Landlord and tenant–Tenants of flats under long leases liable to pay a maintenance charge and an excess contribution, to be certified by the landlords’ accountants in respect of structural repairs to the block, including roof repairs–Assurances by landlords that, despite tenants’ liability in the leases, the landlords would repair roofs at their own cost–Subsequent demand for contributions from tenants in accordance with leases towards cost of roof repairs–In some cases tenants had assigned their leases since the assurances–Tenants’ refusal to pay upheld by county court judge and Court of Appeal–Some differences of doctrine between members of Court of Appeal–Lord Denning’s view that tenants were protected by ‘High Trees’ principle of equitable estoppel–Roskill and Cumming-Bruce LJJ preferred collateral warranty on principle of De Lassalle v Guildford, or waiver in the case of assignees or a principle of equitable relief, distinguished from equitable estoppel, derived from Hughes v Metropolitan Railway Co
This was an
appeal by the landlords, Brikom Investments Ltd, from a decision by Judge
Granville Slack, at Willesden County Court, in favour of tenants, Mrs Theobisti
Carr, Eugene Patrick Roddy and his wife Margaret Mary Roddy, and Miss Margaret
Hickey, of flats at Herga Court, Sudbury Hill, Harrow. The landlords,
plaintiffs in the county court, sued the tenants for contributions claimed to
be due from them under their leases in respect of expenditure incurred by the
landlords in repairing the roofs of the flats.
Ronald
Bernstein QC and R Fernyhough (instructed by A E Hamlin & Co) appeared on
behalf of the appellants; I E Jacob (instructed by J E Kennedy & Co)
represented the respondents.
Giving
judgment, LORD DENNING MR said: This case concerns four blocks of flats at
Herga Court, Sudbury Hill, Harrow. There are 102 flats altogether. In 1974 the
landlords expended £18,000 in repairing the roofs. They say that under a clause
in the leases each of the tenants is bound to pay a contribution towards the
expenditure, each according to the rateable value of his flat. The amount of
the contribution ranges from £50 to £250. The landlords sued the tenants in the
county court for their contributions. The tenants disputed the claim because
they said that the landlords had told them that they would repair the roofs at
their own cost. The landlords contended that the express clause in the leases
had priority over anything the tenants were told; and that they were entitled
to the sums claimed. The county court judge heard the case for seven days. He
decided in favour of the tenants, relying on the principle stated in the High
Trees case, Central London Property Trust Ltd v High Trees House Ltd
[1947] KB 130, and the cases that have followed it. The landlords appeal to
this court, saying that that principle does not apply for several reasons. It
is these that we have to consider. But before I come to them, I must state the
facts in more detail.
In the years
before 1971 the landlords had let the flats to tenants at rack rents. But in
1971 they decided to offer long leases of 99 years each to the sitting tenants
of the flats. Many accepted the offer: and after meetings, correspondence and
contracts, leases were signed. They were all in standard form. They provided
that the tenants should pay rent, and by way of additional rent, a maintenance
charge, together with an excess contribution. Each lease contained an express
covenant by the landlord that he would repair and maintain the main structure
of the building, ‘including the principal internal timbers and the exterior
walls and the foundations and the roofs thereof.’ But each lease also contained an express
stipulation that the tenant would pay a maintenance charge; and, in addition,
the tenant would pay an annual contribution in respect of all the excess
expenses which the landlord incurred. The amount of the contribution was to be
ascertained by a certificate prepared by the landlord’s accountant. It was to
be paid by the tenants within 28 days of the service of the certificate. So, on
the terms of the lease, the landlord could charge a contribution against each
of the tenants on getting a certificate as to the amount, and serving it on the
tenant.
Everything was
done to satisfy the terms of the lease. In 1974 the landlords repaired the roof
at a cost of £18,000. In 1976 the accountants issued their certificates. These
were served on the tenants. But in some cases the original tenants had assigned
their leases. The landlords then claimed against the assignees. In all
strictness of law, neither the tenants nor their assignees have any answer to
the claim for contribution. The covenants in the lease are clear. But the
tenants and their assignees rely on various representations or promises made by
the landlords before and after the leases were executed. These were to the
effect that the landlords would themselves repair the roofs at their own cost
without making any charge against the tenants. The tenants and their assignees
claim that, on this account, it would be inequitable and unjust for the
landlords to insist now on their paying a contribution. They rely on the High
Trees principle.
