Court of Appeal decision on effect of disclaimer on AGA
On April 1, 2009, the Court of Appeal gave judgment in Shaw v Doleman [2009] EWCA Civ 283, in which Timothy Fancourt QC and Edward Peters represented the respondent. Dismissing the appeal, the Court of Appeal held that a former tenant was not released from liability under an AGA by a disclaimer of the lease. The AGA expressed the period of the guarantee as being limited to “the period during which the Assignee is bound by the tenant covenants of the Lease”, and it gave the landlord a put option to require the former tenant to take a new lease in the event of termination of the lease by disclaimer. Although the assignee ceased to be bound by the tenant covenants of the lease upon disclaimer, for the purposes of liability under the AGA the assignee was deemed to remain bound by them (applying Hindcastle v Barbara Attenborough Associates Ltd (1996)), so that the former tenant’s liability under the AGA continued. The existence of the put option was not inconsistent with such continuing liability.
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