City and Westminster Properties (1934) Ltd v Mudd
| Jurisdiction | England & Wales |
| Date | 1958 |
| Year | 1958 |
| Court | Chancery Division |
Contract - Construction - Deletion - Words in draft omitted in contract - Lease. - Contract - Construction - Extrinsic evidence - Lease - Covenant regarding user - Nature of premises - Knowledge of user. - Waiver - Landlord and tenant - Covenant - Breach - Covenant to use as business premises only. - Contract - Promise inducing - Lease - Covenant regarding user - Promise not to enforce.
In 1941 the defendant became the tenant of certain premises comprising a ground floor shop and basement described as a lock-up shop, for a term of three years during which he was allowed by the landlords (the plaintiffs) to sleep in an office behind the shop. By a lease dated April 5, 1944, the plaintiffs let the premises to the defendant for a term of three years from Lady Day, 1944, the defendant covenanting not to use the premises except as a shop for his business of an antique dealer. The defendant continued to carry on business there and to sleep behind the shop and during this period he fitted up the basement rooms for residential purposes. The plaintiffs knew that the defendant slept on the premises from time to time but did not know that the property was his residence. In January, 1947, the defendant asked for a new lease and in May the plaintiffs' solicitors sent a draft, clause 2 (9) of which contained a covenant by the lessee:
“To use the demised premises as and for showrooms, workrooms and offices only and not to use exercise or carry on (certain specified trades and businesses) … and not to permit or suffer the demised premises or any part thereof to be used as a place for lodging dwelling or sleeping.”
On October 27, 1947, the defendant's solicitors returned the draft, having struck out the last part of clause 2 (9), and enclosed a letter saying that the defendant had been sleeping on the premises for some time. There followed correspondence between the solicitors. Meanwhile the plaintiffs' agent told the defendant orally that if he signed the lease the plaintiffs would make no objection to his continuing to reside there; as a result of that the defendant was willing to complete. On February 10, 1948, the lease and counterpart were exchanged, the lease omitting the words which had been struck out from clause 2 (9) of the draft by the defendant's solicitors. After the execution of the lease the defendant continued to reside and carry on business on the premises. In May, 1956, the defendant asked for a new lease and the plaintiffs' managing director having visited the premises and learned that the defendant was living there wrote giving the defendant notice to quit.
In an action for forfeiture of the lease on the ground of breach of covenant, the defendant denied that he was in breach, and alleged, alternatively, that the plaintiffs had waived the covenant or, alternatively, were estopped from relying on it. He also counterclaimed for rectification of the lease and relief against forfeiture:—
Held, (1) that on the question of construction of the covenant it was not permissible for the court to look into the past history of the matter or to rely on the fact that the defendant had been living on the premises to the plaintiffs' knowledge; nor could the fact be called in aid that express words of prohibition as to residence had appeared in the draft but were not in the lease as executed, none of these matters being surrounding circumstances which could be called in aid to construe the language used.
(2) That the nature of the property, however, was a matter to be taken into consideration, and the fact that these particular premises were not suitable for a dwelling-house, taken with the fact of a covenant to use them for showrooms, workrooms and offices only, clearly showed that the defendant was in breach of covenant in using the premises for residential purposes.
(3) That the fact that the plaintiffs knew that the defendant was using the premises to sleep in and were prepared to allow that did not amount to a release by them of the covenant contained in the lease.
(4) That, the defendant having signed the lease because of the promise of the plaintiffs' agent, was entitled to rely on that promise so long as he was in occupation of the shop and the action would be dismissed.
ACTION.
The plaintiffs in this action, City and Westminster Properties (1934) Ltd., claimed forfeiture of a lease granted to the defendant of premises known as No. 4, New Cavendish Street, W.1, on the ground of breach of covenant.
