John Smith & Company (Edinburgh) Ltd v Hill & Ors

A reversioner will generally be unable to sue for a temporary nuisance which causes no injury to the reversion before it falls into possession. That principle may not be absolute. A temporary interference may injure the reversion where it gives the tenant an arguable right to set off damages for breach of a covenant for quiet enjoyment against rent, thereby permanently affecting the reversionary interest. Whether administrators are personally liable for a nuisance committed through their statutory control of a company depends on the precise facts and the nature of their intervention. Those issues were unsuitable for summary determination where material facts, including the existence of actionable interference and the contractual scope of the quiet enjoyment covenant, remained unresolved.

The claimant was the concurrent landlord of premises occupied under an occupational sublease by the third defendant. Scaffolding remained around the property after redevelopment works had ceased while the first and second defendants acted as administrators of the claimant’s former landlord companies.

The third defendant alleged that the scaffolding interfered with quiet enjoyment and sought to set off damages against rent. The claimant sought an indemnity from the administrators for any resulting liability. The administrators sought summary judgment on the basis that a temporary nuisance could not injure the claimant’s reversion and that their own participation could not establish personal liability. The central issues were whether the claimant had an arguable nuisance claim as reversioner and whether the administrators’ intervention could make them personally liable.

1. Both applications dismissed. Neither the claimant nor the administrators was entitled to summary judgment. The existence of actionable interference, the contractual protection afforded by the quiet enjoyment covenant, and the precise mechanism by which the administrators retained the scaffolding required factual findings at trial.
2. The general rule is that a reversioner cannot sue for a merely temporary nuisance which causes no injury to the reversion before the reversion falls into possession. The Victorian authorities did not decide that a tenant’s equitable set-off for breach of quiet enjoyment could never constitute injury to the reversion.
3. It was at least arguable that the tenant’s right to set off damages against rent could permanently deprive the reversioner of part of the value of its proprietary rights. The possible operation of that principle was not confined to interference continuing beyond the end of the lease. Bell v Midland Railway Company was an indication that a temporary obstruction could injure a reversion where it adversely affected the landlord’s monetary return.
4. The administrators’ personal liability could not be determined without evidence of their precise intervention. A person who causes or commits a nuisance generally remains liable despite acting as another’s agent: Re Goldberg (No 2). A director who instructs a company’s employee to commit a tort may also be personally liable: Mancetta Developments Ltd v Garmanson. However, MCA Records Inc v Charly Records Ltd recognised that a person exercising only the constitutional role of governing a company may avoid personal liability where the company commits the tort. Whether that distinction applies to administrators exercising statutory powers required trial.
5. The court therefore declined to determine the substantive issues finally and dismissed both summary judgment applications.