Lease of commercial premises — Claimant guaranteeing tenant’s obligations — Defendant undertaking to indemnify claimant — Assignment of lease without landlord’s consent — Whether landlord’s acceptance of new occupant releasing claimant from guarantee — Appeal dismissed
A subsidiary of the claimant company held a lease of commercial premises. The claimant was guarantor of the subsidiary’s obligations under that lease. The guarantee contained a proviso that the claimant’s liability would be unaffected by “any neglect or forbearance of the Landlord” in seeking to enforce the performance of the covenants in the lease. The claimant entered into a share sale agreement with the defendant and an associated company, UH, whereby UH would purchase all the issued shares of the claimant’s subsidiary. UH covenanted that it would use reasonable endeavours to procure the release of the claimant’s guarantee, and would, in the meantime, indemnify the claimant against any liability arising under it.
The claimant’s subsidiary subsequently ceased trading, and a related company went into occupation of the premises and took over the payment of the rent. This amounted to a breach of the lease covenant against assigning without the landlord’s prior written consent. UH later wrote to the landlord, seeking its consent and asking for the claimant to be released from its guarantee. Meanwhile, the landlord continued to issue rent demands and accept rent payments.
