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AVONRIDGE PROPERTYCO LTD – V – MASHRU [2005] UKHL 70

PCB acted for a property company who rented commercial premises comprising a number of retail units at a rack rent. The company then granted sub-leases in respect of a number of the retail units for a peppercorn rent, with the sub-lessees each paying a large premium on the grant of their sub-lease. The company covenanted to each of the sub-lessees to pay the rent on the head lease for so long as it retained its interest in the property. The company then assigned the head lease to a third party, who then disappeared leaving the rent due under the head lease unpaid. The sub-lessees obtained relief from forfeiture but had to pay the rent due under the head lease and take new leases at a higher rent. They claimed damages against the company and won at first instance and in the Court of Appeal, it being held that the purported limit of liability of the company only to pay rent under the head lease until such time as it disposed of its interest was void pursuant to the Landlord and Tenant (Covenants) Act 1985. PCB persuaded the House of Lords that this raised issues of general public importance and subsequently succeeded on appeal, it being held that the Act did not prevent such a limitation of liability being agreed.