The following facts are taken from the judgment of Harman J.: The demised property consists of a ground floor and basement forming part of a block of residential flats having four storeys above the ground floor which consisted of four shops described as lock-up shops; the basements go with the shops. The defendant began his connexion with the property in 1941, when he took over the shop and basement for a term of three years. No written agreement was produced covering this period, during which it was admitted that he was allowed to sleep in the ground floor back room behind the shop. This was a wartime arrangement. The defendant was engaged in civil defence activities and it was thought a useful protection against incendiaries that he should be on the property at night. His Lordship found that no inference ought to arise from this. During this period the defendant fitted up a room in the basement in an elaborate style as a sitting room. On April 5, 1944, a lease was granted by the plaintiffs to the defendant by a document under seal whereby the landlords let “the shop on the ground floor and the basement floor all as now in his occupation” of No. 4, New Cavendish Street for a term of three years from Lady Day, 1944, at a rent of £170 payable monthly. There were covenants by the lessee, who was described in the lease as an antique dealer, “not to use or permit the use of the said premises except as the shop of the lessee for his business as hereinbefore described”; also not to do or suffer to be done anything which might render the premises liable to be assessed as a dwelling-house. The defendant continued to carry on his business of an antique dealer in the ground floor shop and to sleep in an office behind the shop where he had a divan bed covered in the day with a velvet counterpane. During the term of this lease the defendant fitted up another room in the basement as a dining room. Both the basement rooms had an appearance consistent with being showrooms for antique furniture, but the defendant alleged that in fact this furniture was not for sale and that he did not take customers down to the basement. He said in evidence that he used these rooms to live in and to entertain his friends. He had an electric cooker in the front area of the basement and a wash basin with an Ascot water heater in a lavatory at the back. He said that he made no secret of the fact that he was living on the premises and that the plaintiffs, particularly through their property manager, one Jones, were well aware of the fact. His Lordship found that the plaintiffs were aware that the defendant from time to time slept on the ground floor, but he was not satisfied on the evidence that they knew that the property was the defendant's principal or only residence or that he used the basement rooms as his home.
In January, 1947, the defendant asked for a new lease and was offered a further lease for seven years from Lady Day, 1947. Negotiations proceeded in a dilatory fashion. A draft lease was sent to the defendant in May, 1947. He continued to occupy the property as before and took no step in the matter during the summer beyond agreeing the repairing terms and the new rent. In August, 1947, Jones telephoned to the defendant, who gave some explanation of the delay and instructed his solicitors, who on October 17, 1947, returned the draft revised in red ink. By this document, as it then stood, the plaintiffs were expressed to demise to the defendant the ground floor shop and basement for the term of 14 years from Lady Day, 1947, at an annual rent rising to £325 in the last seven years of the term, payable quarterly on the usual quarter days, together with fire insurance premiums. The lessee's covenants included covenants to repair and paint, and clause 2 (9) was in the following terms:
“To use the demised premises as and for showrooms, workrooms and offices only and not to use exercise or carry on or permit or suffer to be used exercised or carried on in or upon the said premises or any part thereof the trades or businesses of”
— and then followed a long list of prohibited trades and businesses. The clause ended in this way: “and not to permit or suffer the demised premises or any part thereof to be used as a place for lodging dwelling or sleeping.” There was a proviso for re-entry by the landlords upon breach of any of the lessee's covenants. At the time when the red ink revisions were made, the defendant's solicitors did not know that he had been residing on the property and intended to continue so to do. On October 27, 1947, the plaintiffs' solicitors returned the draft with various amendments in yellow ink not here relevant. The draft in this condition was submitted by...
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...the main authorities cited before me. Mr Suppiah cited in support the English case of City and Westminster Properties (1934) Ltd v Mudd [1959] 1 Ch 129. In that case, a tenant lived at the premises in breach of a covenant `to use the demised premises as and for showrooms, workrooms and offi......
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...v Keith (1958), 15 DLR (2d) 472 (Ont CA). 206 (1969), 6 DLR (3d) 705 (Sask CA). 207 City and Westminster Properties (1934) Ltd v Mudd , [1959] Ch 129. 208 See, for example, Couchman v Hill , [1947] KB 554; Webster v Higgin , [1948] 2 All ER 127; Harling v Eddy , [1951] 2 KB 739; J Evans & S......