Swift (P. & A.) Investments v Combined English Stores Group Plc
| Jurisdiction | England & Wales |
| Judge | Lord Keith of Kinkel,Lord Roskill,Lord Templeman,Lord Ackner,Lord Oliver of Aylmerton |
| Judgment Date | 07 July 1988 |
| Judgment citation (vLex) | [1988] UKHL J0707-2 |
| Date | 07 July 1988 |
| Court | House of Lords |
[1988] UKHL J0707-2
Lord Keith of Kinkel
Lord Roskill
Lord Templeman
Lord Ackner
Lord Oliver of Aylmerton
House of Lords
My Lords,
I have had the opportunity of considering in draft the speeches to be delivered by my noble and learned friends Lord Templeman and Lord Oliver of Aylmerton. I agree with them and for the reasons they give would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Templeman and Lord Oliver of Aylmerton. I agree with them and would dismiss this appeal for the reasons they give as well as for those given by the Sir Nicolas Brown-Wilkinson V.-C. in Kumar v. Dunning [1987] 3 W.L.R. 1167.
My Lords,
The appellant, the surety, joined in a lease to guarantee the performance and observance of the covenants by the tenant contained in the lease. A covenant by a tenant which touches and concerns the land runs with the reversion; the benefit of such a covenant vests in the successors in title of the landlord; the successors in title of the landlord may sue upon the covenants although the benefit of the covenants may not have been expressly assigned. For this purpose a successor in title of the landlord is the person who, at the date of the breach of covenant, is entitled to the reversion expectant on the expiration or sooner determination of the term demised by the lease. In the present case the original landlord assigned the reversion to the respondent landlord; there was no express assignment of the benefit of the tenant's covenants or of the benefit of the surety's covenant. The tenant defaulted in payment of the rent reserved by the lease and thereby committed a breach of a covenant which touched and concerned the land. The respondent landlord, failing to recover the rent from the tenant, brings these present proceedings against the surety to recover the amount of the unpaid rent. The surety denies liability, pleading that the surety's covenant does not touch and concern the land and does not run with the reversion so as to be enforceable by the respondent landlord. The respondent landlord replies that a covenant by a surety, in whatever form or expression the surety covenant may take, is a covenant that the tenant's covenants shall be performed and observed. A covenant by a surety that a tenant's covenant which touches and concerns the land shall be performed and observed must itself be a covenant which touches and concerns the land; the benefit of that surety's covenant will run with the reversion, and the covenant is therefore enforceable without express assignment. I agree. A surety for a tenant is a quasi tenant who volunteers to be a substitute or twelfth man for the tenant's team and is subject to the same rules and regulations as the player he replaces. A covenant which runs with the reversion against the tenant runs with the reversion against the surety. For these reasons and for the reasons to be given by my noble and learned friend, Lord Oliver of Aylmerton, I would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Templeman and Lord Oliver of Aylmerton. I agree with them and for the reasons they give I too would dismiss this appeal.
My Lords,
This is an appeal from an Order made on the 29 January 1988 in an action in the Queen's Bench Division of the High Court whereby the plaintiff, the respondent firm, recovered judgment against the appellant in a sum of £4,250 together with interest and costs, that sum being the amount of the arrears of rent due to the respondent as the landlord of certain premises under a lease to which the appellant was a party not as tenant but solely as guarantor. The judge, His Honour Judge Oddie (sitting as a judge of the High Court), granted a certificate pursuant to section 12 of the Administration of Justice Act 1969 and on 24 March 1988 leave was granted by your Lordships to appeal direct to your Lordships' House. The appeal raises the much debated question whether the benefit of a covenant by a surety for the performance of the tenant's obligations under a lease is one which is capable of running with the reversion so as to be available without express assignment to the successor in title of the original landlord. The point had been decided in favour of the landlord by the Court of Appeal in Kumar v. Dunning [1987] 3 W.L.R. 1167 at the time of the hearing before Judge Oddie and his order was accordingly made without hearing full argument since he was, in any event, bound by that decision.
The relevant facts can be shortly stated. Two individuals, Paul and Annie Swift, were the lessees of premises at 58-60, Lime Street, Liverpool, for a term of 99 years from 1 December 1950. In 1959 they assigned their leasehold interest to a company, P. & A. Swift (Investments) Ltd. At that time they were carrying on business at the premises but in July 1967 they ceased to trade there and sold their business to a subsidiary company of the appellant. By an underlease dated 26 July 1967 P. & A. Swift (Investments) Ltd. demised the premises to a subsidiary of the appellant, P. & A. Swift Ltd., which company subsequently changed its name to Dubarry (Liverpool) Ltd. ("Dubarry"). The underlease was for a term of 35 years at a substantial rent and the undertenant's obligations were guaranteed by the appellant, which joined in the underlease as surety only. In July 1968 P. & A. Swift (Investments) Ltd. was wound-up voluntarily and by a conveyance dated 18 August 1969 the leasehold reversion expectant upon the underlease was assigned by the company and its liquidator to the respondent firm. That conveyance did not contain any specific assignment of the benefit of the surety's covenant entered into by the appellant in the underlease. P. & A. Swift (Investments) Ltd. has since been dissolved. Dubarry failed to pay the rent due under the underlease for the quarter commencing on 29 September 1984 and subsequent quarters and on 18 November 1986 went into creditors' voluntary winding-up. On 31 July 1987 the liquidator of Dubarry disclaimed all interest in the underlease. The appellant has not paid the outstanding rent although called upon to do so.
The underlease was a full repairing and insuring underlease containing standard covenants on the part of the tenant. The only clause which matters for present purposes is clause 5 which, so far as material, is in the following terms:
"5. THE SURETY in consideration of the demise hereinbefore contained having been made at its request HEREBY COVENANTS with the lessor that the tenant shall pay the rent hereby reserved on the days and in manner aforesaid and shall duly perform and observe all the covenants hereinbefore on the tenant's part contained and that in case of default...
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