On 24 February 2010, the Court of Appeal handed down judgment in the case of The Financial Services Authority (1), Elisabeth Connell (2), Patricia Senra (3) -v- Amro International SA (1) Creon Management SA (2) and Goodman Jones LLP (Interested Party) [2010] EWCA Civ 123.

AGAs LOSE THEIR HEAT A recent high court decision has sent alarm bells ringing for landlords. The court held that a guarantee of an assignee's covenants given by the former tenant's guarantor, whether it is in an AGA or in a separate deed of guarantee, is void and unenforceable. This is because the Landlord and Tenant (Covenants) Act 1995 provides for tenants and guarantors to be released when a lease is assigned. The only exception is that a tenant (but not a guarantor) can give an AGA. The decision that the former tenant's guarantor cannot give a new guarantee for an assignee will have a significant effect on group company assignments where usually the existing parent company guarantor will guarantee the new group company assignee. The judgment does not say whether a former tenant's guarantor can guarantee the tenant's (as opposed to the assignee's) covenants in an AGA (a so-called "sub-guarantee") which is what most leases provide, although it implies it cannot. Until this point is clarified or the judgment is successfully appealed, there are only two safe courses open to landlords if an assignee's financial strength is in doubt: insist the assignee provides a new guarantor or, if this is not possible in the case of a group company assignment, give consent only on the basis that the assignment is to the parent company.

When does an ambitious sales pitch become a fraud? Dipti Hunter and Michael Williams report on the difficulties in proving fraudulent misreprentation