K/S Habro Gatwick v Scottish & Newcastle Ltd [2015] EWHC 2084 (Ch)
Following a disclaimer by the liquidator of the tenant, the landlord of an hotel, K/S, claimed rent, insurance rent, costs of securing the hotel and rates from the original lessee, S&N. S&N claimed an indemnity or recoupment from a guarantor of the first assignee of the lease, GLH. S&N accepted liability for rent and insurance rent but disputed liability for the security costs and rates on various grounds. The Judge held that the tenant covenants of the lease, on their true interpretation, covered security costs that K/S incurred at the request of its insurers and rates assessed on K/S following the disclaimer. The remaining issues were whether such liabilities were in the nature of fixed charges within the meaning of s.17 of the Landlord and Tenant (Covenants) Act 1995, whether s.17 notices served by K/S were valid, and whether S&N was entitled to be indemnified by GLH against any liability to K/S.
The issue in relation to security costs (which were admitted to be fixed charges becoming due on demand by K/S) was whether or not the s.17 notices were invalid for failing to state, in the schedule, the date on which the charges became due, as required by the relevant form in the Notices Regulations. The Judge held that, although the schedule did not identify the date on which the sums claimed became due under the lease, it was sufficient that the notice annexed various invoices from the security company by which the sums in question were demanded of K/S. A notice that annexed the relevant invoices was substantially in the same form as the prescribed form.
The issue in relation to reimbursement of rates was whether or not the rates were a “fixed charge” as defined in the 1995 Act. The judge held that although K/S had claimed from S&N reimbursement of identified sums paid to the rating authority, liability under the covenant was in substance a liability in damages for breach of the obligation to pay the rates, and accordingly the claim for breach of that covenant was not a claim for a liquidated sum payable in the event of failure to comply with a tenant covenant of the tenancy, within the meaning of “fixed charge”.
S&N was therefore held liable to K/S for the security costs and rates, but succeeded on its claim to be indemnified by GLH. Timothy Fancourt QC acted for S&N.
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