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Consultation Paper on the General Law of the Landlord and Tenant

Consultation Paper on the General Law of the Landlord and Tenant

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There is no equivalent provisi<strong>on</strong> governing an assignment <strong>of</strong> <strong>the</strong>l<strong>and</strong>lord’s interest (reversi<strong>on</strong>) by <strong>the</strong> original l<strong>and</strong>lord. Yet privity <strong>of</strong>c<strong>on</strong>tract will also exist between <strong>the</strong> l<strong>and</strong>lord <strong>and</strong> any tenants to whomthat l<strong>and</strong>lord granted tenancies. Following an assignment by thatl<strong>and</strong>lord c<strong>on</strong>tinuing liability to such tenants <strong>on</strong> <strong>the</strong> l<strong>and</strong>lord’scovenants may exist. 59 In many cases this will not pose a majorproblem because <strong>of</strong> <strong>the</strong> few obligati<strong>on</strong>s entered into by <strong>the</strong> l<strong>and</strong>lord.However, substantial obligati<strong>on</strong>s <strong>on</strong> <strong>the</strong> part <strong>of</strong> <strong>the</strong> l<strong>and</strong>lord are notuncomm<strong>on</strong> in commercial leases, such as those relating to multi-letproperties like shopping centres. 60 Not infrequently <strong>the</strong> originall<strong>and</strong>lord’s interest in such cases will be disposed <strong>of</strong>, for example, byway <strong>of</strong> a c<strong>on</strong>current lease granted to investors. 61 Under <strong>the</strong> currentlaw, it would appear that <strong>the</strong> original l<strong>and</strong>lord remains exposed toc<strong>on</strong>tinuing liability <strong>and</strong> should, <strong>the</strong>refore, c<strong>on</strong>sider obtaining anindemnity from <strong>the</strong> assignees. In practice this is rarely, if ever, d<strong>on</strong>e,probably because tenants are not aware <strong>of</strong> <strong>the</strong> legal positi<strong>on</strong> <strong>and</strong>assume that <strong>the</strong>y have a claim against <strong>the</strong> new l<strong>and</strong>lord <strong>on</strong>ly. Onbalance, it would seem desirable to assimilate <strong>the</strong> positi<strong>on</strong> <strong>of</strong> <strong>the</strong>original l<strong>and</strong>lord <strong>and</strong> original tenant. 62 The Commissi<strong>on</strong> provisi<strong>on</strong>allyrecommends that a provisi<strong>on</strong> equivalent to secti<strong>on</strong> 16 <strong>of</strong> Deasy’s Act,which protects assignments by <strong>the</strong> original tenant, should beintroduced to protect original l<strong>and</strong>lords.E Part Assignments3.18 As menti<strong>on</strong>ed earlier, 63 it is not uncomm<strong>on</strong> for ei<strong>the</strong>r <strong>the</strong>l<strong>and</strong>lord or <strong>the</strong> tenant to engage in a partial assignment <strong>on</strong>ly, usually5960616263Stuart v Joy [1904] 1 KB 362. Liability ends when <strong>the</strong> original l<strong>and</strong>lord’sinterest in <strong>the</strong> reversi<strong>on</strong> ends: see Bath v Bowles (1905) 93 LT 801.Eg those arising under typical service charge provisi<strong>on</strong>s, whereby directliabilities are imposed <strong>on</strong> <strong>the</strong> comm<strong>on</strong> l<strong>and</strong>lord, notwithst<strong>and</strong>ingrecoupment <strong>of</strong> <strong>the</strong> costs <strong>and</strong> expenses by way <strong>of</strong> <strong>the</strong> annual charges levied<strong>on</strong> tenants: see Chapter 9 below.See Wylie op cit paragraph 4.09. See also paragraph 3.19 below.The English legislati<strong>on</strong> reversing privity <strong>of</strong> c<strong>on</strong>tract (see paragraph 3.12above) does so: under secti<strong>on</strong>s 6-8 <strong>of</strong> <strong>the</strong> <strong>L<strong>and</strong>lord</strong> <strong>and</strong> <strong>Tenant</strong>(Covenants) Act 1995. The original l<strong>and</strong>lord may apply to <strong>the</strong> court to bereleased from obligati<strong>on</strong>s <strong>on</strong> assignment <strong>of</strong> <strong>the</strong> reversi<strong>on</strong>.Paragraph 3.02 above.65

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