Scottish Court of Session Decisions

At advising on 7th November 1941,—

LORD PRESIDENT (Normand).—I am of opinion that the Lord Ordinary was right in holding that the present case is ruled by Tay Salmon Fisheries Co. v. Speedie .

In that case two grounds of judgment were put forward, eviction and rei interitus. I am bound to say, with respect to the learned judges who were parties to the decision, that I think that there was no eviction in the proper sense, for there was no breach of warrandice. Warrandice is warrandice of title, and absolute warrandice guarantees to the grantee that no title shall appear which will prevail against that conferred on him. In a lease of subjects let for a particular purpose, there is implied warrandice also that they are fit for that purpose. But there is no guarantee against damnum fatale or inevitable loss arising from causes independent of the title. Moreover, warrandice is an express or implied term of the contract, and its breach gives rise to an action of damages. When, therefore, a tenant is excluded from possession by vis major, damnum fatale, or the action of Government under subsequent legislation, he has neither the remedy of an action of damages nor a right to terminate his lease on the ground of eviction. But it is now well settled in our law that, when the subjects let are wholly destroyed, the tenant has at once the right to claim cancellation of the lease, or, which is the same thing, to abandon it. I do not doubt that the landlord has a corresponding right, although in the usual case it is the tenant who has the interest to abandon.

In the Tay Salmon Fisheries case there was no actual rei interitus, for the salmon fishings remained as they were before the danger zone was created by the lawful action of the Air Council, but it had become impossible for the tenant or for anyone to exercise the right of salmon fishing. In a practical sense the salmon fishings were, while the Air Council continued its by-laws, wholly destroyed. There was not actual destruction, but there was what may be conveniently called constructive total destruction. The effect of the decision is to extend the law applicable to physical or actual rei interitus to constructive total destruction.

Counsel for the landlord maintained that this case was distinguishable from the Tay Salmon Fisheries case on three grounds: (1) Because the effect of requisitioning was not to render the subjects let wholly unoccupiable, although they could not, during that period of requisition, be occupied by the tenant; (2) because the duration of the requisition was uncertain, and the subjects might be restored to the tenant within a short time; and (3) because the statute under which the requisition was made provided for compensation to the tenant ousted from possession by the requisition, and to no one else.

He suggested that the military authorities were occupying in place of the tenant for a period which might be quite short, that the lease and the landlord's rights remained unaffected, but that the tenant, remaining under obligation to pay his rent, received compensation for disturbance of his occupation according to a statutory measure which need not necessarily equate with the rent payable by him under the lease.

On the first point, I am of opinion that the argument ignores the composite character of the subjects let, and the effect on them of the requisition. What was let included not only the house but the furniture, and it is evident that the lease was a lease of a furnished house, subject to the tenant's right to substitute furniture of his own and to store the landlord's furniture without diminution of rent. Now the military authorities have requisitioned the house, but they have not requisitioned the furniture, which has been stacked in part of the house. The result is that neither the tenant, nor the military authorities, nor anyone else can occupy the mansion house as a furnished house or use the furniture while the present requisition continues to affect the subjects. The subjects are, for the present, non-existent for practical purposes as a furnished house, just as the salmon fishings were in the Tay Salmon Fisheries case practically non-existent while the Air Council by-laws were in force.

On the second point argued for the landlord, it appears to me that there was no necessary permanence in the by-laws creating the danger zone in the Tay Salmon Fisheries case, and that the constructive total destruction was as indefinite in its duration in that case as in this. Where actual total destruction takes place, the fact that it is speedily reparable, and therefore only temporary in its effect, is not material. That is clearly shown by the decision and opinions in Duff v. Fleming . In that case the subjects, which were let as a spirit shop on a seven years' lease from Martinmas 1867, were burnt so as to render them unfit for business on 17th January 1869. The tenant abandoned the lease four days later, and the premises were repaired by 13th April 1869. It was held that the tenant was entitled to abandon. The Lord Justice-Clerk said (at p. 771):

"The true test of the effect of the injury is, whether, without rebuilding, the subject was in any respect fitted for the purpose for which it was let. I am satisfied that it was not."

