THE MASTER OF THE ROLLS: This is a preliminary issue. The main point is whether Harrison v. Wells (1967) 1 Queen's Bench 263 was correctly decided and is binding upon this Court.
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.
(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.
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.
(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 3rd January, 1946, by the Parker Trustees to the General Electric Company Ltd. (the predecessors of A.E.I.).
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.
Now comes the point: Although the purchase price was paid, nevertheless the property was never conveyed to the Industrial Company. This was not by inadvertence. 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.
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 laches: see Williams v. Greatrex (1957) 1 Weekly Law Reports 31) and the Limitation Act 1939 would run in their favour and give them in due course the legal estate (Bridges v. Mees (1957) Chancery 475).
So the Industrial Company remained the equitable owners. It received the rents from the tenants and acted as landlord.
(iii) The misrepresentation. In 1966 the Industrial Company negotiated a now lease to A.E.I. The draft was sent by Lessor'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".
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".
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.
(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 cither party at the end of the first seven or fourteen years. It contained a covenant by the lessee with the lessor:
"To keep ... 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 term".
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".
From that time forward A.E.I, occupied the premises and paid the rent.
(v) The need for a confirmatory deed. In 1972 the Industrial Company wished to borrow money from the County Bank, and proposed that the promises 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".
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 reversioner on the lease may not be quite as good as if the lease 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 t his 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 after the lessee has ceased to occupy under the lease".
In the view of this Opinion, the Parker family asked their solicitors to issue supplementory documents to put in order all the existing leases: But this was not done in time for the present lease.
(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 new tenancy. They gave up possession on 25th December, 1973. The premises were then badly out of repair.
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.
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. Her executor sued the tenant for damages for breach of the covenant to yield up in repair. The tenant had no defence save this: He proved that the widow was not the freeholder. The legal title was vested in trustees (of which she was one). Her husband had owned the property and had left it to the trustees (including his widow) on trust to pay the income to his widow for her life. She had managed the property and let it on lease to the tenant and had received the rent. When the tenant surrendered the tenancy, the premises were much out of repair. So the tenant was clearly liable in damages unless he could find some technical defence. Ho found it. This Court held that, as the widow was not the freeholder, she had no title herself to grant the lease: that lease was void: and as the covenant "cannot stand naked by itself without any lease to support it", the covenant was no good. The Court held that the doctrine that a "tenant cannot dispute his landlord's title" only applied whilst the tenant was in possession; and that it did not apply when the tenant had gone out of possession. The Court recognised that "the defendant has not a shred of merit": but, nevertheless, decided that he was not liable. They added, too, that he succeeded "only on a technicality," but he still succeeded.
I must say that I am aghast that in these days our Court of Appeal should reach such am unjust result. I know that in days past the Courts used to give effect to technicalities of the worst description: but I had hoped we had outgrown all that. As it is, I am quite satisfied that the Court in Harrison v. Wells was wrong - and not only wrong but so wrong that we are now in a position ourselves to over-rule Harrison v. Wells.
The truth is that the Court there misunderstood a case over 100 years old called Cuthbertson v. Irving, decided in 1859.
The Court had only the report in the Law Journal. They ought to have looked at the report in 4 Hurlstone & Norman, which is much better, affirmed in the Exchequer Chamber in 6 Hurlstone & Norman 135. I must consider it in some detail.
John Biglands was at one time the legal owner of a water cornmill. In 1844 he borrowed money from his brother Benjamin, and mortgaged the mill to him as security. Under the mortgage deed the legal title was transferred to the mortgagee, Benjamin Biglands, but John Biglands remained in possession as mortgagor in possession, having only an equity of redemption. That was, of course, very common under the old conveyancing system.
In 1848, John Biglands, being mortgagor in possession, let the mill on a lease for seven years, from 1st August, 1848, to John Irving. The lease contained the usual covenants to repair during the term and to deliver up in repair at the end of the term.
John Irving paid the rent to John Biglands for the first six years. But then in 1854 John Biglands sold his equity of redemption to Joseph Cuthbertson, subject, of course, to the lease. From 1854 for the last year of the term John Irving paid the rent to Joseph Cuthbertson.
On 1st August, 1855, the term of seven years expired. Two months later, on 1st October, 1855, John Irving delivered up possession of the mill to Joseph Cuthbertson. The mill was then found to be in a very bad state of repair.
The mortgagee Benjamin Biglands never interfered in any way at any time with the mill, or any of these dealings.
Some time later (I expect in 1856 or 1857) Joseph Cuthbertson brought an action against John Irving for damages for breach of the covenant to yield up in repair. It is plain from the pleadings that this action was commenced after John Irving had gone out of possession. The declaration said expressly that the mill works were "until and at the end of the said term, and until the same were delivered up as hereinafter mentioned (i.e., two months after the expiration of the term) and were left by the defendant in a bad and ruinous condition".
Two years later, in 1859, the case came for trial. The defendant, John Irving, made this contention: He said that John Biglands had no legal estate in the mill at the time of the lease and, therefore, no estate in reversion to assign to Joseph Cuthbertson. This contention was rejected and judgment was given in favour of Joseph Cuthbertson against the tenant.
In modern language, the issue was this: Was Joseph Cuthbertson, the buyer, entitled to sue John Irving on the covenants? It was admitted that the original lessor, John Biglands, could have sued, even though he had not the legal title. But, could Joseph Cuthbertson sue? The Exchequer Chamber gave the answer in a few sentences (6 Hurlstone & Norman at page 139).
"The lessor (John Biglands) in this case, being a mortgagor in possession at the time of the granting of the lease, had no legal title to the premises, but only an equity of redemption. His title, therefore, as between him and his lessee is only by estoppel: and if the lessor assigns, as he can only assign that which he has, his assignment will either have a title by estoppel as against the lessee, or no title at all ... There is no sound reason why the assignment of the reversion should not establish his title by way of estoppel".
The actual decision was, therefore, that the tenant was estopped from denying the title, not only of his lessor, John Biglands, but also the title of the assignee, Joseph Cuthbertson.
But, the significant thing is that, on the facts, the estoppel operated against the tenant - after he had gone out of possession - on his being sued for dilapidations which were found to exist when he quitted and delivered up possession. The decision itself shows that the estoppel operates, not only whilst the tenant is in possession, but also when he has gone out of possession and is being sued on the covenants. It is, therefore, a direct contradiction of Harrison v. Wells.
The dictum of Martin B. In the course of the judgment in the Court of Exchequer, Martin B. stated these two propositions (4 Hurlstone & Norman at page 751):
"If the lessor have no title, and the lessee be evicted by him who has title paramount, the lessee can plead this and establish a defence to any action brought against him.
