Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE ROSKILL,LORD JUSTICE LAWTON
Judgment Date02 February 1977
Judgment citation (vLex)[1977] EWCA Civ J0202-1
Docket Number1974-I-No.215
CourtCourt of Appeal (Civil Division)
Date02 February 1977

[1977] EWCA Civ J0202-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Queen's Bench Divison

Bristion Disirict Registry

(His Honour Judge Edgar Fay, Q.C)

Before:

The Master of The Rolls (Lord Denning)

Lord Justice Roskill and

Lord Justice Lawton

1974-I-No.215
Between:
Industrial Properties (Barton Hill) Limited
First Plaintiffs
(Respondent)
and
Philip Albert Ashley Parker and Second Anne Monica Parker
Second Plaintiffs
(Respondents)
and
Associated Electrical Industries Limited
Defendants
(Appellants)
and
Ward & Co. (Lettfrs) Limited
First Third Party
and
Bristol Erickson Limited
Second Third Party
and
Western Freights Limited
Third Third Party
and
Auto Precision Limited
Fourth Third Party
and
Ward & Co. (Letters) Limited
fourth Party

MR. R. BERNSTEIN, Q.C. MR. C. PRIDAY and MR. K. REYNOLDS (instructed by Messrs. Wilde, Sapte & Co., Solicitors, London) appeared. On behalf of the Plaintiffs (Respondents).

MR. M.C. NOHERSE, Q.C. and MR.G LIGHTMAF (instructed by Messrs. Lewis & Co., Solicitors. London) appeared on behalf of the Defendants (Appellants)

THE MASTER OF THE ROLLS
1

This is a preliminary issue. The main point is whether Harrison v. Weils (1967) 1 Queen's Bench 263 was correctly decided and is "binding upon this Court.

2

The facts. In Bristol there are factory "buildings on an estate called the Barton Hill Trading Estate Some of these buildings have been occupied for years by Associated Electrical Industries Ltd. and their predecessors. That Company covenanted to repair them and to yield them up in repair. Their lease came to an end and they left the premises. They were then in a very dilapidated condition. It might cost £200,000 to put them into a proper state of repair. But A. E.I say they are not liable. They say that their lessors - the people who let the premises to them - were not the legal owners of them, and for that reason they were not bound to repair the premises when they left. Seeing that this is a very technical point, I must set out the legal position.

3

(i) The legal owners. The freeholders have at all times been members of a family surnamed Parker. They have held it as trustees on a trust for sale. The freehold title has been vested in members of the family at all times from father to son, and so forth, until it is now in Mr. and Mrs, Philip Parker. I will call them the Parker Trustees.

4

In 1959 the Parker trustees were advised that there were tax advantages to be gained by transferring the properties to bodies corporate. So three companies were formed. The directors and shareholders were members of the Parker family. The estate was divided into three portions. Each Company had its portion This case concerns one of the three companies called Industrial Properties (Barton Hill) Limited. I will call it the Industrial Company.

5

(ii) The equitable owners. By an agreement dated 7th July, 1959, the Parker trustees agreed to sell to the Industrial Company a portion of the Barton Hill estate for £48,000. It contained a provision that the purchase was to be completed on 29th September, 1959. It was sold subject to a lease made on a 3rd January, 1946, by the Parker Trustees to the General Electric Company Ltd. (the predecessors of A.E.I.).

6

The purchase price was paid in this way: Shares were allotted to members of the Parker family at a price of £48,000. The family members paid £48,000 to the Industrial Company for the shares: and the Industrial Company used the money - £48,000 - to pay the trustees for the premises.

7

Now comes the point: Although the purchase price was paid, nevertheless the property was never convoyed to the Industrial Company. This was not by inadvertance. It was a deliberate decision made so as to avoid stamp duties. The legal title remained in the Parker trustees. The Industrial Company was only the equitable owner and it has remained so ever since.

8

The agreement for sale was registered on 9th March, 1960 as a land charge. But no conveyance was ever executed. The reason was simply to save stamp duty. The solicitors (who acted, both for the trustees and the companies) took the opinion of Counsel, who advised that that was perfectly in order. He said: "Provided the companies satisfy the consideration and take possession of the land, they would not, if they had to obtain specific performance of the agreements, be defeated by a claim of lashes: see Williams v. Greatrex (1957) 1 Weekly Law Reports 31) and the Limitation Act 1939 would run in their favour and give thorn in due course the legal estate ( Bridges v. Mess (1957)0hancery 475).

