Assignment and sub-letting

Citation

Waterson, G. and Lee, R. (1999), "Assignment and sub-letting", Property Management, Vol. 17 No. 3. https://doi.org/10.1108/pm.1999.11317cab.003

Assignment and sub-letting

Parc (Battersea) Ltd (in administrative receivership) v. Hutchinson [1999] The Times, 9 April 1999

The question at issue in this case was whether an oral agreement to grant a sub-lease "for a period not less than the remaining term" of the lease out of which it purported to be granted was effective to assign the whole of that lease notwithstanding that such "assignment" had not been in writing.

Moore-Bick J, after reviewing the relevant case law, including Milmo v. Carreras [1946] 1 KB 306, Grosvenor Estate Belgravia v. Cochran [1992] EGLR 83 and St Giles Hotel Ltd v. Microworld Technology Ltd [1997] 2 EGLR 105, reached the conclusion that the purported grant of such a sub-lease acted as an assignment of the original lease by operation of law, the assignor being left without any reversionary interest in the property whatsoever after the transaction had been completed. In the circumstances, therefore, by virtue of s. 53 (1) (a) of the Law of Property Act 1925, such assignment was effective. "It was not anomalous", said the judge, "for the assignment of a lease, which would ordinarily require writing, could be effected orally in such a way as an assignment by operation of law in that manner could only occur in limited circumstances. It was no more anomalous than the fact that an agreement for a short lease could also be made orally."

The original lease had been contracted out of the provisions of ss. 24-28 of the Landlord and Tenant Act 1954. It would follow therefore that the position was exactly the same after the purported sub-lease had taken effect as an assignment by operation of law.