Landlord and tenant — Appeal by intermediate landlords against grant of interlocutory mandatory injunction, in an action brought by their tenants, requiring the landlords to use their best endeavours to put a lift in good working condition until after trial of the action — Complicated situation in which there were actions by head landlords against intermediate landlords and by intermediate landlords against their tenants as well as the present action by these tenants against their landlords — Main point in present interlocutory proceedings was whether the tenants could enforce the covenant concerning the lift when they were applying for relief against the forfeiture of their underlease in the action brought against them by their landlords — Submission by the landlords that the tenancy had been terminated by the service of the writ claiming forfeiture and that the lift covenant, together with the other covenants, had come to an end — Held, affirming decision of Ewbank J, that the tenants were entitled to rely on the covenant, notwithstanding the forfeiture, since the covenants in the underlease were still potentially good, pending a decision on the application for relief — Review of authorities and some important dicta on the effects of a landlord’s unequivocal election to forfeit a lease
This was an
appeal from an ‘unusual order’ made by Ewbank J on the application of the
plaintiffs, Peninsular Maritime Ltd, in an action against their landlords,
Padseal Ltd. The order granted an interlocutory mandatory injunction by which
the landlords were enjoined to use their best endeavours to put a lift
mentioned in the statement of claim in good working condition until after the
trial of the action or further order. The position in regard to other actions
which had a bearing on the present proceedings is explained in the judgment of
Stephenson LJ.
Paul de la
Piquerie (instructed by Green, David Conway & Co) appeared on behalf of the
appellants (defendants in the action); David E Neuberger (instructed by
Linklaters & Paines) represented the respondents (plaintiffs in the
action).
Giving
judgment, STEPHENSON LJ said: This is an appeal from an unusual order of Ewbank
J made on February 24 of this year directing that the ‘defendants shall by
themselves their servants or agents or otherwise howsoever forthwith use their
best endeavours to put the lift referred to in the statement of claim in good
working condition until after the trial of this action or further order’.
The lift referred
to is a lift which runs from the ground floor through the first floor, the
second floor and to the third floor of a building which has a ground floor and
four floors in 82 Brook Street, London W1. That is to say, it is intended to
run up and down between those floors but it has not been doing so since last
August, and the plaintiffs, who are tenants under an underlease, to which I
will come in a moment, of the second, third and fourth floors, have asked the
court to make their immediate landlords make the lift run between those floors
once more. Ewbank J has granted them the relief which they claim.
No 82 Brook
Street is owned by a company called Allied London Investments Ltd and on
January 27 1972 they leased the whole of the premises to the defendants’
predecessors in title for a period which expires on September 26 2000. That
lease was assigned to the defendants, the appellants in these proceedings,
Padseal Ltd, whom I will call ‘Padseal’. Padseal sublet the ground floor and
the first floor to a company aptly named ’82 Brook Street Ltd’ by an underlease
dated March 2 1978 for a term expiring shortly before September 2000, and at an
earlier date, namely by an underlease dated February 17 1975, they sublet the
second, third and fourth floors to the plaintiffs, Peninsular Maritime Ltd, the
respondents to this appeal, whom I will call ‘Peninsular’, for a term expiring
shortly before the expiry of the headlease in September 2000.
There has been
a dispute between Peninsular and Padseal, principally over water getting into
the top floor. As a result Peninsular have withheld rent and service charges
and Padseal brought an action against them, no P 3167 of 1980, for over £19,000
arrears of rent, over £2,000 service charges, and possession of the three floors
together with mesne profits. To that action Peninsular put in a defence and
counterclaim and they have applied for relief from forfeiture.
Padseal, of
course, have to pay rent to Allied London Investments Ltd, their head lessors,
and it is difficult for them to pay their head lessors if they do not get their
rent from Peninsular and 82 Brook Street Ltd. They have not been getting that
rent. The day after Padseal sued the plaintiffs, Allied London Investments Ltd
sued Padseal in an action no P 3037 of 1980 for arrears of rent and for
possession. In that action Padseal have applied for relief against forfeiture.