Before I
consider this defence, I would draw attention to a preliminary objection on
which the landlords relied. It was an exception clause which was included in
all the contracts which the tenants signed before entering into the leases. It
purports to except the landlords from any responsibility for any
representations whatever. It is clause 7, which says:
It is
expressly agreed and declared that the foregoing conditions form and include
the entire basis and terms of the Agreement for Sale and Purchase of the said
leasehold flat and that no representation warranty or statement whether written
oral or implied heretofore made by or on behalf of one party to the other shall
be capable of being treated as forming part of the said terms or as an
inducement by the Vendor for the Lessee to enter into this Agreement or as a
warranty in relation to the subject-matter thereof or be the ground upon which
the Lessee shall base any claim against the Vendor.
All I need say
about that clause is that it is of no avail to the landlords whatever. The
cases are legion in which such a clause is of no effect in the face of an
express promise or representation on which the other side has relied; see J
Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR
1078: at any rate when the circumstances are such that it would not be fair or
reasonable to allow the landlord to rely on it: see section 3(b) of the
Misrepresentation Act 1967.
So I put
clause 7 aside and turn to the representations and promises on which the
tenants and their assignees relied. They were first made in February 1972–at a
time when some of the tenants had signed agreements for leases but had not
actually executed the leases. The tenants had formed a tenants’ association.
About February 14 1972 there was a meeting between the representatives of the
landlords and some representatives of the tenants’ association. The roofs had
got very badly out of repair by this time. According to the lease, the
landlords ought to have repaired the roofs already. But they had put off the
repairs because the landlords were hoping to get planning permission to put an
extra storey on the top. In that case it would be unnecessary to repair the
roofs. So their Mr Jarvis made this promise or representation to the tenants:
‘If we get planning permission to put the extra storey on, there will be no
need to repair the roofs. But, if we do not get permission, then we will repair
the roofs at our own cost.’ The judge
found clearly that that representation was made by the landlords’
representative, Mr Jarvis.
As a result of
that conversation, the tenants’ representative, Mr Rowe, wrote a circular
letter which he sent to all the tenants of the 104 flats. It was dated February
18 1972 and said:
Dear Sir or
Madam,
I have to
advise you that the Association did not succeed in their approach to get the 99
years’ lease altered. We have to accept it in its present form, or not at all.
However, we
have successfully obtained the Landlords’ covenant that they will arrange to
repair all the roofs this summer at their own cost. As the condition of the
roofs was our main concern (and that of many Building Societies who had been
approached for mortgages), our efforts have not been in vain.
Regarding any
future redevelopments, we shall have to rely on the Harrow Planning Committee
to refuse permission, as they have done in the past. We understand that they
consider the density at Herga Court has reached its limit and would refuse
further applications for this reason alone.
The
Association Committee thank you for your support and hope the necessity will
not arise for us to be called upon at any future date.
Yours truly,
J M Rowe.
Some tenants
relied on that circular letter and signed their leases on the faith of the oral
representation. Others were more cautious: and by themselves or their
solicitors got written confirmation from the landlords’ agents saying that they
would repair the roofs at their own expense. The judge said:
These
documents, in my view, are overwhelming evidence of the attitude of the
landlords at the time. They were assuring the tenants, one after another, that
the landlords would resurface the flat roofs, and they would not charge the
cost of doing so to the maintenance account, and that the work would be done in
the summer of 1972.
Relying on
those promises–some oral and some in writing–the tenants signed the leases.
Some asked for the leases to be altered to give effect to the promise: but the
landlords said that they could not alter the form of the lease: because it
covered the whole 99 years and they could not insert anything about this
particular expenditure.
The landlords
did not repair the roofs in 1972. They still sought planning permission to put
an extra storey on top. This was opposed by some of the tenants. In 1973 there
was another meeting between the landlords’ representative and the tenants. The
tenants were aggrieved because the landlords had not yet repaired the roofs.
