Lease — New lease settled before original lease came to an end on terms favourable to tenant — Whether unconscionable bargain — High Court and Court of Appeal holding that lease should be set aside as unconscionable — Privy Council dismissing appeal by tenant
In 1976 the tenant took a lease of a two-storey building in Market Street, St John’s, Antigua, from January 1 1977 for a term of five years at the monthly rent of $833.33. The tenant covenanted to keep the interior and exterior of the property in good and tenantable repair. The lease contained an option to the tenant to renew for a further period of five years at a rent to be agreed or fixed by a qualified third person as the fair market rent. In 1980 a new lease was negotiated at a monthly rent of $1,000 for a 10-year period from January 1 1982, renewable at the option of the tenant for a further period of 10 years at the same rent. On August 24 1982 the landlord signed a power of attorney in favour of her cousin, G, and on May 30 1983 a writ was issued asking for a declaration that the 1980 lease was an unconscionable bargain and an order that the lease be rescinded as null and void. The High Court of Antigua and Barbuda set aside the lease and that decision was upheld by the Court of Appeal. The tenant appealed to the Privy Council.
Held The appeal was dismissed.
1. It was not sufficient to attract the jurisdiction of equity to prove that a bargain was hard, unreasonable or foolish; it had to be proved to be unconscionable: see Multiservice Bookbinding v Marden [1979] Ch 84 at p110.
2. “Unconscionable” related not merely to the terms of the bargain, but to the behavior of the stronger party, which had to be characterised by some moral culpability or impropriety: see Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1983] 1 WLR 87 at p94.
3. Unequal bargaining power or objectively unreasonable terms provided no basis for equitable interference in the absence of unconscientious or extortionate abuse of power: see Alec Lobb (Garages) Ltd [1985] 1 WLR 173 at p183.
4. A contract could not be set aside in equity as “an unconscionable bargain”, against a party innocent of actual or constructive fraud. Even if the terms of the contract were “unfair” in that they were more favourable to one party than the other, equity would not give relief unless the beneficiary was guilty of unconscionable conduct: see Hart v O’Connor [1985] AC 1000.
5. In situations of this kind it was necessary for the plaintiff seeking relief to establish unconscionable conduct of his disabling condition or circumstances: see Commercial Bank of Australia Ltd v Amadio (1983) 46 ALR 402.
6. On the evidence in the present case the tenant must have taken advantage of the landlord with full knowledge before the 1980 lease was settled that her conduct was unconscionable.
Geoffrey Robertson QC and Martin Westgate (instructed by Stephens Innocent) appeared for the tenant; Dr Fenton Ramsahoye SC and Colin Derrick (both of the Antigua and Barbuda Bar)(instructed by Simons Muirhead & Burton) appeared for the landlord.
