House of Lords gives judgment
House of Lords gives judgment in Scottish & Newcastle plc v Raguz [2008] UKHL 65
The House of Lords has given judgment on 29 October 2008 dismissing Mr Raguz’s appeal against the decision of the Court of Appeal and allowing S&N’s cross-appeal.
Timothy Fancourt QC appeared for S&N and Stephen Jourdan appeared for Mr Raguz.
This decision means that the notices served on S&N by the landlord pursuant to s.17(2) of the Landlord and Tenant (Covenants) Act 1995 for all the “catch up” rent following completion of long outstanding rent reviews were validly served and that S&N was liable to pay the landlord. The Court of Appeal and Hart J had held that, to protect its right to the accrued increased rent after the determination of the rent review, the landlord should have served s.17 notices on S&N, quarter by quarter, saying that “nil” was due but more might become payable later. This decision was criticised in the property press as producing absurd results.
The majority of their Lordships agreed, holding that the passing rent accruing due on each quarter day is a fixed charge and that the catch up rent payable after the determination of the rent review is another, separate fixed charge that requires its own s.17(2) notice. Accordingly, a s.17(2) notice served for the passing rent need not contain a paragraph stating that more could become payable later; and no s.17(4) notice is needed after the rent review has been determined. It is recognised that section 17(4) will therefore only very rarely apply. The same conclusion should logically apply to service charge payable quarterly in advance, followed by an end of year balancing payment.
Despite their decision on the s.17 issue, Hart J and the Court of Appeal had held Raguz liable to indemnify S&N for the payments of rent that S&N had made to the landlord. The House of Lords indicated (Lord Scott of Foscote dubitante) that, had it been necessary to decide the issue, they would have agreed with that decision on the basis that the expense of paying the landlord was fairly and reasonably incurred in the circumstances. It was not necessary, to claim under the indemnity implied by the Land Registration Act, that the money paid out be lawfully due to the landlord.
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