![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] |
![]() |
||||||||
England and Wales Court of Appeal (Civil Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Expert Clothing Service & Sales Ltd v Hillgate House Ltd & Anor [1985] EWCA Civ 4 (2 April 1985) URL: https://www.bailii.org/ew/cases/EWCA/Civ/1985/4.html Cite as: 275 EG 1011, [1985] 2 EGLR 85, [1985] 3 WLR 359, [1985] 2 All ER 998, 50 P&CR 317, [1986] 1 Ch 340, [1986] Ch 340, [1985] EWCA Civ 4 |
[New search] [Printable version] [Buy ICLR report: [1986] 1 Ch 340] [Buy ICLR report: [1985] 3 WLR 359] [Help]
B e f o r e :
____________________
EXPERT CLOTHING SERVICE & SALES LTD | ||
V | ||
HILLGATE HOUSE LTD AND ANOTHER |
____________________
(1) Were the breaches capable of remedy?
(2) Had the plaintiffs waived their right to forfeit the lease on account of the breaches?
(3) If questions (1) and (2) were answered in the negative, should the defendant company be given relief from forfeiture?
The learned judge answered all three questions in the negative. The defendants now appeal, submitting that all of them should have been answered in the affirmative.
The Landlord hereby grants unto the Tenant full licence and permission to demolish and reconstruct the interior and roof of the demised premises (the said premises when reconstructed being hereinafter referred to as 'the reconstructed premises') PROVIDED THAT . . . (d) the Tenant shall commence the said works of demolition and reconstruction within a period of three years from the commencement date.
(a) Not to assign charge underlet or part with or share the possession or occupation of part only of the demised premises.
(b) Not to part with or share the possession or occupation of the whole of the demised premises, other than by way of assignment or underletting.
Clause 3 (13), so far as material, read:
Not to assign the demised premises as a whole without the previous written consent of the Landlord (such consent not to be unreasonably withheld). . . .
Clause 3 (14), so far as material, read:
Within one month of every . . . charge . . . of or relating to the demised premises . . . to give notice thereof in writing with particulars thereof to the Solicitors . . . of the Landlord. . . .
Clause 3 (25) contained a restriction on further material development. Clause 4 set out the rent review provisions which were to be applied at the expiration of each period of five years of the term. For present purposes nothing turns on the precise form of the rent review provisions, save that the assessment was to be made 'as if the demised premises had not been reconstructed', so that, effectively, the tenant would not have to pay for its own improvements by way of increased rent.
IT IS ORDERED BY CONSENT
I) That the Plaintiff is entitled to possession of the premises the subject of this action, namely Hillgate House, 13 Hillgate Street, London W8 forthwith.
II) That there be no order as to costs.
III) That all further proceedings be stayed save for the enforcement of the terms contained in the schedule hereto, with liberty to apply.
SCHEDULE
I) The Plaintiff to pay within 14 days hereof £ 11,250, being all the rent due under the Lease . . . up to and including the rent due on the 24th day of June 1981.
II) The Lease to be varied to give effect to the following provisions with all necessary or consequential amendments.
A) Clause 2 to be wholly replaced by a clause to the following effect:
(i) The Defendant to give licence to the Plaintiff to reconstruct the demised premises either as three floors of offices or as a gymnasium and health club.
(ii) The Plaintiff to covenant to reconstruct the demised premises either as three floors of offices or as a gymnasium and health club, and that such reconstruction shall be:
(a) Substantially completed and ready for occupation by or before the 28th day of September 1982 and fully completed as soon as reasonably possible thereafter.
(b) Effected to a good standard, and in accordance with the planning permission dated the 14th day of March 1981 or dated the 6th day of August 1976 as the case may be.
(c) Open to inspection by the Defendant, its servants and agents up to its completion.
B) The Plaintiff to covenant to inform the Defendant in writing of its election whether to reconstruct offices or as a gymnasium and health club as soon as it has decided and in any event on or before the 28th day of September 1982.
C) In clause 3 (8) 'Reconstructed' to be replaced by 'demised'.