The judge found that the landlords’ representative ‘in effect repeated the
assurance which they had given to Mr Rowe and others in the early part of 1972
that, if planning permission were refused, they would undertake resurfacing of
the roofs and not charge it to the tenants.’
On the faith of the renewed promise in 1973, the tenants did not press
for further repairs to be done at that time. In November 1973 the landlords’
application for planning permission was turned down. Then at last the landlords
began to buy the asphalt to repair the roofs. In due course in 1974 the
landlords did repair the roofs. It cost them some £18,000. In May 1976 the
accountant got out the certificates and they were served on each of the tenants
or their assignees at the time. The landlords claimed that they were entitled
to a contribution from each of the tenants in regard to their part of this
£18,000.
Many of the
tenants refused to pay. The landlords no doubt took legal advice. As a result
they selected the defendants carefully. They did not sue those tenants to whom
they had given a written undertaking that they would repair the roofs at their
own cost. They sued only those tenants who did not have anything in writing but
to whom they had given an oral promise. It is quite plain that that distinction
is bad in point of law. If the landlords are debarred in the cases where they
gave a written undertaking, equally they are debarred where they gave an oral
promise.
In discussing
the law, three cases were taken before us. Each had a separate point. The first
was that of Mrs Dufton. In the autumn of 1971 she was engaged to be married to
a Mr Carr. She was anxious to take flat no 14–a top flat. It had stains on the
ceiling where water had come through. She raised the question with Mr
Stacpoole, the landlords’ agent. He told her that the landlords would be paying
the cost of repairing it and that letters would be going out to other tenants
to that effect. She agreed to buy the 99-year lease for £10,750 and signed the
contract on January 19 1972. In her evidence she said that ‘she had Mr
Stacpoole’s assurance about the roof in mind when she signed the contract and
relied on it, even though she would still have gone ahead if she had not been told
about the roof.’ (It is by reason of
that evidence that the landlords say she cannot avail herself of the High
Trees principle.) Her fiance, Mr
Carr, attended the meeting on February 14 1972 and reported to her that the
landlords had agreed to repair the roofs at their own cost: and they both saw
the circular of February 18 1972. She signed the lease on March 20 1972. She is
being sued for £264.75.
Mr Bernstein,
for the landlords, submitted that Mrs Dufton (now Mrs Carr) could not rely on
the principle in the High Trees case (supra), because it was
essential that she should have acted on the representation: and here she had
not acted on it. On her own admission, he said, she would have gone on and
taken the lease even if she had not been told about the roof. In all the cases,
Mr Bernstein said, the courts had said that the party must have ‘acted’ on the
promise or representation in the sense that he must have altered his position
on the faith of it, meaning that he must have been led to act differently from
what he would otherwise have done, see Alan (W J) & Co v El Nasr
Export & Import Co [1972] 2 QB 189 at p 213. This argument gives, I
think, too limited a scope to the principle. The principle extends to all cases
where one party makes a promise or representation, intending that it should be
binding, intending that the other should rely on it, and on which that other
does in fact rely–by acting on it, by altering his position on the faith of it,
by going ahead with a transaction then under discussion, or by any other way of
reliance. It is no answer for the maker to say: ‘You would have gone on with
the transaction anyway.’ That must be
mere speculation. No one can be sure what he would, or would not, have done in
an hypothetical state of affairs which never took place: see Halsbury’s Laws
of England 3rd ed, vol 26, p 852, para 1583. Once it is shown that a
representation was calculated to influence the judgment of a reasonable man,
the presumption is that he was so influenced. The judge put it quite simply:
‘Mrs Dufton had an assurance from Mr Stacpoole before she signed the contract
on January 19 1972 that the landlords would repair the roof, and she was aware
of the assurance by Mr Jarvis before she signed the lease. The landlords should
not be allowed to go back on these assurances.’
