Cases - Scottish & Newcastle plc v Raguz
Record details
- Name
- Scottish & Newcastle plc v Raguz
- Date
- [2008]
- Citation
- UKHL 65
- Legislation
- Keywords
- Landlord and tenant - rent review
- Summary
-
A case on section 17 notices under the Land and Tenant (Covenants) Act 1995. The facts were unusual. Scottish & Newcastle (S&N) were tenants under two underleases for over 90 years with rent reviews every 14 years. S&N assigned the underleases to Mr Raguz in 1982. There were two further assignments and by 1992 the tenant was Hotel St James Ltd. Rent reviews were due in 1995 and 1996, but not settled until 2000 and 2001. The hotel stopped paying rent in 1999 and the landlord served section 17 notices on S&N. The notices did not state that the rent was subject to review. Later notices did so state; but no further information was given as to the outstanding reviews (of which, of course, S&N would have been unaware). Once the rent reviews had been settled further section 17 notices were served demanding payment of the increases in rent backdated to 1995/6 - figures in excess of £300,000. Eventually S&N paid the amounts due, then claimed them off Mr Raguz under the indemnity he had given when he took his assignment in 1982.
(It is worth noting, in passing, that although the 1995 Act offers protection against nasty surprises by requiring a former tenant from whom current arrears are demanded to be given prompt notice of those arrears, someone who has to indemnify that former tenant - such as Mr Raguz in this case - has no such protection. Further, under section 19 it is S&N who get the right to an overriding lease, not Mr Raguz.)
Mr Raguz tried to avoid liability by claiming that the section 17 procedure had not been followed correctly. Once the rent had been reviewed in 2000/2001 the increase fell due to be paid, as a matter of law, with each quarterly payment of rent after the review date. Since no section 17 notice had been given within 6 months of each of those quarter days telling the former tenant that even though the quarter's rent had been paid, it might be increased in future and the former tenant might be liable for that increase, S&N were not liable to pay the arrears, so could not pass them on to Mr Raguz under his indemnity.
This House of Lords decision overturned the decisions in both the High Court and the Court of Appeal and restores the law to the commonsense view we all held before the litigation began. Notice need only be given within six month of actual arrears of rent.