Lord Cowan, Lord Benholme, and Lord Neaves took the same view, and Lord Neaves added (at p. 772):

"It was argued for the landlord that, having since rebuilt the house, he can compel the tenant to resume possession and pay rent. But location is a mutual contract, and, if this argument were sound, it would follow that the tenant, by tendering rent, could compel the landlord to rebuild, which I do not consider to be the law. The simple answer, however, to the argument is, that the destruction, once accomplished, dissolves the contract, and that the relation of landlord and tenant between the

parties being thus brought to an end can only be re-established by a new agreement."

Applying the principle thus stated by Lord Neaves in the concluding sentence, I am of opinion that, subject to the limitation de minimis, the tenant and landlord are both liberated when constructive total destruction of the subject is caused by Government requisition, although its duration may be indefinite.

On the last point argued for the landlord, it may be sufficient to say that, in the absence of the Crown, it is not open to us to determine who the party entitled to compensation may be. It is probably from a recognition of this difficulty that the argument is not adumbrated in any way on record. The Lord Ordinary indicates that the landlord may perhaps have a right to compensation under the Compensation (Defence) Act, 1939, if the effect of the requisition is to dissolve the lease. I express no opinion on this point, for it does not arise for decision. But I may add that, if the common law of Scotland is that a lawful interference by the Government which makes the subjects of a lease wholly unoccupiable as such subjects has the effect of dissolving the lease, it would require plain terms or very clear implication in the statute authorising the interference to provide that the Government's interference was not to have the usual legal effect.

A decision of the House of Lords in an English case is referred to by the Lord Ordinary. No English case was cited to us. In this, counsel exercised a wise discretion. In the chapter of leases of heritage, and I think also in the chapter of rei interitus, our law is by no means the same as the law of England, and, to quote Lord Justice-Clerk Hope, if we were to attempt to apply that law in these cases, we should run the greatest risk of spoiling our own by mistaking theirs.

I move your Lordships to refuse the reclaiming motion, and to affirm the interlocutor of the Lord Ordinary.

LORD FLEMING .—I concur. I wish, however, to make it clear that I am not committing myself to the opinion that in every case of a requisition by the Crown of let subjects a right is necessarily given to the landlord or to the tenant to bring the lease to an end.

LORD MONCRIEFF .—I am of the same opinion. Although our earlier law as formulated by the Institutional writers would appear to have been less determinate, it must be recognised as having been settled, in any event since the decision in 1870 of the case of Duff v. Fleming, that any actual, although temporary, physical destruction of the lease-hold subjects is a rei interitus which entitles the tenant ex debito justitiœ to avoid the lease and not merely to claim an equitable abatement of rent. In the case of a national rather than an actual destruction of the subjects the same doctrine was applied in 1929, in the case of Tay Salmon Fisheries Co. v. Speedie, and was applied no less conclusively

and to the same effect, although certain of the learned Judges further thought that the rei interitus upon which they proceeded had inferred against the landlord a breach of warrandice.

These cases are binding on this Court, and the only question (apart from any effect to be given to the statute) for determination accordingly is, Did the requisition of the mansion house for an indeterminate time, as followed by its immediate displenishing, operate rei interituswhere the leasehold subjects had been a furnished house for occupation by the tenant? To that question there can, in my opinion, be only one answer, and I thus have no difficulty in holding that, following on the requisition, the tenant became immediately entitled to avoid the lease.

As regards the argument which was addressed to us on the statute, I agree with your Lordship. If the leasehold subjects have in fact been destroyed by the requisition, the tenant's rights at law cannot be supposed to have been displaced even by a misdirected tender of compensation; while the landlord may yet have an argument on the statute which, in the absence of the Department, we cannot entertain.

LORD CARMONT .—The decision in the case of Tay Salmon Fisheries Co. v. Speedie I also agree, shows it is not only in the branch of law which deals with marine insurance that there can be constructive total loss. By Speedie's decision this Court decided that the principle of the right to avoid a lease on interitus reican be applied where the lessee is wholly, or almost wholly, deprived of his occupation, although the subjects let still exist. The present case seems to me to fall within the principle of Speedie'scase, and, indeed, in some respects it is a stronger case than was Speedie's. I do not feel that the criticisms of some of the opinions delivered by the Judges are sufficiently strong to entitle us to treat Speedie'scase as special and not binding on us. The case must, I think, be disposed of as proposed by your Lordship in the chair.