Claim for rent — Plaintiff landlord claiming arrears — Assignment — Rent review being agreed by surveyors by deed — Whether original lessee liable for rent under lease or under deed — Whether assignee having authority to deal with lease as if original lessee — Judgment for the plaintiff
Under a lease of June 24 1977, the plaintiff as the landlord let Stone House, The Hyde, Colindale, London NW9, to the defendant as the original lessee for a term of 25 years. For the first five years the rent was £40,000 pa, payable quarterly in advance and rent reviews were fixed at five-yearly intervals. Under the second schedule, which dealt with rent reviews, the current rent was to be paid until agreement or adjudication, with a retrospective adjustment to previous review date upon either of those events.
The defendant assigned its leasehold interest in 1986 to two companies (“the tenant”) and the plaintiff claimed one-quarter’s rent, which the tenant had not paid, from the defendant. The first rent review was agreed in June 1982 at £132,500 pa. With a view to settling the rent for the five years from June 1987, the plaintiff and tenant both instructed surveyors. They reached agreement reflected in a deed of March 18 1988 whereby the rent was to be £210,000 pa from June 1987 for three years and £220,000 pa thereafter (subject to further review), in other words a “stepped” rent. The deed was expressed to be supplemental to the lease and reached “pursuant thereto” to a revision of the rent.
The defendant contended that any deviation from the terms of the lease was not binding upon the original lessee and that the rent review provisions of the second schedule did not envisage a stepped rent, but a single yearly rent to be adjusted at five-yearly intervals. The plaintiff contended that an assignee was entitled to agree with the lessor variations in the terms of a covenant for rent. If that happened, then the revised terms bound the original lessee whether or not the variation was an adverse or favourable one.
Held Judgement for the plaintiff.
1. The principle expressed in Baynton v Morgan (1888) 22 QB 74 was that — at least ordinarily — an assignee stood in the place of the original lessee and was authorised to do whatever the original lessee might have done.
2. That principle had been applied in two cases dealing specifically with rent review clauses following an assignment: see Centrovincial Estates plc v Bulk Storage Ltd (1983) 268 EG 59 and Selous Street Properties Ltd v Oronel Fabrics Ltd (1984) 270 EG 643.
3. An assignment was said to be sui generis to the law of landlord and tenant and not to be categorised as an agency. “The basic answer which any real property lawyer would give to a question about an assignee’s power to deal with a tenancy interest is that each assignee … can deal with it so as to alter its terms. The estate so altered then binds the original tenant…” as per Centrovincial. That formulation had been adopted in Selous.
4. While the general principle might in certain circumstances give way to particular express provisions in a given lease, there was nothing in the present lease to take it out of the general rule. The clauses in the lease drew no distinction between the position of the original lessee and that of an assignee and the description “lessee” applied to both.
David Neuberger QC and Jonathan Karras (instructed by Paisner & Co) appeared for the plaintiff; Leolin Price QC (instructed by Titmuss Sainer & Webb) appeared for the defendant.
