Romain v Scuba T.v Ltd

JurisdictionEngland & Wales
JudgeLord Justice Evans,Lord Justice Waite,Sir John May,LORD JUSTICE EVANS
Judgment Date10 November 1995
Judgment citation (vLex)[1995] EWCA Civ J1110-1
Docket NumberQBENI 95/0036/E/
CourtCourt of Appeal (Civil Division)
Date10 November 1995
(1) Philip Romain
(2) Elizabeth Wolfson
Plaintiffs/Appellants
and
(1) Scuba TV Limited
(2) Dennis Gordon Brown
(3) Stephen Graham Brown
Defendants/Respondents

[1995] EWCA Civ J1110-1

On appeal from (Mr. Simon Goldblatt)

Before: Lord Justice Evans Lord Justice Waite Sir John May

QBENI 95/0036/E/

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

MR. G. FEATHERSTONEHAUGH (Instructed by Penningtons, Clifton House, Bunnian Place, Basingstoke, Hampshire, RG21 1JE) appeared on behalf of the Appellants.

MR. J. BARKER (Instructed by Leslie Michaelson, Lincoln's Inn) appeared on behalf of the Respondents.

Lord Justice Evans
1

The main issue in this appeal is whether the limitation period in a claim against the guarantor of a tenant's obligation to pay rent is twelve or six years, when both the guarantee and the lease are under seal. The guarantor is the third defendant in the action and the appellant in this Court.

2

The question arises because the plaintiff landlords are liable to have a large part of their claim dismissed for want of prosecution; in other words, they or their representatives have been guilty of inordinate and inexcusable delay in the prosecution of the action. But if the limitation period is twelve years they could bring fresh proceedings, if the present ones were dismissed, and it would be wrong to make the order in such circumstances: Birkett v. James [1978] A.C. 297. On the other hand, if the limitation period is six years, most but not all of the claims were statute-barred when the application to dismiss the action for want of prosecution was made by the third defendant on 26 September 1994 and those claims, the defendant submits, should be dismissed accordingly. Master Eyre and the learned judge, Simon Goldblatt Q.C., both held that the relevant period is twelve years. The third defendant's application therefore failed, and he now appeals.

3

A further issue is the date when the plaintiffs' cause or causes of action arose under the guarantee.

4

Section 8 of the Limitation Act 1980 provides that "actions on a specialty" shall not be brought after the expiration of twelve years from the date on which the cause of action accrued (sub-section (1)) unless a shorter period is prescribed by any other provision of the Act (sub-section (2)). The defendant says that section 19 applies to a claim against the guarantor of a tenant's obligation to pay rent. Section 19 reads as follows:-

"19. Time limit for actions to recover rent.

No action shall be brought, or distress made, to recover arrears of rent, or damages in respect of arrears of rent, after the expiration of six years from the date on which the arrears became due."

5

The lease

6

The lease of shop, offices and other premises at No. 640 Lea Bridge Road, Leyton, Essex, was made under seal and dated 29th November 1982 for a period of twenty-one years. The second and third defendants were parties to it as joint guarantors of the first defendant who was the lessee. Their undertaking is contained in clause 5:-

"5.The Guarantors …….. hereby jointly and severally covenant with the landlords that the Lessee will at all time during the continuance of this demise pay the rents hereby reserved and will also duly observe and perform the covenants on the part of the lessee hereinfore contained and that they will pay and make good to the landlords on demand all losses damages costs and expenses thereby arising or sustained or incurred by the landlords".

7

The last phrase "thereby arising etc." does not make grammatical sense. We were told that words were omitted from the draft which make it clear that the reference intended is to a relevant default by the lessee. This does not affect the interpretation of the operative part of the clause, with which we are concerned.

8

Does section 19 apply?

9

So the question is whether the claim against the Guarantors under this clause following the lessee's failure to pay instalments of rent when they fell due is "brought … to recover arrears of rent, or damages in respect of arrears of rent" within section 19. If it is, then the relevant period is six years. If it is not, then because the action is brought "on a specialty" section 8 applies and the period is twelve years.

10

The judge held that the claim is made under what may be called the second part of the undertaking by the Guarantors: not for breach of their covenant that the lessee would pay the rents reserved by the lease, but under the words which follow: "and that they will pay on demand all losses etc. thereby arising [from default by the lessee]". He did not decide whether the first part gave rise to a separate cause of action but he said that if it did, it was difficult to avoid the conclusion that that was a claim for arrears of rent or for damages in respect of arrears of rent to which section 19 applied. But the claim for losses etc. payable on demand was, he held, though not without hesitation, outside the section. He said that "an action whose origin is a demand by the landlord in respect of the obligation of a surety in a lease under seal is not to be categorised as an action brought to recover damages in respect of arrears of rent." He held, therefore, that the limitation period is twelve years, which had not expired, and that it would be inappropriate to strike out any part of the claim. The third defendant appeals.

