometimes have "capricious and uncommercial" implications, potentially altering the terms of the parties' legal relationship from that which they intended and negotiated.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Emma Humphreys
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.