In that action there has been an order for payment of over £28,000, an interim
order on account, by Padseal.
When
Peninsular began their action which they have brought against Padseal, in which
this interlocutory mandatory injunction has been granted, it is said that their
underlease of February 17 1975 is forfeited either by the service of the writ
in the action that Padseal have brought against them, or by the service of the
writ which Allied London Investments has served in the action brought against
Padseal. In the Order 14 proceedings which Padseal brought against Peninsular
an order was made by consent that upon Peninsular undertaking to pay into court
until the determination of the action or until further order the sum of £6,615,
it was ordered that the defendants pay £20,000 into court within 14 days as a
condition of leave to defend the action for the whole of Padseal’s claim. It
was further ordered that ‘If the aforesaid sum of £20,000 is not so paid, the
plaintiffs [Padseal] may enter judgment against the defendants for £21,902.66
and interest to be assessed . . .’. That order was obtained after a Mr
Hadjipateras, a director of Peninsular, the defendants in that action, had
sworn an affidavit which includes this paragraph:
10. Further
and in any event, the plaintiffs’ landlords
that is Allied
London Investments
have, on the
day following the issue of the writ herein, instituted proceedings for the
forfeiture of the plaintiffs,
that is
Padseal
lease. A copy
of the writ issued by the plaintiffs’ landlords is produced and shown to me
marked ‘JCH 3’. In the circumstances, I respectfully submit that the plaintiffs
are not entitled to possession of the premises demised by the underlease and
that any conditions as to relief from forfeiture, if relief was necessary,
would have to be argued as between [Padseal, Peninsular and Allied London
Investments] so that [Peninsular] in order to obtain relief from forfeiture, do
not have to pay twice over any sum which might be found to be due by them to
[Padseal].
In an approved
note of his judgment, which we have had the advantage of seeing, the learned
judge set out the two relevant sets of proceedings between these two parties:
(i) Padseal’s action for possession for non-payment of rent, of which £20,000
had been paid into court by Peninsular, in which action Peninsular were
claiming damages by way of set-off and counterclaim in respect of damage by
water and, we are told, by way of interference with their user and enjoyment of
the three floors demised to them by the underlease; and (ii) the proceedings in
which Peninsular were claiming that Padseal must put the lift in the building
in good working condition.
The basis,
although not the original basis, of Peninsular’s claim against Padseal was
clause 5(e) of their underlease. I need not read any of that subclause except
its proviso, which reads as follows:
. . .
provided that the Lessor shall so far as in its power cause any damage to main
services or other main pipes or cables or cause the breakdown of the lift as
the case may be to be reinstated and made good with as little delay as is
reasonably possible.
It is perhaps
not a very happily worded clause, but it seems to be saying in the clearest
terms that the lessor, which is Padseal, shall so far as is in its power cause
the breakdown of the lift to be reinstated and made good with as little delay
as is reasonably possible. It is in reliance on that subclause in that covenant
of Padseal that Peninsular have sought and obtained this mandatory injunction.
Mr de la
Piquerie has submitted to this court that the learned judge was in error in
granting this injunction and he makes a number of complaints of errors on the
part of the learned judge. There are indeed six grounds in his notice of appeal
which he has clearly and forcefully put before us today. He says first of all
that the judge misdirected himself and was wrong in holding that Peninsular
were entitled to enforce the covenants contained in clause 5(e) of the
underlease by means of an interlocutory mandatory injunction, or otherwise,
pending their obtaining relief from forfeiture which had been incurred by them
on the ground of non-payment of the arrears of rent and service charges claimed
against them by Padseal in Padseal’s action no 3167, and he was wrong in saying
that there was a potential covenant in the underlease which entitled them to
that relief.
