Real Estate Update - Case Roundup, Summer 2016

EMI Group Ltd v O & H Q1 Ltd [2016] EWHC 529 (Ch)

A tenant cannot assign its lease to its guarantor. In this case the focus was whether the tenant, HMV, had legitimately assigned the lease to its guarantor, EMI, once it had entered administration. The High Court found that the effect of such purported assignment was that the assignment was void by virtue of section 25(1) of the Landlord and Tenant (Covenants) Act 1995, as it frustrates the purpose of the Act. The assignment is void and the lease remains vested in the tenant with the tenant's guarantor remaining bound by its guarantee.

This issue was one of the points that was not settled by the Court of Appeal in K/S Victoria Street v House of Fraser (Stores Management) Ltd and others [2011] EWCA Civ 904, and the decision is of particular importance where a corporate restructuring is planned and where a group company has guaranteed the obligations of another in a lease.

Isaaks v Charlton Triangle Homes Ltd [2015] EWHC 2611 (Ch)

A tenant sought rectification of its lease and the alteration of the land register where the lease mistakenly stated that the third floor had been demised (rather than the second).

The Land Registry had refused to amend the register on the basis that it correctly recorded what was said in the lease, and said that the tenant should surrender the lease and enter into a fresh one with the landlord. To do so would have affected the tenant's mortgagee's security. Applying rule 126 of the Land Registration Rules 2003 and schedule 4 to the Land Registration Act 2002 ('LRA 2002'), the court held that the lease should be amended and the land register should be altered (rather than rectified). In respect of the latter it was irrelevant that the error was not the Land Registry's fault.

The Law Commission recently launched a consultation on revising the LRA 2002, including the provisions on altering the land register (see News in Brief).

Asset Land Investment plc and anor v Financial Conduct Authority [2016] UKSC 17

For the first time, the Supreme Court considered the definition of a collective investment scheme under section 235 of the Financial Services and Markets Act 2000, ruling that 'land-banking' arrangements were a collective investment scheme, and therefore was a regulated activity.

The court found that, although investors were the legal owners of their individual plots of land, the practical arrangement of the scheme was such that investors did not have control over...