But, so long as the lessee continues in possession under the lease, the law will not permit him to set up any defence founded upon the fact that the lessor 'nil habuit in tenementis'".
In Harrison v. Wells the Court of Appeal drew an inference from that last proposition. They treated it as carrying this corollary: that, once the lessee had gone out of possession, he could dispute the Landlord's title. In my opinion that corollary is unfounded. It is contradicted by the actual decision in Cuthbertson v. Irving. Those two propositions of Baron Martin only state two sides of the same coin. The one proposition is simply the converse of the other. The first is that, if the lessee is evicted by title paramount, he can dispute the lessor's title. The second is that, if he continues in possession (i.e. if he is not evicted by the title paramount), he cannot dispute it.
So far as concerns the position of the tenant who goes out of possession of his own free will - without being evicted by title paramount, or its equivalent - then the justice of the case requires that he should be estopped from denying the landlord's title. This position is covered by the later words of Baron Martin. He said:
"... This state of the law in reality tends to maintain right and justice, and the enforcement of the contracts which men enter into with each other (one of the great objects of all law): for so long as a lessee enjoys everything which his lessor purports to grant, how does it concern him what the title of the lessor or the heir or assignment of the lessor, really is. All that is required of him is that having received the full consideration for the contract he had entered into, he he should on his part perform it".
So here it seems to me that A.E.I., having received the full consideration for the contract in which they entered, they should perform their part of it. It docs not matter to them what title the Industrial Company had - whether it was the legal title or an equitable title - it makes no difference to them so long as they are not subject to any adverse claim by any one else.
The correct propositions. In the course of the discussion we were referred to many authorities, old and new. I have considered them all - and others, too - but the result can be stated thus: If a landlord lets a tenant into possession under a lease, then, so long as the tenant remains in possession undisturbed by any adverse claim - then the tenant cannot dispute the landlord's title. Suppose the tenant (not having been disturbed) goes out of possession and the landlord sues the tenant on the covenant for rent or for breach of covenant to repair or to yield up in repair. The tenant cannot say to the landlord: "You are not the true owner of the property". Likewise, if the landlord, on the tenant's holding over, sues him for possession or for use and occupation or mesne profits, the tenant cannot defend himself by saying: "The property does not belong to you, but to another".
But if the tenant is disturbed by being evicted by title paramount or the equivalent of it, then he can dispute the landlord's title. Suppose the tenant is actually turned out by the third person - or if the tenant, without going out, acknowledges the title of the third person by attorning to him - or the tenant contests the landlord's claim on an indemnity from the third person - or there is anything else done which is equivalent to an eviction by title paramount - then the tenant is no longer estopped from denying the landlord's title - see Wilson v. Anderson (1830) a B. & Ad. at page 457 by Mr. Justice Littlewood. The tenant, being thus disturbed in his possession, can say to the landlord: "You were not truly the owner at the time when you demanded and received the rent from me. I am liable to pay mesne profits to this other man. So you must repay me the rent which I overpaid you. Nor am I liable to you on the covenants during the time you were not the owner" - (see Newsome v. Graham (1829) 10 B & CR 234: Mountjoy v. Collin (1853) El. & Bl. 630: Watson v. Lane (1856) 11 Ex. 769. The tenant can also claim damages for the eviction if there is, as here, an express covenant for quiet enjoyment covering interruption by title paramount.
Short of eviction by title paramount, or its equivalent, however, the tenant is estopped from denying the title of the landlord. It is no good his saying: "The property does not belong to you but to a third person" unless that third person actually comes forward and successfully makes an adverse claim - by process in the courts or by the tenant's attornment? Or acknowledgment of it as by the tenant defending on an indemnity. If the third person, for some reason or other, makes no adverse claim or is debarred from making it, the tenant remains estopped from denying the landlord's title. This is manifestly correct: for, without an adverse claim, it would mean that the tenant would be enabled to keep the property without paying any rent to anybody or performing any covenants. That cannot be right. That was the reasoning adopted by the Court of Queen's Bench in Biddle v. Bond (1865) B. & S. 225 - a case of a bailor and Bailee, but the Court treated it as the same as landlord v tenant.
Effect on Harrison v. Wells. If this principle had been applied in Harrison v. Wells, the decision would have been different. In that case the trustees (including the widow) were the legal owners: the widow was entitled to the rent for life. The trustees had made no adverse claim on the tenant: I do not see that they could ever have made one - at any rate not with any hope of success - since the widow herself was one of the trustees. So, there being no adverse claim, the tenant was estopped from denying the lessor's title.
Effect on the present case. In the present case the tenants, A.E.I., are not subject to any adverse claim whatever. The lessor to A.E.I, was the Industrial Company which was the equitable owner. The legal owners were the Parker trustees. They were also the directors and shareholders of the Industrial Company. They acquiesced in the lease being made by the Industrial Company to A.E.I. They could not by any possibility make any adverse claim against A.E.I, on their own account. Not only that. They have actually come in as plaintiffs in these proceedings jointly with the Industrial Company - so as to make sure that the benefit of these proceedings goes to the Industrial Company only.
Seeing that A.E.I, are absolved from any adverse claim by the legal owners, it is a very proper case for the doctrine of tenancy by estoppel. A.E.I, have had the full benefit of the lease for the stipulated term of years. They should perform the covenants - or pay damages in lieu - to the only persons entitled to sue them, namely, the Industrial Company. Even though A.E.I, have gone out of possession, they cannot avoid their responsibilities by reliance on a technical rule of law - which on investigation is found to be groundless.
The misrepresentation. A.E.I, sought to make something out of the innocent misrepresentation made by the solicitor. He represented that the Industrial Company was the freeholder when it was not. But that misrepresentation did no one any harm. If the truth had been known, all that would have happened would have been that the trustees would have joined in the lease. And all this later trouble avoided. So the misrepresentation affords no defence to A.E.I.
Equity. Thus far I have considered the position at common law. But in equity there is a much shorter way to a decision. It is quite plain that, if the lease to A.E.I. was defective in point of law, nevertheless it was good in equity, and for this simple reason. There were two agreements of which specific performance would be granted. One was the agreement by the Parker Trustees to convey to the Industrial Company. The other was the agreement by the Industrial Company to grant a lease to A.E.I. In respect of each of these agreements, equity looks upon that as done which ought to be done. It follows that, by combining the two agreements, the tenant, A.E.I., holds upon the same terms as if a lease had actually been granted by the Parker Trustees to A.E.I. This is, of course, an extension of the doctrine of Walsh v. Lonsdale (1882) 21 Chancery Division 9, where there was only one agreement. But I see no reason why the doctrine should not be extended to a case like the present, where there were two agreements, each of which was such that specific performance would be granted.
