Cricklewood Property and Investment Trust Ltd v Leighton's Investment Trust Ltd
| Jurisdiction | England & Wales |
| Judge | The Lord Chancellor,Lord Russell of Killowen,Lord Wright,Lord Porter,Lord Goddard |
| Judgment Date | 25 January 1945 |
| Judgment citation (vLex) | [1945] UKHL J0125-1 |
| Date | 25 January 1945 |
| Court | House of Lords |
[1945] UKHL J0125-1
Lord Chancellor
Lord Russell of Killowen
Lord Wright
Lord Porter
Lord Goddard
House of Lords
After hearing Counsel as well on Tuesday the 21st, as on Thursday the 23d, days of November last, upon the Petition and Appeal of Cricklewood Property and Investment Trust Limited, of 7, Park Lane, in the County of London, Arthur James Pegley, of 16 Arthur Road, Wimbledon Park, in the County of Surrey, and William Charles Pegley, of Alexandra Hotel, Hyde Park Corner, in the County of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 4th of June 1943, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Leightons Investment Trust, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 4th day of June 1943, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
By a lease dated 12th May, 1936, the predecessors in title of the Respondents demised certain land at Potters Bar to the Appellant Company, hereinafter referred to as the tenants, for a term of 99 years, and the other two Appellants joined in the lease as guarantors for the payment of the rent and performance of the covenants. It seems that the lessors were developing a building estate for residential purposes and the lease in question was a building lease under which the tenants were to build a number of shops to form what is commonly called a shopping centre for the residents on the estate. The subject of the demise was two parcels of land, one coloured red and the other blue on the plan attached to the lease. A question had previously arisen between the lessors and the local authority under a Town Planning Scheme for the area and there had been an appeal to the Minister. This appeal was compromised on terms which were scheduled to the lease and which in effect provided that not more than 24 shops in all should be built on these two parcels of land; that eight might be built at once, and, in addition, that not less than four shops to each 200 houses occupied should be permitted to be built in the future till the total of 24 was reached. The rent reserved was the aggregate of the following rents, ( a) as to each of the 10 shop sites on the red land a peppercorn for the first year and thereafter a yearly rent of £35 for each site, and ( b) as to each of the 14 shop sites on the blue land a peppercorn till the expiration of one year from notification by the landlords that erection of a shop thereon might proceed and thereafter a yearly rent of £35 for each site in respect of which such notification had been given. This notification that building might proceed was rendered necessary because of the compromise referred to above. Clause 2 of the lease contained covenants by the tenants to pay the rent and outgoings and to build 24 shops on the demised land, 10 on the red and 14 on the blue. The first 8 were to be built on the red land not later than 25th March, 1937; the remainder were to be built within one year from the notification by the landlords that building might proceed, but in certain circumstances, which need not be set out in detail, an "abeyance period," as it was called, might arise which would have the effect of postponing the obligation to build beyond the year. It was, however, expressly provided that nothing in the Clause which provided for this abeyance period should in any way affect the rent or rents payable in respect of the demised property or any part thereof or the time or manner of such payment.
It is clear, therefore, that the parties agreed that as soon as a year from the notification had elapsed the full rent was to be paid for the sites to which it related, although no buildings had been erected thereon. By Clause 4, a right of re-entry for non-payment of rent or breach of covenant was reserved, but it was provided that after any of the shops had been assigned or underlet this right should only be exerciseable upon the particular shop in respect of which the breach had occurred, the intention being that each should be held separately and independently of the others. The lease gave the tenants the option of purchasing both the red and blue sites; this option has been exercised as regards the red and consequently we are not concerned with it or with the shops built upon it. There was also a provision in Clause 6 of the lease enabling the tenants at the expiration of seven years from the date of the agreement to give notice to determine the lease as to any of the sites in respect of which notice that building might proceed had not been given. As regards the blue land, no shops had been erected when notice that building might proceed was given as to two sites on 24th September, 1937. Further notices were given on 30th May, 1938, and 25th August, 1939, in each case as to four houses. No building has been begun on any of these ten sites, but it is admitted that by the provision for the abeyance period contained in the lease the tenants had not become under an obligation to build, nor were they in any other respect in default when this action was begun, except as to payment of rent.
On 17th May, 1938, the original lessors conveyed the land subject to and with the benefit of the lease to the Respondents, and as the Appellant Company had paid no rent since the outbreak of the present war, the Respondents issued a writ dated 8th April, 1942, against the Appellant Company as tenants and against the other two Appellants as guarantors claiming arrears of rent since September, 1939. If the Appellants are liable for any rent, there is no dispute that the amount due in this action is £419 14s. 3d. The Respondents applied for summary judgment and in the affidavit filed in opposition on behalf of the Appellants it was deposed that by reason of the outbreak of war the demand for these shops had ceased, that finance for their erection had become unobtainable and that the restrictions placed by the Government upon building and upon the acquisition of materials made it impossible to erect buildings on any of the sites or to continue the development. Consequently, it was said, the agreement in relation to the 14 sites had been frustrated and the Appellants are under no liability thereunder.
On this affidavit the Master gave leave to defend, and on appeal to the Judge in Chambers the present Respondents admitted these allegations of fact and the admission was embodied in the order of the learned Judge. He made the usual order for trial in the short cause list; the affidavit was treated as a pleading and no further Defence was ordered.
Before this House, and apparently in both Courts below, the Appellants did not attempt to rely on the fact that the demand for shops had ceased, or on their inability to procure finance, as establishing a defence. They relied entirely on the impossibility of building created by the restrictions imposed on work of this character and on the acquisition of materials. Though these restrictions were not particularised it must be taken that they were imposed by valid orders or prohibitions under the Defence Regulations, and while it would have been more satisfactory if the documents relied upon had been set out or referred to, the case has proceeded (as must this appeal) on the footing that the performance of the covenant to build was impossible, and continues to be so while the orders or prohibitions are in force.
Asquith J., who tried the case, held on the authorities that the doctrine of frustration did not apply to a lease at all, and that for this purpose there was no distinction between a building lease and any other lease, though he said that had the doctrine applied he would have decided that the contract had been discharged. The Court of Appeal, in a judgment delivered by MacKinnon L.J., said that the doctrine had never been applied to a demise of real property and that there was clear authority that it cannot be; "it is impossible for the Defendants to rely upon the doctrine of frustration to relieve them from their obligations as tenants under a demise of land for 99 years". Against that judgment the tenants appeal to this House.
Two questions are raised by the appeal: first, can the doctrine of frustration apply to determine a lease? and, secondly, even if it can, are the circumstances in the present case such as to produce the result that the lease has been determined by frustration? If, my Lords, we all agree (as 1 understand we do) that the answer to the second question is in the negative, it is not essential in the present case to reach a conclusion on the first question (as to which I gather that our opinions are divided). Nevertheless, I propose to express my opinion with regard to both questions, since the more general issue has been much discussed and was pronounced upon in the Courts below, where it was regarded as concluded by authority, including the...
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Table of Cases
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