References: [2003] EWCA Civ 1070, Times 09-Sep-2003, [2004] LandTR 11
Links: Bailii
Coram: Lord Justice May Lord Justice Sedley The Vice-Chancellor
Ratio: Leases had been granted. They had been assigned to the defendant who had assigned them again. The last assignee became insolvent and statutory demands were served on the claimant under the 1995 Act for rent. The claimant paid the sums due and now sought them from the defendant. He countered that his obligation under the 1925 Act was as guarantor, and that his obligation might be discharged by a claimant’s wrongful act.
Held: The 1925 Act implied an obligation of indemnity, and was unaffected by any act of the claimant.
The indemnity applied also to any VAT charged to the rent: ‘The original lease constituted a contract for a relevant supply by the landlord to the tenant for which the rent covenanted to be paid was consideration. In view of the terms of s. 89(3) it is indisputable that when the lessor opted to tax the supply there was a change in the VAT charged on that supply. That change occurred before the supplies with which this claim is concerned were rendered. Accordingly the express terms of s. 89(1) requires VAT at the relevant rate to be added to the rent as part of the consideration for the supply by the Lessor to the Tenant. In my view it follows that the default of the Tenant in paying the rent including the VAT thereon falls within the terms of the implied covenant because it constitutes a failure to pay the rent ‘by and in the registered lease reserved and contained’ as amended in accordance with s. 89(1).’
Statutes: Land Registration Act 1925 24(1), Landlord & Tenant (Covenants) Act 1995
Jurisdiction: England and Wales
This case cites:
- Cited – Yeoman Credit Ltd v Latter CA ([1961] 1 WLR 828)
The distinction between contracts of guarantee and indemnity are real and important and to be retained. . . - Cited – Harris v Boots Cash Chemists (Southern) Ltd ([1904] 2 Ch 376)
The case concerned the question whether an original lessee could enforce by injunction against a successor in title to the term, a provision in a lease precluding alteration without consent. The ground on which he sought to do so was a covenant by . . - Cited – Butler Estates Company Ltd v Bean CA ([1942] 1 KB 1, [1941] 2 All ER 793)
. . - Cited – Allied London Investments Ltd v Hambro Life Assurance Ltd (No 2) ChD ([1984] 1 EGLR 16)
The lessors sued the original lessees for rent due under the lease after the term had been assigned to another. The lessors had given a licence to assign and the licence contained a guarantee from a third party to the lessors that the assignee would . . - Cited – RPH Ltd v Mirror Group (Holdings) Ltd ([1993] 1 EGLR 74)
. .
(This list may be incomplete)
This case is cited by:
- See Also – Scottish and Newcastle Plc v Raguz CA (Bailii, [2007] EWCA Civ 150, Gazette, [2007] 2 All ER 871)
The claimant was the original tenant under two 99 year underleases granted in 1967, and assigned them to the defendant who then himself assigned them. The eventual assignee had become insolvent. The landlord recovered the rents from the claimant who . . - See Also – Scottish and Newcastle Plc v Raguz ChD (Bailii, [2004] EWHC 1835 (Ch))
The claimant had previously assigned its interest in a lease to the defendant, who had in turn re-assigned it. The eventual tenant became insolvent, and the landlord had recovered sums from the claimant who now sought an indemnity under the covenant . . - See Also – Scottish and Newcastle Plc v Raguz ChD (Bailii, [2006] EWHC 821 (Ch), [2006] 4 All ER 524)
The defendant had taken assignments of the term of two underleases from the claimant, and then re-assigned them to a limited company with guarantors of the rent, and they in turn re-assigned the leases. The last company became insolvent. The . . - See Also – Scottish and Newcastle Plc v Raguz HL (Bailii, [2008] UKHL 65, HL, Times, [2008] 1 WLR 2494)
The lease had been assigned by the claimant to the defendant and on again to a tenant who became insolvent. The landlord had recovered sums said to be due from the claimant who now sought an indemnity from the defendant. The defendant said that the . . - Cited – Mason v Boscawen ChD (Bailii, [2008] EWHC 3100 (Ch), [2009] NPC 5, [2009] BVC 75, [2009] 2 EG 80 (CS), [2009] BTC 5075, [2009] STI 185, [2009] STC 624, [2009] 1 All ER 1006)
The landlord had opted to charge VAT on part of the rent. The tenant fell into arrears and now challenged a notice to quit which included the VAT. The court was asked what constituted ‘rent’ for the purposes of a demand for rent founding a notice to . .
(This list may be incomplete)
Last Update: 06 April 2019
Ref: 184868
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