Lease taken by defendants as trustees for family trust – Defendants disclaiming liability for rent arrears on ground that recovery limited to trust assets in their hands – Whether such limitation arose by way of contractual undertaking or landlords representation amounting to an estoppel – Judgment for plaintiff landlords
The plaintiffs held certain freehold land and buildings in Greenwich, London SE10, (the premises), as trustees for Morden College, a charity. The defendants were at all material times trustees of a private family trust. In 1972 part of the premises was occupied by a garage operator who offered to sell to the defendants the 12-year residue of his lease subject to obtaining the plaintiffs’ consent. The defendants went ahead with the purchase after being assured by the plaintiffs’ surveyor that, as trustees, they would enjoy the same protection as that
conferred upon the plaintiff trustees by clause 3 of the lease, which declared that the lessor’s covenants would not bind them personally except while acting as such trustees. On expiry of that lease in 1984 the defendants remained in possession, having sublet the demised property to a company for use as an MOT testing centre.
In 1989 the defendants, while considering an offer of a new lease of the entire premises, sought and received the plaintiffs’ assurance that their position as regards personal liability would remain unchanged. They were further informed by the plaintiff’s surveyor that their liability could be equated with that of a director of a limited company. On September 25 1989 the defendants took a new lease of the entire premises for a term of 15 years, back dated to commence on March 25 1984, at an annual rent of £2,000 with provision for a rent review to take effect from March 25 1989 (the review date). By an arbitrator’s award made in November 1993 the annual rent payable as from the review date was determined at £19,000. In July 1994 the plaintiffs issued proceedings for forfeiture coupled with a claim for £96,000 arrears of rent and for mesne profits as from service of the writ. The defendants, while consenting to an order for possession, resisted the financial claims on the ground that as trustees they were liable only to the extent of the trust assets then remaining in their hands.
Held Judgment was given for the plaintiffs.
1. No such protection was given by the general law, it being immaterial, so far as the plaintiffs were concerned, that the defendants had a right of indemnity against the trust assets for liabilities incurred in the lawful execution of the trust. Accordingly, the defendants had to establish that their liability had been limited by operation of a
contractual undertaking or a representation capable of founding an estoppel.
2. Neither consequence flowed from the discussions and correspondence put in evidence. Protection equivalent to that afforded by clause 3 of the old lease could only be claimed, if at all, against liabilities incurred after the death or retirement of a trustee. The surveyor’s (erroneous) views as to the liability of trustees in general did not amount to an express exoneration of the defendants, and were no substitute for independent legal advice.
Wayne Clarke (instructed by Stafford Young Jones) appeared for the plaintiffs; the defendants appeared in person.