That is the
first matter with which the learned judge dealt: the submission that the lease
had come to an end, as the judge put it, and therefore the covenants contained
in the lease had also come to an end, the covenant to pay rent had come to an
end and only mesne profits could be claimed. The case of Wheeler v Keeble
Ltd [1920] 1 Ch 57, a decision of Younger J, as he then was, was relied on
as showing that a landlord could not blow hot and cold and once he had
determined the lease by taking proceedings for forfeiture, the covenants in the
lease went.
On the other
side Mr Neuberger referred the judge to a decision of this court in Driscoll
v Church Commissioners for England [1957] 1 QB 330 in support of his
submission that, although Padseal had forfeited the lease, nevertheless the
covenants were still in existence and enforceable, including 5(e). The relevant
part of that decision related to a preliminary point taken against a tenant who
had obtained a decision from the Lands Tribunal to whom he had gone under
section 84(1) of the Law of Property Act 1925 as amended, a subsection which
provided that an authority ‘shall . . . have power from time to time, on the
application of any person interested in any freehold land affected by any
restriction arising under covenant or otherwise as to the user thereof or the
building thereon, by order wholly or partially to discharge or modify any such
restriction . . . on being satisfied . . .’ of various matters.
The point
taken in this court was that the six leases under which
forfeited by writs issued and served by his landlords in 1952, he had no
business to go to the Lands Tribunal to get a restriction arising under
covenants in his leases removed, because there were no subsisting covenants in
his leases. They had gone with the forfeiture of the leases by the service of
the writs. I say ‘service of the writs’ because, although the issue of the writ
for possession has been commonly regarded as forfeiting a lease, it has now
been authoritatively held by this court in another case to which I will refer
shortly, Canas Property Co Ltd v K L Television Services Ltd
[1970] 2 QB 433, that it is not the issue but the service of the writ which
operates as a forfeiture — whatever exactly that means or whatever precisely
its effect. This court came to the unanimous decision that the preliminary
point was bad and that the tenant was a person interested and was entitled to
go to the Lands Tribunal to obtain or try to obtain a modification of a
restriction arising under covenants in his leases. He was entitled to go there
in May 1956, two months before the landlords’ 1952 action was decided by Pearce
J, and he was granted relief from forfeiture on conditions by the learned
judge; so that at the time when he appeared before the Lands Tribunal he had
not obtained relief from forfeiture but the leases had been forfeited by the
landlords, and he had applied for relief from forfeiture but his application
had not been decided.
The way it was
put by Denning LJ (as he then was) in the Driscoll case at p 339 of the
report was this. The point put before him was that, because of writs for
forfeiture being issued, the tenant had no locus standi to apply for
these restrictions to be modified at all in regard to six of these leases. The
issue of a writ for forfeiture was an unequivocal election by the landlords to
determine the leases, and in consequence the leases had gone and the covenants
had gone, and there was nothing left to modify. Denning LJ said:
I do not
agree with that argument, for this reason: that, although a writ is an
unequivocal election, nevertheless, until the action is finally determined in
favour of the landlord, the covenant does not cease to be potentially good. For
instance, the forfeiture may not be established; or relief may be granted, in
which case the lease is re-established, as from the beginning.
He then cites
authorities, and says:
It seems to
me that so long as the covenant is potentially good, Mr Driscoll, or anyone in
like position, has a locus standi to apply to the tribunal for a
modification of the covenant.
So he decided
that the tenant was not defeated by any technical point.
Hodson LJ’s
judgment was to the same effect on that point. At p 343 of the report he said
of the rival contentions:
On the one
hand it was said by the Church Commissioners that the leases were determined by
the forfeiture, so that there are no subsisting covenants to be discharged or
modified. On the other hand the applicant says that the issue of the writ did
not determine the applicant’s interest in the premises, and that the leases
subsisted until the determination of the action and the counterclaim for relief
from forfeiture.
After
referring to various authorities the learned Lord Justice said:
I think the
effect of the authorities is that the right of the applicant is not destroyed
for this purpose, bearing in mind that the right to relief relates back, just
as the right to forfeiture relates back; so that the preliminary objection
taken in respect of the six cases, I think, fails.
