Landlord and Tenant

Landlord levying distress in respect of unpaid rent tenant offsetting past overpayments against rent demand restitutionary claim accruing from time of overpayment unless tantamount to...Landlord levying distress in respect of unpaid rent tenant offsetting past overpayments against rent demand restitutionary claim accruing from time of overpayment unless tantamount to rescission equitable but not legal set off availableFuller v Happy Shopper Markets Ltd and Another: ChD (Lightman J): 14 February 2001Under the terms of the lease granted by the first defendant to the claimant in March 1994 in the event of part of the premises becoming unusable as a result of, among other things, storm damage, a fair proportion of the rent was to be suspended until the premises were fit again for use.

In January 1994 the property sustained severe storm damage, rendering 60-70% of the property unfit for use until August 1996.

The tenant requested a suspension of rent in September 1994 but continued to pay rent in full until September 1995 after which date he paid no more rent.

In February 1997 the landlord instructed bailiffs to levy a distress in respect of rent arrears, and goods belonging to the tenant were seized and sold.

The claimant brought an action alleging unlawful distress and the first defendant counterclaimed for the unpaid rent.

The first defendant applied for summary judgment on the counterclaim, which was refused by the master.

At the hearing of the first defendants appeal, both parties agreed that the hearing should instead be used to try preliminary issues as to whether the claimant would be entitled to set off the alleged overpayments against the first defendants demands for rent.Stephen Boyd (instructed by Heyes Samuel, Ryde) for the claimant.

Mark Wonnacott (instructed by Kingsford Stacey Blackwell as agents for DAngibau Willmot, Boscombe) for the defendants.Held, declaring that credit was to be given for overpayments when assessing rent due at date of distress, that the question arose as to whether the tenant only became entitled to offset the overpayment against the rent due after he had made a demand for repayment; that while the due exercise of a right of rescission by giving notice had to precede the accrual of any right of action for money had and received, where no question of rescission arose (for example in overpayment cases), no notice or demand was required; that since legal set off was a procedural rather than a self-help remedy it was only available in judicial proceedings, and could not therefore be relied on against the levying of distress; but that the close connection between the claim and cross-claim in the present case meant that the tenant could nevertheless invoke the doctrine of equitable set off in order to offset any overpayments against the unpaid rent.