Specific performance of an agreement to surrender where the tenant has gone into administration

In A/Wear UK Ltd (In Administration), Re ([2012] EWHC 2050) A/W entered into an agreement to surrender with its landlord. A/W agreed to pay GBP340,000 on completion of the surrender. This sum was held in escrow by the landlord’s solicitors. Before the surrender could take place. A/W went into administration. The landlord (in effect) sought leave to bring proceedings for specific performance of the agreement to surrender. This was refused. The landlord would have to take its place alongside A/W’s other creditors.

The judge, David Donaldson QC pointed out that the effect of specific performance  would be to allow the payment of the agreed sum to the landlords. He  said:

‘The corollary of this benefit is to deprive the Company (and hence its creditors) of its future right to those monies. These considerations would make it in my judgment inappropriate for the court to grant the discretionary remedy of an order for specific performance.’ ([8])

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