Morris LJ put
the matter shortly and more simply on a finding that the tenant was a person
interested. That appears at p 347 of the report. But he expressed no dissent
from the more explicit view of the other two Lords Justices that he was a
person interested because he was still able to rely on covenants in leases
which the landlords had elected unequivocally to forfeit by the writs in the
proceedings they had taken against him. No member of the court attached any
importance to the fact that the application for relief was subsequently
granted, and indeed, as is clear from the passage which I have read from
Denning LJ’s judgment, the learned Lord Justice seems to have thought that the
covenants would have been, as he said, potentially good, just as much, if there
was a possibility that the claim for possession would fail, as if there was a
claim for relief from forfeiture.
What the
learned judge said about that case was that it, in effect, decided the point
against Mr de la Piquerie. He came to the conclusion, echoing the words used by
Lord Denning in the Driscoll case, that the covenants in this underlease
‘are potentially good covenants and as such they are enforceable if the
circumstances are right’.
What Mr de la
Piquerie says about that case is that it really was only a decision on a tenant
being a person interested and that, interpreted as a decision that the
covenants in a forfeited lease still subsist and are enforceable because an application
for forfeiture has not finally been decided, it would be inconsistent with a
later decision in this court, to which I have already referred, Canas
Property Co Ltd v K L Television Services Ltd.
That decision
established that it is the service of a writ and not the issue of it which
forfeits a lease and the language used there certainly favours the view that
such a service of a writ by a landlord is equivalent to re-entry and does
determine the lease, although the references to Scarf v Jardine
(1882) 7 App Cas 345 in the judgments of the Master of the Rolls, Lord Denning,
and Megaw LJ indicate that they were not departing or intending to depart from
what may be the truer view that the service of a writ for possession by a
landlord is an unequivocal election by the landlord to determine a lease rather
than a determination of it. However that may be, the case of Driscoll,
as appears from p 434 of the report, was cited to their Lordships and they
expressed no opinion about it and certainly did not disapprove it. It is also
the case that no question of relief against forfeiture appears to have been
raised or considered in that case. In these circumstances I find it quite
impossible to regard that case as in any way cutting down or disapproving the
previous decision of this court in Driscoll and it may be that the
position is that a landlord who has unequivocally elected to determine a lease
by serving a writ and forfeiting it cannot himself rely on any covenants of the
lease in any shape or form, or any covenants in it, but the tenant who has not
elected to determine the lease can do so.
That seems to
be the result of the decision in Driscoll which binds us, and I take it
to be the law correctly applied by the learned judge in the instant case.
The next ground
on which the learned judge’s order is challenged is that Peninsular were not
entitled to enforce the covenant contained in clause 5(3) by reason of the fact
that in the action of Padseal against them, wherein Padseal claimed possession
of the premises from them, they alleged that Padseal were not entitled to
possession against them on the grounds that their own lease under which they
held the premises from Allied London Investments had been forfeited by Allied
London Investments on the ground of non-payment of rent. That is based on the
paragraph which I have read from Mr Hadjipateras’s affidavit. The learned judge
dealt with that allegation in this way:
The landlords
also say that in the first proceedings the tenants have made an election
Padseal say
that Peninsular made an election
and that they
are now estopped from asserting what they do assert . . . . I do not think that
this paragraph is an election. It is putting forward a submission principally
directed to the danger of double payment of such arrears as may be due. No
question of estoppel arises.
I entirely
agree with the short way in which the learned judge dealt with that paragraph.
There was a
possibility that if Peninsular paid not into court but to Padseal £20,000, or
any sum in respect of arrears of rent, Padseal might not pay that sum over to
Allied London Investments in satisfaction of their claim for rent, but pocket
it; and there was therefore a risk that if Peninsular paid Padseal £20,000 they
would then find themselves liable to pay that sum over again to the unsatisfied
head landlords, Allied London Investments Ltd. It was to safeguard them against
that eventuality, as the judge found, that Mr Hadjipateras, on behalf of
Peninsular, took that point in his affidavit, though it was not pleaded in the
defence and counterclaim of Peninsular in that action; and it does not seem to
me to justify any kind of estoppel or election by Peninsular to determine the
lease. So
and cannot rely on the covenants, there is no similar election by Peninsular
arising from what Mr Hadjipateras has sworn on their behalf, and on the
authority of Driscoll’s case they are entitled to treat this covenant as
still subsisting or, in Denning LJ’s words, ‘potentially good’.
