Avonridge Property Co Ltd v Mashru
A landlord may limit its liability under the covenants in a lease so that it is liable only while it owns the reversion.
Facts
Avonridge held a head lease of a property, and granted underleases of shops to tenants, who paid large premiums. The underleases contained covenants by Avonridge to pay the rent under the head lease, but said that Avonridge's obligations would be binding only while it remained the owner of the reversion. Avonridge then assigned its head lease to a company that failed to pay the head rent, and the head landlord forfeited the head lease, so the tenants lost their underleases. The tenants sued Avonridge.
Legal principle
The House of Lords held that Avonridge was not liable. Lord Nicholls said that section 25 of the Landlord and Tenant (Covenants) Act 1995, which makes void any agreement that would frustrate the operation of the Act, did not prevent a landlord from limiting its liability in the lease itself. The Act was intended to release landlords and tenants from liability after assignment, and it did not prevent the parties from agreeing that the landlord's liability would be limited in this way from the outset. The tenants had agreed to the clause.
Related cases on leasehold covenants and forfeiture
- Akici v LR Butlin Ltd [2005] EWCA Civ 1296, [2006] 1 WLR 201
- Billson v Residential Apartments Ltd [1992] 1 AC 494
- City of London Corporation v Fell [1994] 1 AC 458
- Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1
- Duke of Westminster v Guild [1985] QB 688
- Expert Clothing Service & Sales Ltd v Hillgate House Ltd [1986] Ch 340
- Glass v Kencakes Ltd [1966] 1 QB 611
- Hussein v Mehlman [1992] 2 EGLR 87
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