Action on the covenant. Even at law all the discussion about estoppel may be unnecessary. Throughout this case, I have seen no reason why the Industrial Company should not sue A.E.I, on the covenant to repair and to yield up in repair. It is plain that the Industrial Company had an interest in having the property kept in repair. They were the equitable owners of it. They could stipulate with anyone to repair it. It might be a builder, or a licensee, or anyone else. So why should they not stipulate with A.E.I, that they should keep it in repair? It makes no difference to A.E.I, what the title was. Not in the least whether the Industrial Company were the legal owners or the equitable owners. So why should not A.E.I, be liable on the covenant? It would be different, of course, if A.E.I, had been evicted by title paramount or anything equivalent to it, but nothing of that kind happened. Seeing that A.E.I, have had the whole of the consideration, they are liable in covenant - see Hodgson v. Sharp 10 East at page 354 by Mr. Justice Bayley: or, in the old phrase, on privity of contract: see Baker v. Gostling (1834) 1 Bing., N.C. 19. And the damages would not be nominal. They would be substantial.
Is Harrison v. Wells binding? For some years now I have tried to persuade others that this court should not be absolutely bound by a previous decision which is later found to be wrong. In this effort I have failed. The law has been stated - and the reasons given - by Lord Simon of Glaisdale in Farrell v. Alexander (1976) 1 Weekly Law Reports at page 168. But it is still open to this Court to depart from a previous decision if it was given per incuriam: and we can so find if we can fasten upon something in the previous decision and say of it: "Here was a manifest slip or error" - see Morelle v. Wakeling (1955) 2 Queen's Bench at page 399. That can, I think, be said of Harrison v. Wells (1967) 1 Queen's Bench 263. The Court thought that there was "no case in the books where the estoppel has ever been held to operate against a tenant who has gone out of possession'- see at page 278 by Lord Justice Salmon. Whereas, in point of fact, the decision in Cuthbertson v. Irving was just such a case: as the report in 4 Hurlstone & Norman shows. They thought, too, that the "covenant cannot stand naked by itself"; whereas, there are cases which show that it can: and these were not cited.
Conclusion. In my opinion, therefore, Harrison v. Wells was wrongly decided per incuriam: and we can, and should, over-rule it.
The doctrine of tenancy by estoppel has proved of good service and should not be whittled down. It should apply in all cases as between landlord and tenant - no matter whether the tenant is still in possession or gone out of possession - so long as he is not confronted with an adverse claim by a third person to the property. If the tenant is so confronted, his proper course nowadays is not to side with either claimant -but to let one or other of them sue him - and to bring in the other as a party - under the wide powers now given in Order 15 Rule 6 (2)(b) which re-establishes Re Vandervell's Trusts in this court (1969) 3 Weekly Law Reports 458. Thus making interpleader available in respect of land.
In the present case there was no adverse claim, and no possibility of it. The tenant is estopped from disputing the landlord's title. I think that A.E.I, are liable on the covenants. I would dismiss the appeal.
LORD JUSTICE ROSKILL: In giving the leading judgment of this Court in Harrison v. Wells (1967) 1 Queen's Bench 263, Lord Justice Barman said at page 272 that it was a fundamental proposition of English law that a lessee cannot dispute his lessor's title. That has long been the law, but the proposition, like so many other fundamental propositions in our law, admits of exceptions, and the first question we have to decide is what is the extent of those exceptions. The two other questions which were subsequently argued at the request of both parties only arise if the appellants succeed in their arguments on the first question.
The estoppel which prevents a lessee from asserting the truth (if it be the truth) against his lessor has been vividly described in some of the early cases as "muzzling". Is that muzzle automatically removed for all purposes where the currency of the lease determines, whether by effluxion of time or otherwise? This Court in Harrison v. Wells seems to have held in the light of such authorities as were referred to in argument in that case, though Lord Justice Salmon (as he then was) clearly had grave doubts and, as he said, thought it "very difficult to discover any sensible answer to the question" why it made any difference that a lessee who had taken the whole of the benefit of the lessee while it subsisted should upon its determination suddenly become free to challenge his lessor's title in order to escape liability under one or more of its covenants as, for example, the dilapidations covenant of which, if the lease were binding, he was flagrantly in breach. So to hold clearly encourages the raising of wholly unmeritorious defences, as this Court sadly recognised in that case. In the only reference to Harrison v. Wells in Megarry & Wade - Law of Real Property (4th edition, 1975) the learned authors observe in note 68 on page 645: "This inequitable result is questionable".
In the present appeal the appellants (for convenience and without prejudice to the question to be decided I shall call them "the lessees") took a "lease" (as I will call it) dated the 24th October 1966 from the respondents (whom I will call, also without prejudice, "the lessors") for 21 years from Christmas Day 1966 but determinable by either party after seven or fourteen years. This lease was in succession to an earlier 21 years lease entered into between different parties on the 3rd January 1946. That lease is however irrelevant for present purposes. The 1966 lease contained in Clause 2(3) a dilapidations clause in tie usual form and in Clause 3(1) a covenant for quiet enjoyment. The option to determine after seven years was exercised and the 1966 lease therefore determined at the end of 1973. A large claim was then made by the lessors for dilapidations under Clause 2(3). Thereupon the lessees, who subsequently managed, not without difficulty, to extract the true facts from the lessors' then solicitors, sought for the first time to challenge the lessors' title. They did this by asserting that since on the true facts as they ultimately emerged the lessors had never in 1966 been in a position to grant that which the lease then promised, namely the legal estate by way of a demise of the property for a term of years, they were no longer bound by the dilapidations covenant in that lease. The lessees accepted that during the currency of the lease they would have been estopped from so contending.
But they said, on the authority of Harrison v. Wells, that once they were out of possession the muzzle was removed and they could freely make use of the true facts to defeat the claim under that covenant notwithstanding that for seven years they had paid the full rent reserved by the lease, had enjoyed the full consideration given for that rent by the lessors, had had undisturbed exclusive possession for the whole of that period and indeed during the latter part of it had benefited from rents which they had received from sub-tenants of part of the property in question.
The underlying facts which are relied upon are these. Before 1966 the legal estate in this and other property had been vested in members of the Parker family and the beneficial interest was vested partly in those same persons and partly in other members of that family. In about 1959 the Parker family was advised that in order to save estate duty and certain other possible liabilities for tax they should convey the property to three different family companies, one part to each. The relevant part of the property was thereupon agreed to be conveyed by the family to the lessors. To save stamp duty on a conveyance to the lessors from the family, only an agreement for sale by the family and purchase by the lessors was entered into, whereby the latter agreed to buy the relevant part of the property for £48,000. That agreement will be found on pages 37 - 39 of the bundle. It was dated 7th July 1959, though we were told that it was not actually signed until a date in January 1960. This document was economically though quite properly executed, for it bore only a 6d stamp. The purchase price of £48,000 was duly paid by the lessors to the family.