I therefore
reject the fourth ground of the appeal that the judge was wrong in following Driscoll’s
case.
That only
leaves two further grounds. The fifth ground is that ‘the work specified in the
said order is not sufficiently particularised to form the subject matter of an
interlocutory mandatory injunction’, and the sixth ground is that the
plaintiffs ‘unduly delayed’ in applying for this injunction. Of course it is
well settled that such an injunction is exceptional and such an injunction,
indeed any form of interlocutory relief, must be applied for promptly; but the
learned judge has found that there was no delay and, as I understand it, Mr de
la Piquerie does not challenge his finding in this court. But he does still rely
on the absence of particularity. What he says is that Peninsular ought to have
had this lift examined and got their expert to say what needed doing in order
to put the lift in working condition again, and a schedule of work to be done
should have been incorporated in the learned judge’s order so that Padseal
would know what it is they were required to do unless they were to run the risk
of being committed for contempt.
That seems to
me, as it did to the learned judge, to be wholly mistaken. I have read the
terms of the covenant requiring in effect that Padseal reinstate and make good
a breakdown of the lift. I find it quite impossible, as did the judge, to say
that no one would know whether Peninsular had complied with an order in the
terms of the summons or not. If the lift works, the order will be complied
with; if it does not, subject to a further point, it will not have been
complied with. I share the learned judge’s view that any casual visitor would
know whether the lift was in working condition. ‘It is clear enough for me’,
said the judge. It is also clear enough for me. But the point was taken before
the judge, and before us, that if Padseal tried to repair this lift they might
not be allowed to do so by their head landlords, Allied London Investments Ltd,
so the judge safeguarded them on that point by ordering them not to put the
lift in good working condition but to use their best endeavours to put the lift
in good working condition; so that if they are prevented by the head landlords
(and there is no evidence they have ever tried to get the permission of the
head landlords or that the head landlords would refuse them permission if they
asked for it) from putting this lift in good working order, all they have to do
is to use their best endeavours to try to get the permission of their head
landlords, and if their best endeavours are not good enough to put it in
working order — and we are told it may be that the lift has outlived its useful
life and cannot be put into good working order but may require replacement by a
more modern appliance — they would not be in breach of this order which only
requires them to put the lift referred to in the statement of claim in good
working condition if their best endeavours can do it. It therefore seems to me
that, subject to one further matter, the learned judge’s order is a good one
and has been unsuccessfully attacked. It has not been contended that the
learned judge violated the principles laid down in American Cyanamid Co Ltd
v Ethicon Ltd [1975] AC 396 for the grant of all such interlocutory
relief as this, and we have not allowed Mr de la Piquerie to amend his notice
of appeal to throw open the door wide to a complete review of the exercise of
the learned judge’s discretion.
There is the
usual undertaking by Peninsular to ‘abide by any order that the court may make
as to damages in case the court shall hereafter be of opinion that the
defendants shall have sustained any by reason of this order which the plaintiff
ought to pay’, and it has been said that that includes Peninsular’s liability
under clause (iv)(2) of the underlease to pay 26 55ths of the total costs
incurred in such repairs as are required of Peninsular to comply with Padseal’s
covenants to repair. Mr Neuberger has the authority of his clients to give an
undertaking that that sum will be paid as a condition of this injunction
standing.
I would
therefore dismiss this appeal, subject to varying the injunction which the
learned judge granted, by adding that undertaking. The form it should take is a
matter which I hope counsel may be able to agree and submit to the court for
incorporation in the order.
BRANDON LJ and
SIR STANLEY REES agreed.
The appeal
was dismissed with costs.
