Scottish and Newcastle Plc v Raguz: CA 24 Jul 2003

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).’

Lord Justice May Lord Justice Sedley The Vice-Chancellor
[2003] EWCA Civ 1070, Times 09-Sep-2003, [2004] LandTR 11
Land Registration Act 1925 24(1), Landlord & Tenant (Covenants) Act 1995
England and Wales
CitedYeoman Credit Ltd v Latter CA 1961
The distinction between contracts of guarantee and indemnity are real and important and to be retained. . .
CitedHarris v Boots Cash Chemists (Southern) Ltd ChD 30-Jun-1904
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 . .
CitedButler Estates Company Ltd v Bean CA 1942
. .
CitedAllied London Investments Ltd v Hambro Life Assurance Ltd (No 2) ChD 1984
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 . .
CitedRPH Ltd v Mirror Group (Holdings) Ltd 1993
. .

Cited by:
See AlsoScottish and Newcastle Plc v Raguz CA 6-Mar-2007
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 AlsoScottish and Newcastle Plc v Raguz ChD 27-Jul-2004
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 AlsoScottish and Newcastle Plc v Raguz ChD 11-Apr-2006
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 AlsoScottish and Newcastle Plc v Raguz HL 29-Oct-2008
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 . .
CitedMason v Boscawen ChD 18-Dec-2008
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 . .

Lists of cited by and citing cases may be incomplete.

Landlord and Tenant, Registered Land

Updated: 30 November 2021; Ref: scu.184868