It is clear that as a result of this transaction the legal estate remained vested in the two members of the family concerned who held as trustees for themselves and other members of the family, but the lessors thereby acquired the eqitable interest in this property. It is also clear that at any time the lessors could upon payment by them of the relevant stamp duty have called upon the two trustees to convey the property to them so that the lessors would thereupon have acquired the legal estate. Though Mr. Nourse sought at one point to argue that no court would have granted specific performance of this contract to the lessors since it had never been the intention of the parties to that contract that completion should ever take place, I see no reason why a court should not if asked so to do have granted such specific performance. I take the view that if at any time before or after the 1966 lease had been entered into the lessors had called upon the trustees to convey the property to the lessors, the trustees would have been obliged to do so, thus enabling the lessors to acquire the legal estate.
Unfortunately as things turned out, though as I venture to think understandably in all the circumstances, this was never done. The relevant stamp duty was under £1,000 and it was the desire to save this sum which has caused all the trouble. Equally unfortunately, when the draft lease was prepared the true position was not only overlooked so that the two trustees were not invited to join in the lease, a step which would have saved all the trouble, but there was a positive though wholly innocent misrepresentation by a partner in the firm of solicitors then acting for the lessors and the family as to the true facts. Fearing very naturally that there might perhaps be some underlying head lease the covenants in which might adversely affect their clients the lessees, the lessees' solicitors on a note on the draft lease (page 136) asked the lessors' solicitors (inter alia) to confirm that the lessors were the freeholders. They received an affirmative but erroneous answer, though they were also told quite correctly at the same time that the consent of mortgagees was required and that consent had been applied for.
Thus it is clear that wrong information was innocently given to the lessees' solicitors on behalf of the lessors. It is also clear that the lessors were technically not in a position to do that which they promised, for the legal estate in the property was never vested in them, though the lessees have not suffered one penny piece of damage as a result of that fact. Had the true position been revealed to the lessees' solicitors in 1966 I have no doubt that the defect could and would have been simply remedied by the joinder in the lease of the trustees in whom the legal estate was vested. Everyone would then have been perfectly content.
The lessees called no evidence at the trial to support the suggestion that the misrepresentation had caused them to act to their detriment and I decline in the absence of such evidence to infer for one moment that they in any way were led to act to their detriment by what happened or have suffered one penny piece of damage as a result.
But it is these facts which have given the lessees the opportunity which they have grasped with both hands of seeking to avoid any liability under the dilapidations covenant. I wholly ignore the lack of merit in this defence. If it be good in law we must give effect to it, even though to do so might lead all but the most enthusiastic lawyers and indeed all right minded laymen alike to regard a system of law which compelled this result with neither respect nor affection but rather with amazement. But if the defence be bad in law, as His Honour Judge Fay from whom this appeal is brought, has hold, it is perhaps permissible to feel some satisfaction that on this occasion at least the law and considerations of justice fortunately coincide.
Mr. Nourse naturally laid much stress upon the decision in Harrison v. Wells, and it is right to say at once that there are passages in the judgment of Lord Justice Harman, with which Lord Justice Willmer expressly concurred, which appear to lay down as a matter of principle that if a lessor has no title to grant the lease which was granted, the lessees once out of possession cannot be prevented from asserting the truth to the court in relation to events which happened during the currency of the lease even though during its currency the lessees would have been estopped from so asserting. If the law were so declared by this Court, then even if we were minded to think that it was wrongly declared we are nevertheless bound by it unless we are justified in declining to follow the statement in accordance with well established principles, as for example because the statement was made per incuriam or in the absence of citation of relevant authority. I have well in mind the decision of this Court in Morelle Ltd. v. Wakeling (1955) 2 Queen's Bench 379 when all the previous cases were discussed and especially what was said in the judgment of the Court (a full Court) at page 406.
If this be the law, certain startling results follow. Take a lease defective in the respects alleged here requiring payments of rent quarterly in arrears so that the last payment falls due on the day upon which the lease expires by effluxion of time. Assume the lessee has not made any of the last four quarterly payments. If the lessor sues for and obtains summary judgment for the first three of those four instalments during the currency of the lease it is conceded that the estoppel would operate to prevent the lessee from alleging the defective title as a defence to those claims. But if the lessee, as would be the fact, cannot sue for the last instalment until after the expiry of the lease, the estoppel will not on this view of the law operate. The muzzle has been removed and this defence can then be used to defeat the lessor' claim for the last quarter, even though the lessee has had exactly the same benefit from his unchallenged possession of the premises, which have purported to have been demised to him under the lease, for the last quarter as for the preceding three.
I do not find it surprising that Lord Justice Salmon should in Harrison v. Wells have found it very difficult to find a sensible answer to the question why this should be so - I think he only reluctantly agreed with the other members of the court because he felt authority constrained him to do so. Lord Justice Harman at page 274 of the report thought that the principle justifying this result was difficult to find but that it must be sound.
It has been strongly urged by Mr. Bernstein for the present lessors that Harrison v. Wells is distinguishable on its facts.
So it is, as I hope later to show. But that is not enough for Mr. Bernstein's clients. If Harrison v. Wells purported to lay down the principle which Mr. Nourse claims that it did and which the passages in the judgment to which I have referred seem to suggest, the lessors can only persuade us not to follow that decision far any one or mere of the reasons I have already indicated and Mr. Bernstein did not shrink from seeking to persuade us so to do.
It is a remarkable fact how little authority there is before Harrison v. Wells on this branch of the law, notwithstanding its fundamental nature to which Lord Justice Harman referred. Indeed it is clear that this absence of authority especially as to the exact limits of the rule troubled this Court on the occasion of that appeal. The authority principally relied upon was Cuthbertson v. Irving, a decision of the Court of Exchequer in 1859 affirmed in the Exchequer Chamber in 1860 without counsel for the Respondent Plaintiff being called upon. When one notes the composition of those two courts, it is clear that their unanimous decisions are of the highest authority for what the case decides. The difficult question is to determine from the reports precisely what was there decided. The decision in the Court of Exchequer is recorded in (1859) 4 H. & N. 752: its affirmation in the Exchequer Chamber is reported in (1860)6 H. & N. 135. The former decision is also reported in 28 L.J. Ex. 306, considerably less fully than in the report just referred to, for the pleadings and especially the declaration are not fully set out in the latter report, nor are the arguments of counsel reported at the length at which they appear in the reports in Hurlstone & Norman.