D) Clause 3(12 and/or) to be amended so that the Plaintiff, if, but only if, it elects and has notified the Defendant of its election to reconstruct as offices, and has completed that reconstruction all pursuant to Clause 2, as substituted, may, with, but only with, the Defendants prior consent in writing (such consent not to be unreasonably withheld) to each subletting, sublet the reconstructed premises to not more than three separate subtenants.
E) In clause 3(13) the Plaintiff to covenant in addition not in any event to assign the lease until completion of the reconstruction in accordance with the provisions of clause 2, as substituted.
There then followed in (F) and (G) proposed variations of clauses 3(16) and 3 (25) of the Lease.
H) Clause 4 to be amended so that the Defendant should have a further option as to basis of reviewing the rent, namely:
i) On the 1982 and 1987 rent reviews, 15% of the fair rack market annual rental value as at the appropriate review date of the premises as reconstructed pursuant to Clause 2 as substituted.
. . .
2 The benefit of the Lease and the term thereby created is now vested in the Tenant.
3 By an Order of the West London County Court dated June 29 1981 it was ordered that the terms of the Lease be altered in manner hereinafter appearing.
Recital 3 was not in fact accurate, since the provisions for variation of the lease contained in the schedule to the order were not themselves part of the order; they were merely part of the agreed terms upon which the proceedings were being stayed. The body of the draft deed contained a number of provisions varying or replacing clauses of the lease. Most of these provisions precisely followed the corresponding provisions of the schedule to the order. One or two of them, however, went a little further than that. For example, an entirely new proposed clause 3 (12) of the lease was incorporated in the draft, which was in much fuller form than clause II (D) of the schedule to the order; clause II of the schedule had expressly contemplated that the proposed deed should include the scheduled provisions 'with all necessary or consequential amendments'. Clause 8 of the draft, to which the defendants attach importance in the context of waiver, provided: 'Save as hereby modified the Lease shall continue in full force and effect in all respects.'
The covenants contained in the said Lease as varied by the Agreement contained in the Order of the 29th June 1981 have been broken and the particular breaches complained of are:
(I) That the Tenant, Hillgate House Ltd, has failed to reconstruct the demised premises either as three floors of offices or as a Gymnasium and Health Club.
(II) That such reconstruction has not been substantially completed and ready for occupation by or before the 28th day of September 1982 and fully completed as soon as reasonably possible thereafter.
(III) As a result the remaining covenants under the said clause have not been complied with.
In breach of the said covenant the Tenant charged the demised premises to Lloyds Bank Ltd, which charge was dated 24th November 1981 and registered under the Companies' Acts on the 5th December 1981, but the Tenant did not give any notice thereof or produce such Charge.
The notice concluded with the following paragraphs:
7. The breaches herein before set out are incapable of remedy.
8. Expert Clothing Service & Sales Ltd intend to re-enter upon the said premises in exercise of the power of re-entry contained in the said Lease and claim damages for the said breaches of covenant.
9. We therefore on behalf of the said Expert Clothing Service & Sales Ltd require you to quit and deliver up the said premises to them forthwith and to make compensation to them in money for the said breaches.
Further to our correspondence herein we now enclose the engrossment of the Counterpart Deed of Variation relating to the lease of the above mentioned property for sealing by your Client and execution by the guarantor and return. We are arranging for the sealing of the original document by the Landlords.
This is the letter which is the linchpin of the defendants' submissions based on waiver.
Were the breaches capable of remedy?
A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice --
(a) specifying the particular breach complained of; and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and
(c) in any case, requiring the lessee to make compensation in money for the breach;
and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.
Where a lessor is proceeding, by action or otherwise, to enforce such a right of re-entry or forfeiture, the lessee may, in the lessor's action, if any, or in any action brought by himself, apply to the court for relief
and goes on to specify the powers of the court on any such application.
In one sense, no breach can ever be remedied because there must always, exconcessis, be a time in which there has not been compliance with the covenant, but the section clearly involves the view that some breaches are remediable and therefore it cannot mean that.
A promise to do a thing, if broken, can be remedied by the thing being done. But breach of a promise not to do a thing cannot in any true sense be remedied; that which was done cannot be undone. There cannot truly be a remedy; there can only be abstention, perhaps accompanied with apology.