9

So the Industrial Company remained the equitable owners. It received the rents from the tenants and acted as landlord.

10

(iii) The misrepresentation. In 1966 the Industrial Company negotiated a new lease to A.E.I. The draft was sent by Lasser's solicitor to A.E.I'S solicitor. It showed the lessor as "Industrial Properties (Barton Hill) Ltd.". On receiving the draft, the solicitors for A.E.I. returned it with this note: "Please confirm that the lessor is the freeholder and that there is no mortgage or charge restricting its power to grant this lease".

11

The solicitors for the Industrial Company answered it by adding: "This is confirmed. The lease needs the consent of the lessor's mortgagees for which application has been made".

12

That confirmation was a mistake. It was a misrepresentation. The lessor was not the freeholder. The lessor was the Industrial Company which was only the equitable owner. It was, however, an innocent misrepresentation. The solicitor for the Industrial Company had got so used to treating the Industrial Company as the owner of the estate that he had forgotten that it was not the freeholder but only the equitable owner. He also thought that the lessee's solicitors only asked the question because they wanted to be sure there was no head lease in existence whose covenants would affect them.

13

(iv) The lease itself. On 24th October, 1966, the lease was executed. It was expressed to be between Industrial Properties (Barton Hill) Limited and Associated Electrical Industries Ltd. (hereinafter called the "Lessee"). It was a demise of the factory and buildings for 21 years at £15,250 a year, determinable by either party at the end of the first seven or fourteen years. It contained a covenant by the lessee with the lessor: "Tokeep the demised premises in good and tenantable repair and condition and so to yield up the sane at the end or sooner determination of the said tern".

14

It contained a covenant by the lessor for quiet enjoyment: "without any interruption by the Lessor or any person rightfully claiming under or in trust for it or by title paramount".

15

From that time forward A.E.I, occupied the promises and paid the rent.

16

(v) The need for a confirmatory deed. In 1972 the Industrial Company wished to borrow money from the County Bank, and proposed that the premises should be lodged as security. In the course of the negotiations the bank's solicitors discovered that the Industrial Company had not the legal title but only an equitable title. This discovery led to a case to another Counsel to advise the bank and the Industrial Company. He did not agree with the previous Counsel, especially on the limitations point. He was also particularly asked to advise "whether leases in the form of the standard lease have been validly granted: if not, what stops should be taken to validate them".

17

The new Counsel recommended that further steps be taken. He said: "In view of the decision in Harrison v. Wells, it seems that the position of the reversionr on the lease may not be quite as good as if the lea3e had been created at a time when the Company had legal estate: and a confirmatory deed executed by the trustees on the lessee would remove any doubts there might be on this point. So far as future leases are concerned, it would in my opinion be desirable for the trustees to join in the lease so as to ensure that it vests in the lessee a legal term of years good against all the world and that no doubt can arise as to the enforceability of the lessee's covenants afterthe lessee has ceased to occupy under the lease".

18

In the view of this Opinion, the Parker family asked their solicitors to issue supplementary documents to put in order all the existing leases: But this was not done in tine for the person lease

19

(vi) The end of the lease. On 13th January, 1973, the solicitor for the Industrial Company gave notice to the A.E.I. to determine the lease on 25th December, 1973; that is at the end of the first seven years. A.E.I. did not claim a now tenancy. They gave up possession on 25th December, 1973, The premises were then badly out of repair.

20

On 23rd January, 1974, the Industrial Company issued a writ against A.E.I. claiming damages for breach of the covenants to repair in 'the lease, A.E.I. thought they had no defence. They were not aware that the Industrial Company had not got the legal title. So they submitted to judgment under Order XIV for damages to be assessed. In the course of discovery, however, they found out that the Industrial Company was not the freeholder. A.E.I. then raised the point that they were not liable. The judgment under Order XIV was set aside. A.E.I. were given leave to defend. The proceedings were amended on both sides. The Parker Trustees (the freeholders) were added as plaintiffs: and the defendants pleaded they were not liable on the covenants. They relied on Harrison v. Wells, to which I now turn.

21

Harrison v. Wells (1967) 1 Queen's Bench 262. Shorn of irrelevancies, the case was this: A widow in 1949 let business premises to a tenant on the usual repairing covenants. It was for a term of seven years: but was continued under the Landlord and Tenant Act, 1954. On 24th June, 1961 the tenant surrendered the premises to the widow. She died six months later. Herexecutor sued...

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