The next case
is rather different. It concerns a Mr and Mrs Roddy. They took flat no 14. But
they did not take it as original lessees. They became lessees by an assignment
from Mr Harris, dated December 12 1972. Their case raises the question of an
assignee of a lease. In 1971 Mr Harris was the tenant of no 12. Like other
tenants, he received an offer to purchase the flat. He became a member of the
tenants’ association, and he received the circular dated February 18 1972. He
accepted what was said in the circular and relied on it. He signed a lease on
June 1 1972. Six months later, on December 12 1972, he assigned the lease to Mr
and Mrs Roddy. At the time of the assignment Mr Harris told Mr and Mrs Roddy
that the landlords had promised to repair the roof. As it happened, at the time
of the trial they were in Nigeria, but they swore an affidavit saying they had
been told by Mr Harris that the landlords had agreed to repair the roofs at
their own expense, and they relied on it. Moreover, they were present at the
meeting in 1973 when the landlords or their agents repeated the assurance about
the roof.
It is plain
that, if Mr Harris had remained the tenant, he could have relied on the
landlords’ assurance and could have resisted the claim, just as Mrs Dufton did.
But can Mr and Mrs Roddy rely on it? The
judge put it quite simply:
‘The
question, therefore, is whether Mr and Mrs Roddy can rely on an estoppel which
Mr Harris could have relied on. It comes back to what is just and equitable. I
have come to the conclusion that, in all the circumstances of this case, it
would be unjust and inequitable to allow the landlords to recover against Mr
and Mrs Roddy, when they could not have recovered against Mr Harris had there
been no assignment.’
Before I deal
with the law about assignees, I will go on to the third case. It is of Miss
Hickey, flat 68a. She was an assignee of an assignee. The original tenant was a
Mr Kavanagh. He received the assurance that the landlords would repair the
roofs at their own expense: and in reliance on it he took a 99-year lease. In
June 1974 he assigned his lease to Mr McGregor. Mr McGregor said that he
noticed the roof was very bad. He went up to the roof and saw the cracks in the
ceiling. Mr Kavanagh assured Mr McGregor that the cost of the repairs to the
roofs was being borne by the landlords. Relying on it, Mr McGregor took an
assignment of the lease of that flat from Mr Kavanagh. During Mr McGregor’s
tenancy in 1974 the landlords finished the work of repairing the roof. It was a
long time before the accountants got out the certificate. Eventually in May
1976 the certificate was made out certifying that a contribution of £81.02 was
payable by Mr McGregor. It was served on Mr McGregor. The 28 days expired on June
7. So, if the money were payable at all, it was payable on June 7. A month
later, on July 12 1974, Miss Hickey took an assignment from Mr McGregor of the
lease. By then the roof was completely repaired. She had no idea that there
would be any charge on her for repairs to the roof. Mr McGregor said nothing to
her about it. She knew nothing. Then, to her surprise, she found herself to be
one of the defendants against whom it is sought to charge a contribution
towards the expense of repairing the roofs.
The judge put
this case, too, quite simply. He said: ‘Now I have to consider whether Miss
Hickey is entitled to set up an estoppel against the landlords. I think that,
in these circumstances, she is.’
Mr Bernstein
submitted that the doctrine of promissory estoppel (as enunciated in the High
Trees case) was personal to the person to whom the representation or
promise was made. So the original tenants–Mr Harris (in the Roddy case) and Mr
Kavanagh (in Miss Hickey’s case) could rely on the estoppel, but no one else.
Mr Bernstein said that the assignees could not rely on it. They took their
assignments in the usual conveyancing way. They take the benefit and burden of
the covenants in the lease itself which run with the land at law or in equity,
but not of estoppels such as this. The judge did not accept that contention. We
have had it elaborately argued before us today. It was suggested that if
assignees are able to rely on an oral or written representation (not contained
in the deeds) it would cause chaos and confusion among conveyancers. No one
buying property would know where he stood.
I am not
disturbed by those forebodings. I prefer to see that justice is done: and let
the conveyancers look after themselves. Suppose that the landlords here (before
or after doing the repairs to the roof) had assigned their reversion to a
purchaser: and then that purchaser sought to recover the contribution from the
tenants–contrary to the promise made by the original landlords. Surely the
assignee of the reversion would be bound by the promise made by the original
landlords. It would be most unjust and unfair if he could go back on the
promise. Equity would not allow him to do it.