I think perhaps he went further than was really necessary for the decision of this case in holding that a breach of any negative covenant - the doing of that which is forbidden - can never be capable of remedy. It is unnecessary to decide the point on this appeal; but in some cases with the immediate ceasing of that which is complained of, together with an undertaking against any further breach, it might be said that the breach was capable of remedy. This particular breach, however - conducting the premises, or permitting them to be conducted, as a house of ill-fame - is one which in my judgment was not remedied by merely stopping this user. I cannot conceive how a breach of this kind can be remedied. The result of committing the breach would be known all over the neighbourhood and seriously affect the value of the premises. Even a money payment together with the cessation of the improper use of the house could not be a remedy.
A reasonable construction has thus been put upon the section, the object being to allow the lessee to remedy the breach or to make compensation before action is brought against him. From that two things seem to me to follow: first, the remedy which is spoken of in the section must be a complete remedy. A partial remedy is not within the section, the concluding words of subsection (1) being: 'and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach'. The second thing to be gathered from the section is that the breach must be capable of remedy within a reasonable time. The lessor is not to be kept out of his right of action for an unreasonable time. If, for example, the breach is of such a character that many months or perhaps years must elapse before the breach can be remedied to the satisfaction of the lessor, such a case would not be as regards remedy within the section at all.
Not much argument has been devoted to the second breach, that is to say failure to give notice of the charge, quite rightly in my judgment. Although it is a covenant to give notice within one month, the rule is not, as I understand it, that once the stated period in the lease has gone by the covenant thereafter becomes incapable of remedy. That in itself is not sufficient to render a breach incapable of remedy, and in this case it is quite clear no damage was done to the landlord by the giving of late notice or failing to give it and the landlord finding out by other means. Accordingly, if that were the only matter on the notice then I would be quite clearly of the opinion that the breach was capable of remedy and the notice would be defective.
That I take as guidance to the proper approach in this case, and it seems to me - and I have no real hesitation about this - that this is not such a breach, having regard to the facts as I have outlined them, as to be capable of remedy within a reasonable time. It is going to take, according to the evidence, at the very least nine months to do the necessary works. Also there is the point that was taken - and I think it is valid - that the rent review provisions are linked to the reconstructed premises and there is no ready way in which the landlord can be reinstated in that position so that at 1982 he was obtaining a rent or assenting to a rent from reconstructed premises. It seems to me that this breach lies in the area of breaches which are incapable of remedy within a reasonable time.
If it is capable of remedy, and is remedied in reasonable time, the lessor is unable to prove that a condition precedent to his ability to seek to forfeit by action or otherwise has been fulfilled. Here at once is a problem. An unlawful subletting is a breach once and for all. The subterm has been created.
. . . this court expressed the view that breach of negative covenants might be capable of remedy, but not this one, on the ground that the stigma attaching to the premises would not be removed by mere cesser of immoral user. I observe that it does not appear to have been considered whether the breach in that case was incapable of remedy on another ground viz: that the wrongful user had ceased before the section 146 notice.
In summary upon the cases we have therefore a number of cases of user of premises in breach of covenant in which the decision that the breach is not capable of remedy has gone upon the 'stigma' point, without considering whether a short answer might be - if the user had ceased before the section 146 notice - that it was ex hypothesi incapable of remedy, leaving the lessee only with the ability to seek relief from forfeiture and the writ unchallengeable as such. If a user in breach has ceased before the section 146 notice (quite apart from the stigma cases) then either it is incapable of remedy and after notice there is nothing in the way of a writ: or the cesser of use has somehow deprived the lessor of his ability to seek to forfeit though he has done nothing to waive the breach, a situation in law which I find extremely difficult to spell out of section 146.
. . . the introduction of such breaches into the relevant section for the first time by section 146 of the Act of 1925 operates only to confer a statutory ability to relieve the lessee from forfeiture on that ground. The subterm has been effectively created subject only to risks of forfeiture: it is a complete breach once and for all: it is not in any sense a continuing breach. If the law were otherwise a lessee, when a subtenancy is current at the time of the section 146 notice, would have a chance of remedying the situation without having to apply for relief. But if the unlawful subletting had determined before the notice, the lessee could only seek relief from forfeiture.