This decision, like so many at this period, turned largely upon the pleadings, as Lord Justice Harman pointed out in his judgment in Harrison v. Wells. It is of importance to see exactly what the declaration averred. The declaration only appears fully in 4 H. & N. at pages 742-744. Unfortunately this court in Harrison v. Wells was only referred to the report in 28 L.J.Ex. - see the various references in the headnote and the footnotes of the report in (1967) 1 Queen's Bench to this report. As I read their judgments, both Lord Justice Harman at page 274 and Lord Justice Salmon at page 278 treated Cuthbertson v. Irving as a case in which the lessee, who in fact lost in both courts, had not gone out of possession and was held to be estopped from disputing the Plaintiff's title because of that fact. Lord Justice Salmon at page 278 said in terms there was "no case in the books in which the estoppel ... has ever been held to operate against a tenant who has gone out of possession. If we were to find that there is such an estoppel, we should be making new law." He added that for himself he would have been strongly tempted to do so.
During the argument we examined all the reports in great detail in order to see whether this understanding of Cuthbertson v. Irving by this Court in Harrison v. Wells was correct or whether this Court had been understandably misled by only being referred to the Law Journal Report. The lease in question demising the premises to the Defendant from the Plaintiff's predecessor in title was dated 22nd February 1848. It was for seven years from the 1st August 1848 - see page 745. The Defendant who had previously been in possession from August 1843 under an earlier five year lease "continued in possession during the whole of the term granted by the lease of 1848" -see page 746. Thus the lease in question expired by effluxion of time on the 1st August 1855 though this is nowhere expressly stated in any of the reports.
On the 2nd February 1854 the Plaintiff acquired the reversion from one John Bigland who had been the mortgagor in possession and in that capacity had demised the premises to the Defendant under the 1848 lease. The declaration averred the lease together with the covenant to "leave and deliver up the same ... at the expiration ... of that demise ..." see page 743. The declaration went on to allege a breach of that covenant. Throughout the currency of this lease the Defendant had paid the rent to his lessor until the deed of 1854 and thereafter to the Plaintiff, and the lessor and the Plaintiff had each at all relevant times treated the Defendant as the tenant of the property in question - see page 748. By the second plea, the Plaintiff's title and his right to enforce the dilapidations covenant was challenged.
I therefore approach the consideration of the effect of the judgment of the Court of Exchequer which was delivered by Baron Martin, upon the footing that when it was first sought by the Defendant and at all times thereafter to defeat the Plaintiff's claim for dilapidations by reliance upon the allegedly defective title of the original lessor and therefore of the Plaintiff, the lease had already expired by effluxion of time and the Defendant was out of possession. At page 754 of the report Baron Martin made it plain that the contention was that the lessor had no legal estate in the premises demised at the time of the lease and therefore no estate in reversion to assign to the Plaintiff. He said that the authorities showed that because there were apt words in the assignment to the Plaintiff to convey a legal estate in fee in reversion to him, the estoppel continued in his favour notwithstanding that the assignment itself showed want of title. The learned Baron after a review of the authorities stated at page 755 that the mortgagor in possession had nothing in the land "whereout any interest can pass to a tenant" and added that "no further or other interest passed to the Defendant than by estoppel." After saying that that seemed plain, he went on to say that on the remaining part of the question the authorities were not uniform. After an elaborate review of those authorities he stated his conclusion at pages 757 to 758 in the following terms.
"... The following propositions may be laid down -first, if any estate or interest passes from the lessor or the real title is shown upon the face of the lease there is no estoppel at all. Secondly, if the lessor have no title and the lessee be evicted by him who has title paramount, the lessee can plead this and establish a defence to any action brought against him ... But thirdly, so long as the lessee continues in possession under the lease the law will not permit him to set up any defence founded upon the fact that the lessor 'nil habuit in tenementis ...'"
Nowhere did the learned Baron ever say that once the lease determined by effluxion of time so that the lessee gave up possession and the estoppel ceased to operate the lessee thereupon became free to open up all those matters which because of the estoppel he could not have opened up during the currency of the lease. On the contrary the judgment of the court was in the Plaintiff lessor's favour and not of the Defendant lessee, for the latter was held to be prevented by the estoppel from disputing liability upon the dilapidations covenant, his obligations under which arose upon the determination of his lease by effluxion of time. I will not again quote in full the passage, to which Lord Justice Harman referred at length in his judgment, at page 758 of the report in 4 H. & N. in which the learned Baron stated why in his view the law was as the court held it to be. It is only necessary to observe that in his view "this state of the law in reality tends to maintain right and justice and the enforcement of the contracts which men enter into with each other (one of the great objects of all law)."
Cuthbertson v. Irving is therefore a case where the estoppel was held to prevent a former lessee out of possession from disputing his lessor's admittedly defective title in order to enable him to defeat the lessor's claim under the dilapidations covenant, and if this Court in Cuthbertson v. Irving held otherwise, I have reached the conclusion that it must have been per incuriam because they were not referred to full reports in 4 and 6 Hurlstone & Norman.
If the present argument for the appellants were well founded, I do not see why, subject only to any relevant limitation period, the appellants should not, if free to challenge the respondents' title, seek to recover back all the rent paid as money had and received upon a total failure of consideration, or as money paid under a mistake of fact. Yet the consideration was in reality fully enjoyed by the lessees and until the lease expired they would have been estopped from asserting the alleged mistake of fact in question.
We were referred in this connection to the decision of the Court of King's Bench in Newsome v. Graham (1829) 10 B. & C. 234.
There the tenant had paid rent to his landlord until he was ejected by title paramount. He was thereafter held liable to the true owner for mesne profits since, vis-a-vis the true owner, the tenant had been a trespasser. He then sought to recover the rent previously paid to his apparent landlord and his claim succeeded for the reasons given in the judgment of Lord Tenterden, C.J. True, that was a case of ejectment, whereas in the present case the appellants have had uninterrupted enjoyment of the property throughout the whole term of the lease. But in principle if the estoppel ceases to operate in the case of ejectment by title paramount during the currency of the lease, as it clearly does, and the aggrieved lessee can then recover the rent he has mistakenly paid because his lessor had no title, I do not see in principle why the result should be different after the determination of the lease where, if the appellants' argument be right, the estoppel has ceased to operate so that the allegedly aggrieved lessee becomes free to assert that he has paid the rent for a consideration which his lessor had no right to grant to him.
In the present case there never could have been any risk of eviction by title paramount at the instance of the trustees in whom the legal estate was always vested. They clearly acquiesced in the lease - indeed two members of the Parker family attested the execution of the lessors' seal upon the lease. Any claim by the trustees must have been defeated by acquiescence or estoppel. Further, at any time during the currency of the lease the estoppel could have been "fed'' by the lessors calling for and obtaining the legal estate in this property.