Now if the
assignee of the reversion takes subject to the burden of the estoppel,
so also the assignee of the tenant should take subject to the benefit of
it. As Lord Coke said long ago in his Commentary on Littleton, vol II at
p 352: ‘Every estoppel ought to be reciprocal . . . privies in estates, as the
feoffee, lessee etc . . . shall be bound and take advantage of estoppels.’ So when the original tenant assigns the lease
over to an assignee, the benefit of the promise passes to the assignee. The
burden and the benefit run down the line of assignor and assignee on each side.
Especially in this case, because it is plain (as the judge found) that when the
landlords made this promise they intended it to be for the benefit of all those
from time to time holding the leases, realising that each in turn would tell
his successor that the landlords were going to repair the roofs at their own
expense. We have the landlords, having made a representation of that kind,
knowing that it would be passed on, cannot escape from it by simply saying:
‘These people are assignees.’
So it seems to
me that the judge was quite right in the way he put the case. He held that in
all these cases the landlords could not go back to the strict rights under the
lease. They had given the tenants their promise or representation to repair the
roofs at their own cost, and the tenants relied on it. That gives rise to an
equity which makes it unjust and inequitable for the landlords to seek to
charge the tenants for a contribution; and the benefit of this equity avails
the assignees of the tenants also.
But I may say
there is another way in which the case can be put which seems to me equally
valid. Although this is called a ‘promise’ or ‘representation,’ is seems to me
that it might also qualify for what we call a ‘collateral contract’ or
‘collateral warranty.’ On the faith of
it these tenants signed the leases. After the first day in the county court,
Miss Hickey and Mr and Mrs Roddy took from their predecessors an assignment of
the benefit of that collateral contract or warranty. That enables them to take
advantage of it as against the landlords. This seems to me a roundabout way of
reaching the same result as the High Trees principle. It is a technical
way of overcoming technical difficulties. I prefer the simple way which is the
way the judge put it. I would like to pay tribute to him for the careful way in
which he analysed the evidence and for his statement of the law, which I think
was correct. I would, therefore, dismiss the appeal.
Agreeing that
the appeal should be dismissed, ROSKILL LJ said: I have found this case more
difficult than my Lord. While I agree this appeal should be dismissed, I wish
with respect, to make plain that my reasons differ from those of the judge
given in his judgment. I do not rest my decision on any question of promissory
estoppel; and I do not think it necessary on the facts of this case to
investigate the juris-prudential basis of that doctrine in order to arrive at
what I conceive to be the right decision. It is necessary to do no more than to
apply that which was said by the House of Lords and especially by Lord Cairns
LC in Hughes v Metropolitan Railway Co (1877) 2 App Cas 439.
I adopt what
was said by Sir Alexander Kingcome Turner in Spencer Bower on Estoppel
3rd ed at p 383. He referred to what Lord Denning MR said in Crabb v Arun
District Council [1975] 3 All ER 865 and added:
This case
[that is,
Crabb]
was really an
acquiescence case; but Lord Denning’s judgment canvassed also the
doctrine of promissory estoppel, and in this passage the Master of the Rolls
said: ‘If I may expand that, Lord Cairns LC said in Hughes v Metropolitan
Railway Co (1877) 2 App Cas 439, 448; ‘it is the first principle upon which
all courts of equity proceed . . . that it will prevent a person from insisting
on his strict legal rights–whether arising under a contract, or on his title deeds,
or by statute–when it would be inequitable for him to do so having regard to
the dealings which have taken place between the parties.” But reference back to the judgment of Lord
Cairns LC shows that the Lord Chancellor did not include in his reference to
‘legal rights’ those arising from ‘title deeds or by statute.’ He confined his proposition to: ‘parties who
have entered into distinct terms involving certain legal results–certain
penalties or legal forfeiture’; and the estoppel which the Lord Chancellor held
to arise in such cases was founded on: ‘a course of negotiation which has the
effect of leading one of the parties to suppose that the strict
rights arising under the contract will not be enforced.’ Hughes v Metropolitan Railway Co
can certainly not be validly cited in support of any wider proposition than
this. There appear to be serious dangers involved in any wider extension of the
new estoppel, and those who place value on the doctrine of consideration may
think that some degree of caution is clearly indicated.
I would
respectfully add to that that it would be wrong to extend the doctrine of
promissory estoppel, whatever its precise limits at the present day, to the
extent of abolishing in this back-handed way the doctrine of consideration.
