Court of Appeal ends “AGA saga”?

In K/S Victoria Street v House of Fraser (Stores Management) Ltd & Ors [2011] EWCA Civ 904, the Court of Appeal has opined that, whilst a tenant’s guarantor’s guarantee of an immediate assignee under a post-1995 Act tenancy is rendered void by section 25 of the Landlord and Tenant (Covenants) Act 1995, a tenant’s guarantor’s guarantee of the tenant’s guarantee of the immediate assignee, entered into in an AGA, is valid. Is there a difference between the two? The Court of Appeal (strictly in obiter) thinks so. The case is seen in the property profession as bringing to an end the so-called “AGA saga”, validating the drafting of many landlords who, since the arrival of the 1995 Act, have been drafting AGAs to include covenants that are supported by the covenant of the assigning tenant’s guarantor. Keeping the tenant’s guarantor on the hook by requiring it to guarantee the AGA does not, says the Court of Appeal, frustrate the guarantor’s release from liability under section 24(2) of the Act. Property law analysts will now dissect the views of the Lord Neuberger-led Court of Appeal to see if welcome clarity has indeed arrived, or whether legitimate scope for doubt still remains. This analyst will do likewise, shortly, on this site.