In Harrison v. Wells the facts were very different. The widow who purported to grant the lease of the property was never the tenant for life. She never had any equitable interest in the property whatever. She was only a person entitled under the trusts of her late husband's will to the rents and profits of the property. She never could have granted that which she purported to grant. Whether if the Plaintiff who sued only as the widow's executor might have succeeded had he been allowed to join a claim as executor or trustee of the husband's estate - a belated application to join such a claim was understandably refused by this Court during the argument of the appeal - see page 267 of the report - one does not know. In the present case any possible theoretical adverse claim by the trustees as the owners of the legal estate is of course barred by the fact that they are parties to the present action.
Mr. Nourse drew our attention to a passage in Spencer Bower on Estoppel (2nd edition 1966) pages 176 and 177 and to certain cases referred to in note 1 on the latter page which he correctly pointed out are not referred to in the reports of Cuthbertson v. Irving. These were James v. Landon (1585) Cro. Eliz. 36, Blundell v. Baugh (1633) William Jones 314, and Brudenel v. Robins (1762) 2 Wilson K.B. 142. I have read and re-read all these reports, the second of which is in Norman French. If my understanding of the decision in Cuthbertson v. Irving is right, I do not find anything in these very old decisions, which are far from easy to follow, which leads me to think that Baron Martin's judgment or that of the Exchequer Chamber would have been different had either court considered these early decisions - if indeed it did not do so. The reports of the argument in Cuthbertson v. Irving show an immense range of citation of authority by counsel and I will not readily assume solely from the absence of any reference to these three early cases in the reports of the argument in Cuthbertson v. Irving that they were not referred to at some point and were not known to the judges concerned.
This Court in Harrison v. Wells referred to and indeed relied upon a decision of the Irish Supreme Court in Levingston v. Somers (1941) I.R. 183. This was a majority decision of the Supreme Court and the appellant who succeeded was unrepresented. The appeal arose from an action by the respondent against the appellant for rent. This action was brought after the appellant had been ejected for non-payment of the rent allegedly due under the lease. The appellant then challenged his liability to pay that rent sued for on the ground that the lessor had no power to grant the lease under which the claim for rent arose. The defence succeeded in the Supreme Court. It is apparent from the leading majority judgment given by Mr. Justice Murnaghan that the respondents had relied upon Cuthbertson v. Irving but that learned Judge distinguished that case on the ground that the lessee concerned had remained in possession throughout the full term of the lease and that although the lessor was not capable of granting a valid lease in the terms of that purporting to have been granted, there was no-one else who could have sued the lessee in trespass. I therefore think that there is much force in Mr. Bernstein's submission that the majority of the Supreme Court would have decided the present case in favour of his clients and that this decision is no authority against his main contention. It is true that in Harrison v. Wells the lessee also remained in possession throughout the term, but in that case it would (so far as the reported facts show) always have been open to the trustees of the husband's estate to have sued the tenant in trespass or for mesne profits or perhaps, for waste. I respectfully agree with Lord Justice Harman that Levingston v. Somers was correctly decided on its facts, it being a case where the lessee was at risk at the instance of the owner of the legal estate and was at the instance of the owner of the legal estate and was free to raise that defence after his ejectment by his lessor, at which time the estoppel had ceased to operate against him. I also think, with all respect to the contrary view of the Master of the Rolls, that on this point Harrison v. Wells was correctly decided because, although the lease in that case had run its full term, the lessee was in theory at least at risk from the owner of the legal estate. Moreover I venture to doubt whether in this Court it is open to us to hold otherwise. But however this may be, in my view neither case is binding authority for the proposition that after the determination of a lease by effluxion of time, the determination of the estoppel leaves a lessee free to challenge his lessor's title so as to avoid all liability under a dilapidations covenant when at no time during or after the currency of the lease was he ever in peril of action by way of ejectment or otherwise by the owner of the legal estate, when the owner of that legal estate had acquiesced in the grant of the lease to him, and therefore could never maintain an action against him for trespass, mesne profits or waste, and when he has at all times had the full benefit of the consideration for which he paid rent to his lessor. I conceive this Court to be free to hold as a matter of law and I do so hold that a lessee or tenant who has had possession for the whole of the term is thereafter estopped from denying his lessor's or landlord's title in respect of the period for which he has had possession unless after the termination of that possession a claim is made against him by title paramount in respect of some part of that period, so that he becomes in peril of an adverse claim by reason of that fact. I think this conclusion is supported by a proper understanding of the decision in Cuthbertson v. Irving, and to the extent that part of the reasoning in Harrison v. Wells is to the contrary effect, I respectfully suggest that the relevant statements in the judgments were made per incuriam because of incomplete reference during the argument to the reports of Cuthbertson v. Irving.
It was accepted by Mr. Nourse that if his submissions on the estoppel question failed, the appeal must be dismissed. Since I find myself unable to accept those submissions which he made, it follows that the appeal must be dismissed and I would be content to dismiss it for those reasons alone. We were, however, pressed by both learned counsel to deal with the other two points which at their joint request were argued after we had reserved judgment on the estoppel question. The reason for this request was that it was anticipated that whichever way this Court decided the estoppel question, this case would be likely to go to the House of Lords and that in that event their Lordships would, or might, wish to know the views of this Court on those two other questions. I confess that I have acceded to this request with some reluctance since our views on those other questions will be obiter and even though those questions have been fully answered, expressions of judicial opinion on matters not strictly calling for decision in an already sufficiently complex case are in my view to be discouraged, since they can cause difficulties therafter for other tribunals who strictly -are not bound by those opinions but may feel nonetheless obliged to follow them.
Upon the footing that the appellants are not estopped from challenging the respondents' title, it is clear that the "lease" did not operate to confer upon the appellants the legal estate to which the appellants were entitled. But the respondents argued that that "lease" took effect in equity as an agreement for a lease and that since the respondents were in a position to obtain the legal estate from the trustees and could without difficulty have done so had the appellants so required, and since equity assumes that to be done which ought to be done, the parties were to be treated as being in the same position as if a lease had been granted. Reliance was naturally placed by the respondents upon the well known doctrine enunciated by Sir George Jessel M.R. in Walsh v. Lonsdale (1882) 21 Ch D 9. Judge Fay accepted this argument - see the transcript of his judgment, at page 18 et seq. The defendants challenged this conclusion of the learned judge. Mr. Nourse invited us to say that the judge was wrong in holding that the Walsh v. Lonsdale doctrine applied at all. In that case, he said, as was the fact, the defendant landlord was possessed of the legal estate and the plaintiff tenant was in direct contractual relationship with him. Thus, as Sir George Jessel M.R. held at pages 14 and 15 of the report, the defendant held under the same terms in equity (since he held under an agreement for a lease) as if a lease had been granted, it being, he added, "a case in which both parties admit that relief is capable of being given by specific performance ..."