Have the plaintiffs waived their right to forfeit the lease?
If the landlord by word or deed manifests to the tenant by an unequivocal act a concluded decision to elect in a particular manner, he will be bound by such an election. If he chooses to do something such as demanding or receiving rent which can only be done consistently with the existence of a certain state of affairs, viz the continuance of the lease or tenancy in operation, he cannot thereafter be heard to say that that state of affairs did not then exist.
Conclusions
In summary upon the cases we have therefore a number of cases of user of premises in breach of covenant in which the decision that the breach is not capable of remedy has gone upon the 'stigma' point, without considering whether a short answer might be - if the user had ceased before the section 146 notice - that it was ex hypothesi incapable of remedy, leaving the lessee only with the ability to seek relief from forfeiture and the writ unchallengeable as such. If a user in breach has ceased before the section 146 notice (quite apart from the stigma cases) then either it is incapable of remedy and after notice there is nothing in the way of a writ; or the cesser of use has somehow deprived the lessor of his ability to seek to forfeit though he has done nothing to waive the breach, a situation in law which I find extremely difficult to spell out of section 146. But whatever may be the position in user breach cases, which are of a continuing nature, there is no authority, other than that of Capital & Counties Property Co Ltd v Mills, to suggest that the creation of a subterm in breach of covenant is capable of remedy. I would make two particular comments on that decision as reported. First, I find it difficult to see how a breach is said to be capable of remedy because the lessor can waive the breach, which would be involved in the suggestion that he could post hoc consent to the subletting. Second, I do not see how a breach by unlawful subletting can be said to be remedied by the lessee when he does nothing except wait for the subterm to come to an end by effluxion of time.
After this review of the cases I come to the conclusion that breach by an unlawful subletting is not capable of remedy at all. In my judgment the introduction of such breaches into the relevant section for the first time by section 146 of the Act of 1925 operates only to confer a statutory ability to relieve the lessee from forfeiture on that ground. The subterm has been effectively created subject only to risks of forfeiture; it is a complete breach once-and-for-all; it is not in any sense a continuing breach. If the law were otherwise a lessee, when a subtenancy is current at the time of the section 146 notice, would have a chance of remedying the situation without having to apply for relief. But if the unlawful subletting had determined before the notice, the lessee could only seek relief from forfeiture. The only escape from that wholly unsatisfactory difference would be to hold that in the second example by some analogy the lessor was disabled from issuing a writ for possession. But I can find nothing in the section to justify that limitation on the common law right of re-entry, bearing especially in mind that a lessor might discover a whole series of past expired unlawful sublettings which might well justify a refusal to grant relief in forfeiture proceedings.
I stress again that where there has been an unlawful subletting which has determined (and which has not been waived) there has been a breach which at common law entitles the lessor to re-enter: nothing can be done to remedy that breach: the expiry of the subterm has not annulled or remedied the breach: in such case the lessor plainly need not, in his section 146 notice, call upon the lessee to remedy the breach which is not capable of remedy, and is free to issue his writ for possession, the possibility of relief remaining. Can it possibly be that, while that is the situation in such cases, it is otherwise if the lessee has failed to get rid of the subterm until after a notice served? Is the lessee then in a stronger position and the lessor in a weaker position? In my judgment not so. These problems and questions arise only if such a breach is capable of remedy, which in my judgment it is not.
I have felt it right to express my doubts. I cannot escape, however, from the illogical situation which results from a conclusion that the facts of each case determine whether or not a breach of covenant not to assign is capable of remedy. I am persuaded finally that the difficulties which arise - and which have been demonstrated in the judgment of Russell LJ - from a conclusion that a breach of such a covenant may be capable of remedy are such as demonstrate that that conclusion is erroneous. The breach of this class of covenant is a once-and-for-all breach; whatever events follow the breach they cannot wipe the slate clean, the breach remains. I conclude that a breach of this covenant is incapable of remedy and would allow the appeal.
The appeal was allowed with costs in the court below, no order for costs being made on the appeal. Leave to appeal to the House of Lords was refused.
The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.