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Rent

For appropriation of rent (ie whether the tenant or landlord has the right to appropriate rent to a particular period) see Thomas v Ken Thomas Ltd which is discussed on the Forfeiture page.


Effect of paying rent in advance

Altonwood Ltd v Crystal Palace F.C. (2000) Ltd
[2005] EWHC 292 (Ch)

There is a reminder in this case of the principle that a payment of rent before it is due is not a fulfilment of an obligation to make that payment. If by mistake a payment is made in advance of the due date it will not count towards payment of the rent unless there is agreement to that effect, express or inferred. Lightman at para 34:
    "The third question raised is whether CPFC is likewise entitled to credit for and to deduct any overpayment of Turnover Rent in respect of its liability to make any subsequent payment of Basic Rent. The principle is long established that a payment of rent before it is due is not a fulfilment of an obligation to make that payment. There may however be an agreement (and the payment in appropriate circumstances may evidence an agreement) between the landlord and tenant that on the day that the rent becomes due the payment shall be treated as a fulfilment of the obligation to pay the rent, and in such a case on the day that the rent becomes due the landlord is bound to treat payment in this way: see e.g. De Nicholls v. Saunders (1870) 5 LRCP 589 and Lord Ashburton v. Nocton [1915] 1 Ch 274 at 290 per Swinfen Eady LJ. There is no such agreement in this case, and none is alleged. Accordingly the erroneous payment in respect of Turnover Rent cannot be treated as a prepayment of or discharge of the future obligation to pay Rent and in particular the Basic Rent. For all purposes of the Lease the full amount of the monthly instalments of Basic Rent continue to be payable and the sanctions for non-payment become enforceable as and when the monthly payments accrue due and are undischarged. CPFCs rights are confined to claiming credit in respect of future liabilities for Turnover Rent and to making a claim in restitution for repayment. This result, as it seems to me, is fully in accord with the evident intention of the parties who have excluded all rights of deduction and set-off and limited the right to credit for overpayments to credit in subsequent payments of Turnover Rent."

Rent arrears - landlord under no duty to mitigate

Reichman v Beveridge
[2006] EWCA Civ 1659

T (a firm of solicitors) took a five year lease of business premises in 2000. By February 2003 they had no further need of the premises and vacated failing to pay the March 2003 rent or make any subsequent rent payments. L claimed rent arrears in the sum of £23,010 + VAT in January 2004. T did not seek to assign or sublet the premises, and L did not take any steps to forfeit or re-let the premises. The question before the Court of Appeal was whether it could be said that a landlord, in failing to take steps to find an alternative tenant in place of the defaulting tenant, or otherwise mitigate his loss, had acted wholly unreasonably.

T argued that a lease is a contract (even though it creates an interest in land), that the courts have increasingly applied the principles of contract law in looking at leasehold parties' obligations and that there is no reason why contractual principles as to mitigation of loss should not also be applied to the recovery of rent. Relying on the dicta of Lord Reid in White and Carter (Councils) Ltd v McGregor [1962] AC 413 at 431 T argued that the obligation on an innocent contractual party to mitigate his loss in seeking to recover damages for breach of contract and on a lease party seeking damages for breach of covenant, should be extended to cover recovery of rental instalments as they fall due.

Reviewing the cases where courts had refused to allow innocent parties to enforce their full contractual rights because to do otherwise would be "wholly unreasonable", Lloyd LJ held that it "would have to be a most extraordinary case for a tenant to show that the landlord's conduct could properly be characterised in this way", (para 40). Further the court held that, in order to establish such a claim against the landlord the tenant would also have to show that damages would be an adequate alternative remedy. This would not be the case in a rent arrears matter as should the landlord take back the premises and then be unable to re-let at the full rental level under the old lease, he would not be able to recover damages to compensate for the difference between the two rental levels. In the alternative, the court held, the landlord was acting reasonably in taking the view that he should not terminate the lease because he might not be able to recover all that would have been due under the lease by way of damages. Lloyd LJ at para 42:
    "There is no case in English law that shows that a landlord can recover damages from a former tenant in respect of loss of future rent after termination, and there is at least one case which decides that he cannot. In those circumstances, either damages are not an adequate remedy for the landlord, or at least the landlord would be acting reasonably in taking the view that he should not terminate the lease because he may well not be able to recover such damages. In principle, moreover, if the landlord chooses to regard it as up to the tenant to propose an assignee, sub-tenant or, if he wishes, a substitute tenant under a new tenancy, rather than take the initiative himself, that is not unreasonable, still less wholly unreasonable."

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