Does it make any difference that the appellants as lessees had no contractual relationship with the persons in whom the legal estate was vested? Mr. Nourse says that it does. He relied strongly upon the judgment of Mr. Justice Farwell in Manchester Brewery Co. v. Coombs (1901) 2 Ch 608 at page 617 as showing that the Walsh v. Lonsdale doctrine had no application to a case where the alleged lessor had never had the legal estate, and also upon the judgment of the Divisional Court in Schalit v. Joseph Nadler Ltd. (1933) 2 K.B. 79 at page 82.
It appears to be the case that no decision has in terms yet so extended the Walsh v. Lonsdale doctrine. But facts such as those giving rise to the present dispute must be rare in the extreme and I find the argument based solely on lack of precedent unconvincing if, authority apart, principle appears to require the application of the doctrine so as to achieve an inherently just and to prevent an obviously unjust result.
Mr. Nourse relied strongly upon the peril in which he claimed the appellants to be and against which, he said, they would obtain no protection if his argument were wrong. This was, he said, unregistered land. Registration under the Land Charges Act would be in personam and not in rem against the property. This agreement for a lease, if such it was, could only have been registered against the respondents and not against the trustees in whom the freehold was vested. If therefore the trustees sought to sell the freehold the purchaser from them would not upon a search have discovered or been put on notice of the existence of this agreement for a lease and indeed would, since this was unregistered land, have bought free of the appellants' interest even had the purchaser known of the existence of that interest. Mr. Nourse accepted that since the 1959 contract had been registered, a purchaser would have been on notice of the respondents' interest under that contract but that, he said, would not have served to protect the appellants in respect of their interest. He placed reliance in this connection upon Megarry and Wade (op. cit.) at pages 1040/1, 1045 and 1048/9. Such a purchaser could therefore have evicted the appellants as trespassers.
It is not in my view necessary in this appeal to consider whether as canvassed in argument that statement as to the effect of registration and non-registration on page 1049 is correct, or whether in such cases the courts would be powerless because this was unregistered land to protect the appellants against eviction by a purchaser with actual notice otherwise than by registration of their interest.
If I may say so, I found Mr. Bourse's argument most ingenious, but in truth quite unreal. The 1959 contract was, as I have just said, registered. That being so, any purchaser must have become aware of its existence and in reality would buy subject to the appellants' lease. Assuming the law to be as contended for by Mr. Nourse, so far as I can see, the risk upon the existence of which he laid so much stress in argument, could only materialise in the event of a deliberate and well planned fraud designed to injure the appellants, to which both the respondents and the trustees would have to be parties if the fraud were to have any prospect of success. I cannot therefore think that this part of his submission is well founded. The appellants were at all times during the currency of the "lease" in possession. They could always have sued for trespass and, as already stated, the risk of eviction by title paramount could only arise, if at all, in the event of fraud by both the trustees and the respondents.
Mr. Bernstein in reply to this part of Mr. Nourse's argument relied upon Parker v. Taswell (1858) 2 De Gex & Jones 559 in support of his argument that this "lease" took effect as an agreement for a lease. In that case the instrument in question offended against section 3 of the statute of 1845. It was therefore "void at law" and thus ineffective to pass the legal estate. But Lord Chelmsford L.C. held that though "void at law" the instrument was nevertheless effective as an agreement enforceable in equity "the intention of the parties having been that there should be a lease and the aid of equity being only invoked to carry that intention into effect." See pages 570/571 of the report.
It seems to me that in the present case if at any time during the currency of the "lease" the true facts had emerged and either the appellants or the respondents had sought execution of a lease effective to pass the legal estate to the appellants, the court would without doubt have granted specific performance. Suppose the appellants had wished to dispose of their lease but on the true facts emerging on an enquiry as to title, their intended purchasers had required such a title to be shown. Could the respondents have refused to execute such a document? Conversely, suppose the respondents had wished to sell the reversion and their purchasers had queried the efficacy of the "lease". Could the appellants have refused to execute such a document? In either case the court would, I apprehend, have readily granted specific performance. Nor would the innocent misrepresentation by the respondents' solicitors to which I have referred earlier in this judgment have afforded the appellants a ready escape since, as already pointed out, that misrepresentation never in any way induced the appellants to act otherwise than they would have done had that misrepresentation never been made.
I therefore see no obstacle to treating this "lease" as an agreement for a lease and to applying it to the Walsh v. Lonsdale doctrine. Even if I had been of the opposite opinion on the estoppel question, I would have unhesitatingly have held this "lease effective as an agreement for a lease.
The same result can, I think, be reached by another route. Suppose the present parties had been concerned not with a lease of land but with a sale and purchase of shares in a company which the respondents had contracted to sell to the appellants. Unknown to the appellants the respondents were not the legal owners of those shares at any material time but they were at all times in a position to require their legal owners to convey the shares to the respondents or as the respondents might direct. If some dispute thereafter arose, could the appellants decline to accept and pay for those shares because at the time of contract the respondents themselves could not make title to them? I apprehend not. The courts would in such a case construe the contract as creating an obligation on the respondents either themselves to convey the title to or to procure the conveyance of the title to those shares to the appellants. I appreciate that in this example one is not concerned with an estate in land as one is in the instant case. But Mr. Nourse relied so much upon the inapplicability of the Walsh v. Lansdale doctrine to a case where there was no privity of contract between the intended lessee and the owner of the legal estate. If in the example I have given the absence of privity of contract between the appellants and the legal owners of the shares would not prevent the contract being construed as creating an obligation on the respondents to procure the conveyance of the shares to the appellants, I do not see why in principle any different result should follow merely because we are here concerned with an estate in land.
In my judgment, therefore, Mr. Nourse's argument on the second question fails. I now turn to consider the third and last question which strictly arises only if the appellants succeed on the first two questions, neither of which they have done. Can the covenant in Clause 2(3) survive and be enforced notwithstanding that on this hypothesis there is no underlying lease or agreement for a lease to support it? It seems to me beyond question that in Harrison v. Wells, this Court unanimously held that it could not. Lord Justice Harman said "I do not think that this can hold water for a moment." He went on to approve what would seem to have been an interlocutory observation by Lord Justice Salmon. That learned Lord Justice had suggested that "This being a covenant in aid of the lease and the lease void, the covenant cannot stand naked by itself without any lease to support it." Not surprisingly Mr. Nourse submitted that we were bound by this clear and categorical statement of the law.
