Edlington Properties Ltd v J H Fenner & Co Ltd [2006] EWCA Civ 403 (22 March 2006)

Edlington Properties Ltd v J H Fenner & Co Ltd [2006] EWCA Civ 403 (22 March 2006)

A tenant cannot set off, against rent falling due after the transfer of the reversion, a claim for damages arising from a breach by the original landlord of the lease or of a collateral agreement, unless the lease expressly provides for such a right. The right of set-off is personal and does not run with the land or bind successors in title. The lease and building agreement in this case did not contain sufficiently clear words to exclude or permit set-off.

Citation
[2006] EWCA Civ 403
Parties
Claimant/respondent: Edlington Properties Limited; Defendant/applicant: J H Fenner & Co Limited
Jurisdiction
England and Wales
Judgment Date
22 March 2006
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Preliminary Issues
Outcome
Appeal allowed; set-off not permitted against successor landlord for post-assignment rent.
Legal Topics
Equitable Set Off, Assignment of Reversion, Leasehold Covenants, Construction of Lease Terms, Insurance Rent
Landlord and Tenant Property Law Contract Law Equitable Set Off Assignment of Reversion Leasehold Covenants Construction of Lease Terms Insurance Rent

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Parties

Edlington Properties Limited

Claimant/respondent

J H Fenner & Co Limited

Defendant/applicant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether a tenant can set off a claim for damages against the original landlord under a building agreement against rent due to a successor landlord after assignment of the reversion.
  2. 2 Whether the lease or building agreement excludes the right of set-off by its terms.
  3. 3 Proper construction of the insurance rent clause in the lease.

Ratio Decidendi

A tenant cannot set off, against rent falling due after the transfer of the reversion, a claim for damages arising from a breach by the original landlord of the lease or of a collateral agreement, unless the lease expressly provides for such a right. The right of set-off is personal and does not run with the land or bind successors in title. The lease and building agreement in this case did not contain sufficiently clear words to exclude or permit set-off.

Court Disposition

Appeal allowed; set-off not permitted against successor landlord for post-assignment rent.

Orders

  • Fenner not entitled to set off its damages claim against Edlington's claim for rent and insurance rent accruing after assignment of the reversion.
  • The lease and building agreement do not exclude set-off by sufficiently clear words, but this is irrelevant as no right of set-off exists in principle.