Distraint: set-off for overpayment of rent

Citation

Waterson, G. and Lee, R. (2001), "Distraint: set-off for overpayment of rent", Property Management, Vol. 19 No. 4. https://doi.org/10.1108/pm.2001.11319dab.010

Distraint: set-off for overpayment of rent

Distraint: set-off for overpayment of rent

Fuller v. Happy Shopper Markets Ltd (2001) The Times, 6 March 2001

Briefly, in this case, the lease contained a suspension of rent clause, providing that in the event that part of the premises became damaged or otherwise unusable as the result of any risk against which the landlord was required to have insured, then a fair proportion of the rent was to be suspended until the premises were once more fit for occupation and use. As the result of severe storm damage, the premises suffered the ingress of water rendering 60-70 per cent of the premises unfit for occupation and use. This was a risk against which the landlords insured. The damage occurred before September 1994, but the tenant continued to pay rent at the full rate until September 1995. After that he ceased to pay any rent at all and, in February 1997, the landlords instructed bailiffs to distrain for alleged arrears totalling some £22,700. The question which arose was whether the tenant was entitled to set-off the notional "over-payments" of rent (more than £2,000 per quarter for at least four or five quarters, according to the calculations of the court) against the amount claimed by way of arrears. Yes, said the court: the monies had been paid under a mistake of fact or law on the part of the tenant; in equity, if not in law, the tenant was entitled to set the amounts overpaid against the amount of the alleged arrears even though the exercise by the landlord of his right to distrain was extra-judicial in nature.

The court went on to give some words of advice to any who might be involved in a similar situation:

Before levying distress a landlord was bound to take the greatest care that there were no claims available to the tenant by way of equitable set-off to be offset against the rent outstanding. In any ordinary case he would be well advised to give notice of his intention, to invite the tenant to agree what was owing and to identify such cross-claims, if any, as existed. The human rights implications of levying distress must be in the forefront of the mind of the landlord before taking that step, and he must fully satisfy himself that doing so would be in accordance with the law.