I would add to
that passage a reference to what Lord Hailsham of Marylebone LC said in Woodhouse
AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] 2
All ER 271 at p 282, cited by Sir Alexander Turner at p 400 of Spencer Bower.
Lord Hailsham said:
I desire to
add that the time may soon come when the whole sequence of cases based on
promissory estoppel since the war, beginning with Central London Property
Trust Ltd v High Trees House Ltd, may need to be reviewed and
reduced to a coherent body of doctrine by the courts. I do not mean to say that
any are to be regarded with suspicion. But, as is common with an expanding
doctrine, they do raise problems of coherent exposition which have never been
systematically explored. However this may be, we are not in a position to carry
out this exploration here and in the present proceedings.
I would
respectfully adopt that passage.
It seems to me
in the present case that Mr Jacob’s argument (in so far as it rests on
promissory estoppel) involves taking that doctrine a great deal further than it
has hitherto been taken. With great respect, I would not go as far as my Lord
in saying it is now the law that the benefits and burdens arising from a
promise made in circumstances such as those presently found by the learned
judge, to quote the phrase he used a few moments ago, ‘run down both
sides.’ It seems to me that the problem
is far more complex. Accordingly, I do not rest my conclusion that this appeal
should be dismissed upon any question of promissory estoppel.
As my Lord
said, one has first to look at the leases in question. There can be no doubt
that if one has regard to, and only to, those leases the landlords on their
true construction have an unanswerable claim. Events have happened which give
rise to the tenant’s liability. The roof, although belatedly, has been
repaired. The certificate, even more belatedly, has been issued. Unless the
lessees or their assignees can somehow find a defence, they must be liable for
the sums due under the respective leases.
When these
cases came before the county court, they were most carefully tried by His
Honour Judge Granville Slack. But, as Cumming-Bruce LJ pointed out, the
defendants–the lessees or assignees–ought to have opened the case. The burden
was wholly upon them; and it was for them to show that they had a defence to
what, if one has regard only to the leases, was an undefendable claim.
What then is
the defence which it is sought to advance?
It was put in various ways. I make no criticism of that fact, because
this was a complex case. The pleadings were amended and re-amended from time to
time. But in the end I think Mr Jacob came to rest on two main defences. One–at
any rate in relation to the first of these cases–was the defence of collateral
contract or collateral warranty, as it is sometimes called. He also in all
three cases relied upon the doctrine of promissory estoppel. The learned
judge–and like my Lord I would pay tribute to the care he took over the
findings of fact in his judgment–dealt, if he will forgive my saying so, with
the issues of law with a brevity which was so admirable as to leave me in doubt
as to what the principle was on which he decided these cases in favour of the
defendants. In the case of Mrs Carr he simply said: ‘The landlords should not
be allowed to go back on these assurances.’
In the case of Mr and Mrs Roddy he said: ‘I have come to the conclusion
that in all the circumstances of this case, it would be unjust and inequitable
to allow the landlords to recover as against Mr and Mrs Roddy when they could
not have recovered against Mr Harris had there been no assignment.’ Finally in the case of Miss Hickey he said:
‘Now I have to consider whether Miss Hickey is entitled to set up an estoppel
against the landlords. I think that in these circumstances, she is.’ It seems to me, with great respect to the
learned judge, that this case requires more detailed legal analysis.
I consider,
first, the case of Mrs Carr, which is in some respects the easiest, for there
the question arises between the original lessor and the original lessee, and
there is no question of devolution by assignment or reassignment. The question
is whether Mrs Carr has a defence to this claim. The learned judge set out the
facts with the utmost care. I gratefully adopt his findings without repeating
them. They seem to me to be well-justified by the learned judge’s note of the
evidence. When I look at that note (and I am not overlooking the passage to
which Mr Jacob asked Mr Bernstein to draw to our attention) I entertain no
doubt (looking at the totality of the evidence and not just picking out from
the judge’s note one sentence which points one way and another sentence which
points the other) that there was a perfectly clear agreement between the
landlords and Mrs Carr–an agreement arrived at, first, because of what Mr
Stacpoole said as their agent and, secondly, because of what Mr Jarvis
said–that those who took these 99-year leases from the landlords would not be
liable for their share of the cost of repairing the roofs if the time ever came
to do those repairs.