11

The precise nature of the obligations of a surety, or guarantor, has been considered in a number of authorities, to which we were referred. The lessee's covenant to pay rent runs with the land —that is to say, it may be enforced by a succeeding landlord even when the benefit of the covenant has not been assigned to him —and so does the surety's undertaking as regards that covenant also: P & Swift Investments v. Combined English Stores Group plc [1989] A.C. 632, and compare Royton Industries v. Lawrence [1994] 1 EGLR 110. Where a rent instalment is paid by the guarantor, at least in a case where the guarantor expressly undertakes the same obligations as the lessee, then the lessee's obligation is discharged also: Milverton Group v. Warner World (1995) 32 EG 70 (C.A. 6 May 1994). But this does not lead, Mr Michaelson for the plaintiffs submits, to the conclusion that the obligations of the guarantor and the lessee are one and the same. He points to the judgment of the Court of Appeal in London & County Ltd. v. W.Sportsman Ltd. [1971] 1 Cl. 764 (per Russell L.J. "But in law they were nothing but payments under the guarantee in satisfaction of the third party's contractual obligation thereunder … "(p.780)) and to the statement in the previous edition of Woodfall on Landlord & Tenant (not in the current edition) that "Payment of arrears of rent by a guarantor of the lessee's rent does not discharge the lessee" (paragraph 7.085, cited in Milverton Group by Glidewell L.J. (at p.71).

12

The Court held in Milverton Group that that general statement was not justified by the earlier authorities, and was too broad. Hoffmann L.J. said that the facts in London & County Ltd. were unusual, because the erstwhile guarantor as well as paying under the guarantee had acquired the reversion from the original landlord and then claimed successfully to forfeit the lease for the tenant's failure to pay the previous instalment of rent. The result could be justified "on the basis that the guarantor was entitled to be subrogated to the previous landlord's claim for the rent and so, on acquiring the reversion, was entitled to exercise the right to forfeit for non-payment" (page 72). In Re Hawkins (dec'd) [1972] Ch. 714 Megarry J. held that payments by a guarantor in respect of interest due from the debtor retained their identity as interest even though they were paid by force of the guarantee. Megarry J. said:-

"What matters is the nature or quality of the thing paid and not the source of the obligation to pay it. Rent is rent, a fine is a fine, a debt is a debt, and interest is interest, whoever pays it" (page 728D).

13

That was, however, a case where the guarantor was liable as primary obligor (p.728F).

14

So Mr Michaelson submits that it was wrong to go so far as to describe the obligations of guarantor and tenant as a "single set", as Hoffmann L.J. did in Milverton Group, except possibly when the guarantor expressly undertakes the same obligations as the tenant. This is because their obligations are separate and distinct. The lessee undertakes to pay the rent, a liquidated sum, whilst the guarantor undertakes that the lessee will perform that obligation, this being a separate covenant which is broken if the lessee defaults and which renders the guarantor liable in damages for the amount of the rent, but not for the rent itself.

15

This is the classic definition of the liability of a guarantor, as stated by Lord Diplock in Lep Air Services v. Rolloswin [1973] A.C. 331, nor is it disputed by Mr Featherstonehaugh who appeared for the appellants. So the submission supports the landlords' contention that their claim against the guarantors is not "for arrears of rent", and therefore not within the first of the two categories described in section 19. But it leads them into difficult terrain when the second category is considered. Their claim admittedly is for damages; is it for "damages in respect of arrears of rent", in which case also section 19 applies? The question seems to compel an affirmative answer unless, as Mr Michaelson submits, the section is not concerned with claims against guarantors or other third parties, but only with claims against lessees.

16

This is, in my view, the central issue raised by this appeal. Apart...

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3 cases
  • McGuinness v Norwich and Peterborough Building Society
    • United Kingdom
    • Chancery Division
    • 23 November 2010
    ...the fact that the guarantee in that case provided for payment on demand, and he relied in particular upon the dictum of Evans LJ in Romain v. Scuba TV Limited [1997] QB 887 at 895, to the effect that such a provision meant that no cause of action arose until the demand was made. On the face......
  • KNP Headwear Inc. v. Levinson, (2005) 205 O.A.C. 291 (DC)
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    ...to. [para. 22, footnote 1]. Duchess Theatre Co. v. Lord, [1993] N.P.C. 163, refd to. [para. 22, footnote 1]. Roman v. Scuba T.V. Ltd., [1997] Q.B. 887, refd to. [para. 22, footnote 1]. Hampton v. Minns, [2002] 1 W.L.R. 1, refd to. [para. 22, footnote 1]. Esso Petroleum Co. v. Alstonbridge P......
  • Shun Kai Finance Co Ltd v Wong Shun
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    ...of limitation, notwithstanding that the agreement was one under seal. 41. The two cases in question are Romaine v Guba TV Limited(?) [1997] QB 887, which was a decision relating to recovery of rent. In that respect, notwithstanding that the document was under seal, section 19 of the Limitat......

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