Previous Section Back to Table of Contents Lords Hansard Home Page


The Lord Chancellor: Strictly speaking, subsection (4A) which is introduced by Amendment No. 32 is in the nature of a definition of an authorised guarantee agreement. It is saying that an agreement will be an authorised guarantee agreement if it has inter alia the character of paragraph (c); namely, that it requires the tenant,

21 Jun 1995 : Column 375


    "in the event of the tenancy assigned by him being disclaimed, to enter into a new tenancy of the premises comprised in the assignment",
provided that the conditions in sub-paragraph (i) and (ii) are satisfied. It will be for the parties, assuming that it is an agreement of this character, to provide for the terms of that agreement. So long as the agreement answers the description in this paragraph, it will be an authorised guarantee agreement under the clause.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 32:


Page 6, leave out from ("it") in line 45 to end of line 5 on page 7 and insert ("purports—
(a) to impose on the tenant any requirement to guarantee in any way the performance of the relevant covenant by any person other than the assignee; or
(b) to impose on the tenant any liability, restriction or other requirement (of whatever nature) in relation to any time after the assignee is released from that covenant by virtue of this Act.
(4A) Subject to subsection (4), an authorised guarantee agreement may—
(a) impose on the tenant any liability as sole or principal debtor in respect of any obligation owed by the assignee under the relevant covenant;
(b) impose on the tenant liabilities as guarantor in respect of the assignee's performance of that covenant which are no more onerous than those to which he would be subject in the event of his being liable as sole or principal debtor in respect of any obligation owed by the assignee under that covenant;
(c) require the tenant, in the event of the tenancy assigned by him being disclaimed, to enter into a new tenancy of the premises comprised in the assignment—
(i) whose term expires not later than the term of the tenancy assigned by the tenant, and
(ii) whose tenant covenants are no more onerous than those of that tenancy;
(d) make provision incidental or supplementary to any provision made by virtue of any of paragraphs (a) to (c).").

On Question, amendment agreed to.

The Lord Chancellor moved Amendments Nos. 34 to 37:


Page 6, line 32, leave out ("(but not its performance by any later tenant)").
Page 6, line 34, at end insert ("; and
(c) its provisions conform with subsections (4) and (4A).").
Page 6, line 36, at beginning insert ("by virtue of a covenant against assignment (whether absolute or qualified)").
Page 7, line 5, at end insert:
("(4B) Where a person ("the former tenant") is to any extent released from a covenant of a tenancy by virtue of section (Assignments in breach of covenant or by operation of law) (2) as from an assignment and the assignor under the assignment enters into an authorised guarantee agreement with the landlord with respect to the performance of that covenant by the assignee under the assignment—
(a) the landlord may require the former tenant to enter into an agreement under which he guarantees, on terms corresponding to those of that authorised guarantee agreement, the performance of that covenant by the assignee under the assignment; and
(b) if its provisions conform with subsections (4) and (4A), any such agreement shall be an authorised guarantee agreement for the purposes of this section; and
(c) in the application of this section in relation to any such agreement—
(i) subsections (2) (b) and (c) and (3) shall be omitted, and

21 Jun 1995 : Column 376


(ii) any reference to the tenant or to the assignee shall be read as a reference to the former tenant or to the assignee under the assignment.
(4C) For the purposes of subsection (1) it is immaterial that—
(a) the tenant has already made an authorised guarantee agreement in respect of a previous assignment by him of the tenancy referred to in that subsection, it having been subsequently revested in him following a disclaimer on behalf of the previous assignee, or
(b) the tenancy referred to in that subsection is a new tenancy entered into by the tenant in pursuance of an authorised guarantee agreement;
and in any such case subsections (2) to (4A) shall apply accordingly.").

The noble and learned Lord said: I have spoken to Amendments Nos. 34 to 36 and Amendment No. 37. With the leave of the Committee, I should like to move these en bloc. I beg to move.

On Question, amendments agreed to.

Clause 12, as amended, agreed to.

Clause 13 [Restriction on liability of former tenant for rent or service charge]:

The Lord Chancellor moved Amendment No. 38:


Page 7, line 14, after first ("a") insert ("tenant").

The noble and learned Lord said: I spoke to this amendment with Amendment No. 33. I beg to move.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 39:


Page 7, line 14, leave out ("to pay rent or a service charge") and insert ("under which any fixed charge is payable").

The noble and learned Lord said: In moving this amendment I should like to speak to Amendments Nos. 41, 43 to 46, 50, 52, 54, 55 and 57.

Clause 13 applies to both new and existing leases. It makes provision aimed at ensuring that former tenants who are still under liability in relation to a lease (either because of privity of contract liability, or an excluded assignment, or an authorised guarantee agreement) should be given notice within a fixed period of any arrears which become due and which they may find themselves having to pay. They will thus be able to make provision against the liability, rather than being presented with a bill which might cover a very long period. As drafted, the Bill fixes the period at nine months, but the Committee will have noted that one of the package of amendments in the name of my noble friend Lord Courtown will change that to six months.

The essence of the provision is that the landlord should serve notice of sums which arise under the lease as fixed or liquidated sums—it being too difficult and onerous to attempt to do this for such matters as dilapidations which are of their nature difficult to quantify as they arise. The existing wording of the clause limits this to rent and service charges; but there are other such liquidated sums whose amount will be fixed as they fall due; for example, specified payments for each fixed period the tenant is in breach of a particular covenant. It is appropriate that the tenant should have notice of such sums as those as well as of rent and service charges, and the approach of the amendments, of which Amendment No. 39 is the first, is to provide that the landlord must give notice of sums payable as "fixed charges". Amendment No. 39 paves the way for no fewer than 10 further amendments carrying

21 Jun 1995 : Column 377

through the approach, and with the Committee's leave, it may be helpful to speak to those amendments now. Amendments Nos. 41, 44, 45, 50, 52, 54, 55 and 57 carry through that approach.

Amendment No. 54 provides the new definition of "fixed charge", namely rent, service charges corresponding to the well-settled definition in the Landlord and Tenant Act 1985, and sums payable as liquidated amounts in the event of breach of a covenant. Amendment No. 57 accordingly deletes the existing definitions of "rent and service charge"; and the other amendments remove the words "rent and service charge" and substitute "fixed charge" as appropriate.

Amendment No. 46 deals with interest on a fixed charge of which the former tenant is given notice under Clause 13. It is considered appropriate that the former tenant should be given some warning of the fact that interest is accruing on the sum due, so that he can take that into account in making provision to meet his potential liability. It would be onerous for the landlord to expect him to calculate the interest accrued and keep updating it for the former tenant's benefit, and so this amendment does not require the landlord to calculate interest but only to warn the former tenant in the notice of the fact that interest is accruing, and the terms on which it is accruing. If he does not include that simple warning, he will not be able to recover the interest should he sue the former tenant in due course. I submit that that is a satisfactory way of dealing with that aspect of the matter. I beg to move.

Lord Meston: I wish only to make a short point on the expression "fixed charge". Amendment No. 54 includes, not surprisingly, rent. But anyone who has the doubtful pleasure of reading a modern lease will realise that the expression "rent" is often used to describe a large number of different types of payment, including things such as insurance. I wonder whether, in drafting the amendment, that was considered and whether an indication can be given as to what sort of construction it is expected should be put upon the word "rent" in the amendment.


Next Section Back to Table of Contents Lords Hansard Home Page