It seems to me
impossible, with all respect to Mr Bernstein’s argument, for his clients now–I
make no comments about their ethics: the learned judge made enough comments
about them–to claim that they will not pursue those claims where there were written
assurances given but are entitled to pursue those claims where there were oral
assurances given. I do not see how the appellants can escape from the bond of
the promises which were given and which seem to me to have been given for
perfectly good consideration. This case seems to me to fall within the
principle laid down by this court in De Lassalle v Guildford
[1901] 2 KB 215. I will read a passage from the judgment of A L Smith MR at p
222: ‘The next question is: Was the warranty collateral to the lease so that it
might be given in evidence and given effect to?
It appears to me in this case clear that the lease did not cover the
whole ground, and that it did not contain the whole of the contract between the
parties.’ And later on: ‘The present
contract or warranty by the defendant was entirely independent of what was to
happen during the tenancy.’ When two
parties are about to enter into an agreement for a lease–a lease which imposes
upon the lessee a very burdensome obligation in respect to repairs–I can see no
reason why one party cannot
our legal position under the terms of the lease, we will not as landlords
enforce that obligation against you.’ I
see no reason why effect should not be given to such a position. I think that
the evidence shows that that was the position here; there was a perfectly good
collateral contract between these two parties.
But if I am
wrong about that, I think in relation to Mrs Carr’s case–and this applies
equally to the other two cases–there was a plain waiver by the landlords of
their right to claim the cost of these repairs from these tenants. Let me take
this example, which I think my Lord the Master of the Rolls mentioned during
the argument: Suppose the landlords were now seeking to recover from the
assignees the last two instalments of rent due from an assignee or lessee
having said earlier that they would not seek to recover those two instalments
from him. If that were the position as between the landlords and Mrs Carr, and
the landlords, having given that assurance, then sought to recover those two
instalments of rent from Mrs Carr, I think that their claim must fail without
more on the ground that there was there the plainest waiver of the right to
recover that rent. If that be right, then it seems to me that that waiver
subsists notwithstanding any subsequent assignment of the lease to assignees
and sub-assignees from the first assignee; because what was then assigned and
reassigned was a lease, the relevant obligation in which had before assignment
been waived by the landlords.
I think it
necessary to go no further than what Lord Cairns LC said in Hughes v Metropolitan
Railway Co where the matter was put not as one of promissory estoppel but
as a matter of contract law or equity (call it which you will) at p 448 of the
report in (1877) 2 App Cas 439:
It was not
argued at your Lordships’ Bar, and it could not be argued, that there was any
right of a Court of Equity, or any practice of a Court of Equity, to give
relief in cases of this kind, by way of mercy, or by way merely of saving
property from forfeiture, but it is the first principle upon which all Courts
of Equity proceed, that if parties who have entered into definite and distinct
terms involving certain legal results–certain penalties or legal
forfeiture–afterwards by their own act or with their own consent enter upon a course
of negotiation which has the effect of leading one of the parties to suppose
that the strict rights arising under the contract will not be enforced, or will
be kept in suspense, or held in abeyance, the person who otherwise might have
enforced those rights will not be allowed to enforce them where it would be
inequitable having regard to the dealings which have thus taken place between
the parties.
For my own
part, I would respectfully prefer to regard that as an illustration of
contractual variation of strict contractual rights. But it could equally well
be put as an illustration of equity relieving from the consequences of strict
adherence to the letter of the lease.
But, whichever
is the right way of putting it, ever since Hughes v Metropolitan
Railway Co, through a long line of cases of which there are many examples
in the books, one finds that where parties have made a contract which provides
one thing and where, by a subsequent course of dealing, the parties have worked
that contract out in such a way that one party leads the other to believe that
the strict rights under that contract will not be adhered to, the courts will
not allow that party who has led the other to think the strict rights will not
be adhered to, suddenly to seek to enforce those strict rights against him.
That seems to me to be precisely what the landlords are trying to do here.
