Court of Appeal insolvency judgment - Doleman v Shaw (2009) 22nd April - effect of disclaiming a lease

23 APR 2009

The Times Newspaper has reported the decision of the Court of Appeal in Doleman v Shaw [2009] BPIR 945. The report notes:

"When a liquidator disclaimed a lease, that did not determine any liability under the lease of the original lessee or of the guarantor in relation to leases or assignments of the leases executed after the Landlord and Tenant (Covenants) Act 1995 had come into force on January 1, 1996, although the liability of the insolvent assignee company had ceased after the disclaimer.
The Court of Appeal (Lord Justice Mummery, Lord Justice Stanley Burnton and Lord Justice Elias) so held on April 1, 2009, in dismissing the appeal of the defendant, Gabriella Elizabeth Anne Shaw, from Judge Barratt, QC, who held in Chichester County Court on August 20, 2008, that the defendant, the lessee of the lease dated May 5, 2004, had not been released from her obligation under the original lease and under a document called “the authorised guarantee agreement” she had executed on August 9, 2005, in favour of the claimant, Hazel Sarion Doleman, the lessor, when the defendant assigned the lease to a company which had subsequently been liquidated and the liquidator had disclaimed the lease.
LORD JUSTICE MUMMERY said that a careful reading of the facts and detailed reasoning in Hindcastle Ltd v Barbara Attenborough Ltd [1996] BPIR 595 (The Times February 23, 1996; [1997] AC 70) demonstrated that the meaning and effect of the guarantee obligation, of which the defined liability period was part, fell to be determined in the context of section 178(4) of the Insolvency Act 1986.That provision meant that the insolvent company was not bound so far as its own obligations were concerned, but the third party obligations were still binding."
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