I confess to having considerable doubt whether on this matter it would be open to us if this question arose for decision to seek to go behind this expression of opinion. But it is very far from clear from the report how much, if any, argument was directed to this question. Certainly the view expressed seems to have been founded upon this interlocutory observation of Lord Justice Salmon which in turn was founded upon the hypothesis that because the lease was void that was the end of the matter. This Court certainly does not seem to have had the advantage of the same careful arguments as we have had on this question in the present appeal. Mr. Bernstein challenged the assertion that in a case such as Harrison v. Wells the lease was void in the strict sense of that word -that is to say, that no rights whatever could arise thereunder. He submitted that a lease granted by a lessor without title was not void because it created both a contract and an estate by estoppel at least so long as the estoppel endured. It followed that in such a case the lessor could sue by virtue of privity of contract and independently of any privity of estate. In support of this submission he referred us both to an article in (1967) 83 L.Q.R.19 which was critical of this part of the decision in Harrison v. Wells, and to the decision of the Court of Common Pleas in Baker v. Gostling (1834) 1 Bing.N.C.19? a decision to which this Court was not referred in Harrison v. Wells. In that case the lessee of property whose executors were the plaintiffs had let that property to the defendants for a term of years longer than his own, the defendant covenanting to pay him rent. The lessor was thus not the reversioner. When his executors sued for rent, the defendant argued (see pages 24 and 25 of the report) that since the lessor by granting an underlease longer than the term for which he himself held the premises had "parted with all transmissible interest" the plaintiffs could not recover because "the covenant to pay rent is incident to the reversion: that no reversion remains in respect of which the plaintiffs can sue." The Court of Common Pleas rejected this argument holding that the plaintiffs sued not as the persons entitled to the reversion but as the persons entitled to the benefit of the privity of contract. See the judgments of Sir William Tindal, C.J., and Mr. Justice Bosanquet, both at page 28 of the report. This is clearly a case where the relevant covenant was held enforceable in spite of the absence of any relevant privity of estate.
Mr. Bernstein did not challenge, upon the hypothesis upon which this question was being argued, that the "lease" was ineffective to pass the legal estate. But he argued even if in that but no other respects that "lease" was void, once the lessee entered into possession under it, he became a yearly tenant on the terms of the "lease" so far as applicable and those terms would include the covenant to repair which the respondents now seek to enforce. He contended that in Harrison v. Wells this Court overlooked that even though the "lease" there in question was void, such a contractual relationship might nonetheless exist between lessor and lessee or landlord and tenant which included the covenant to repair and that the possibility that there was a tenancy from year to year was never mentioned in that case. It was for this reason that he claimed that it was open to us in accordance with well established principles to decline to follow what was there stated to be the law without offending against what this Court held in Morelle v. Wakeling, to which I have already referred. I feel bound to say with the utmost respect to the members of the Court who decided Harrison v. Wells I think this submission has great force. I do not think that the Courts should be astute to find reasons whereby lessees and tenants can escape easily from obligations which they freely entered into and if it were necessary to decide this question I would be prepared to accept this part of Mr. Bernstein's argument and to hold that the appellants, all else apart, are liable on the covenant. But I rest my decision in dismissing this appeal on the answer which I have given earlier in this judgment to the estoppel question. In the result, therefore, in my view this appeal should be dismissed.
LORD JUSTICE LAWTON: In 1966 the Defendants, whose name is well known to the British public, made an agreement purporting to be a lease with the first named Plaintiffs. That agreement contained a dilapidation clause in a common form. The Defendants must have had what they considered to be sound commercial reasons for making this agreement and going into possession under it. They occupied the premises until the agreement was terminated in accordance with its terms. The Plaintiffs claimed to be paid for dilapidations. The Defendants disputed the amount of this claim. On the 23rd January, 1974 the first named Plaintiffs issued a writ to enforce their claim. At this date the Defendants thought they had no defence and, when served with a summons for summary judgment, did not seek to raise any save as to quantum. Thereafter they discovered that the Plaintiffs were not the freeholders of the premises as their solicitors had held them out to be in the negotiations for the agreement. There was a defect in their title which they could have put right at any time before they made the agreement and which they could put right now by taking a conveyance of the freehold and paying the appropriate stamp duty on it. This defect, say the Defendants, entitles them to refuse to pay anything for dilapidations. They had had all the benefits of the agreement. They used the premises for seven years. When they went out of possession the premises were in a worse condition than when they went in. Nevertheless they contend that the law relieves them of liability. It is a strange and seemingly unjust law if it does.
The origins of this law lie in the middle ages, probably in decisions as to methods of proof and manner of pleading. The earliest relevant reported case is James v. Landon, (1585) Crow. Eliz. 36. The most junior apprentice in the law who was present in Court when this case was being tried must surely have known what the result was going to be. The Defendant had granted a twenty-one year lease to the Plaintiff. After it had expired a dispute arose between the Plaintiff and the Defendant as to which of them owned the freehold. The Plaintiff said he did as the heir at law of an earlier freeholder. The Defendant tried to defend this claim by saying that as the Plaintiff had taken a lease from him he was forever barred from disputing his claim to the freehold. This unmeritorious defence was rejected. The report is short. Periam, J. said:
"This estoppel shall endure no longer than the lease."
and followed this with comments which are now difficult to understand. Anderson, C.J. is reported as saying:
"After the term expired the Plaintiff may confess and avoid the lease."
These judicials comments have been repeated many times and seem to be the basis of the view of the law taken by text-book writers and some judges in more modern times. If the law has to bear these medieval shackles the time surely has come to examine them carefully. They may have rusted away.
In Harrison v. Wells, (1967) 1 Queen's Bench 263 this Court examined the law and adjudged first, that a tenant who had gone out of possession was not estopped from denying his landlord's title and secondly, a covenant in an agreement purporting to be a lease could not stand alone without the lease to support it.
Unless that decision can be distinguished or can be disregarded for one of the reasons identified in Bristol Aeroplane Co. v. Young, (1944) King's Bench 718, it is my judicial duty to follow it.
Both the Master of the Rolls and Roskill, L.J. have examined closely Cuthbertson v. Irving, as reported in (1859) 4 Hurstone & Norman 752. It did not decide what this Court in Harrison v. Wells, basing itself on the report in 28 Law Journal thought it had decided. It follows that whilst Harrison v. Wells on its facts may have been correctly decided the wider statements in it were made per incuriam and need not be followed. For the reason given by my brethren I too adjudge that the defendants are estopped from denying the Plaintiff's title.
As for the alternative grounds for supporting the judgment which were argued by Mr. Bernstein, I agree with what Roskill, L.J. has said about them and I have nothing to add.
(Order: Appeal dismissed with costs. Leave to appeal to the House of Lords, refused).