Having said both through their solicitors and Mr Jarvis to various inquiring
solicitors of intending purchasers of the leases, and to Mr Rowe, the chairman
of the tenants’ association, and through their agent Mr Stacpoole at lunch with
Mrs Carr: ‘We will do these repairs at our expense,’ they then subsequently, as
it would seem as a reprisal because of disapproval of opposition by these
lessees in attempting to prevent the landlords getting planning permission to
add another storey to these flats, belatedly tried to enforce against one of
these lessees, and in the other two cases against assignees, the strict letter
of the contract. I do not think that the common law or equity will allow them
to take that step; and for my part, with profound respect to the Master of the
Rolls, I do not think it is necessary in order to reach that result to resort
to the somewhat uncertain doctrine of promissory estoppel.
For those
reasons, which I have given at some length in deference to the arguments to
which we have listened, I would dismiss this appeal.
Agreeing with
the reasons given by Roskill LJ, CUMMING-BRUCE LJ said: I add a word of my own
as the appeals have given rise to a discussion of some controversial problems
of legal analysis.
The first
appeal is the case of Mrs Carr. Before she signed her contract, to which the
draft lease was annexed, she received an assurance that the grantors who became
her landlords under the lease would not enforce against her a covenant imposing
upon her the burden of paying for repairs to the roof of the building in which
she was proposing to become their tenant. Relying upon that assurance, she
entered into an agreement for a lease. Before she signed the lease, the
landlords by their agent repeated the assurance. Relying thereon, she entered
into the lease. Those facts established a contract collateral to the agreement
for a lease and collateral to the lease itself. Consideration moved from Mrs
Carr because she entered into the agreement for a lease and then made the deed
in reliance upon the assurance. Looking back on the transaction, she said in
evidence that she would have entered into a lease anyway: none the less, on her
evidence the inducement of the landlords’ promise was one of the factors that
she relied upon. That is enough without giving rise to the necessity of
assessing the weight or quantum of each of the factors that between them
induced her to agree to enter into the lease. After she had taken possession
under the lease she was minded to take action to make the landlords repair the
roof as was their obligation under the lease. She stayed her hand because the
landlords were still assuring all the tenants that they were going to pay for
the roof repairs themselves. A long time afterwards they changed their mind
about that, apparently out of resentment over the line taken by some tenants in
connection with a planning application. The principle declared in Hughes
v Metropolitan Railway Co (1877) 2 App Cas 439 is in point. If I am
wrong in holding that she can rely upon the contract collateral to her lease,
she then acted to her detriment in reliance upon the landlords’ promise that
they would not enforce a covenant in the lease, and equity will not allow them
to enforce their legal right.
In the cases
of Mr Roddy and Miss Hickey there was no promise given by the landlords to them
as assignees. The promises were given in both cases to the first purchasers of
the leases, which leases were assigned by the tenants. So Mr Roddy stands at
one remove, and Miss Hickey at two removes from the promises given by the
landlords to the original lessees. I do not see how an assignee can claim the
benefit of an estoppel founded on a promise made to somebody else, even though
that other person is the assignor who is assigning the unexpired term of the
lease. Nor is there any collateral contract between the assignees and the
original grantor of their leases. But in both these cases the landlords by their
declarations at the time when the leases were granted communicated to the
lessees that they waived the lessees’ covenant to pay for repairs so far as
repairs to the roof were required at the date of lease. Having waived the right
to recover the cost of such repairs from the original lessees, their obligation
to pay for those repairs came to an end. There is nothing in the evidence to
suggest that the landlords intended their assurances to be personal to any
individual tenant. On the contrary it is clear that when those lessees passed
on the content of the landlords’ assurances about the cost of roof repairs to
their assignees they were behaving
found by the learned judge are considered, they point to an overwhelming
inference that the landlords acted in such a way as to lead the original
lessees to believe that they had the right to assign an estate unencumbered by
any obligation to pay for the repairs to the roof which was necessary at the
time when the leases were granted. On those facts the landlords’ waiver
operated so that the lessees’ obligation to which it related came to an end
once and for all, and did not revive upon the accidental contingency of a first
or second assignment.
For those
reasons I concur in the order that the appeal should be dismissed.
The appeals
were dismissed with costs. Leave to appeal to the House of Lords was refused.