07 November 1941
The pursuer supported her claim to abandon her lease by the decision in Tay Salmon Fisheries Co. v. Speedie, 1929 S C 593. In that case the pursuers alleged that by the action of the executive, as empowered by the Legislature, the whole subjects leased had been rendered unworkable and entirely unproductive, and contended that they were therefore entitled to abandon their lease. They were held entitled to abandon their lease.
Counsel for the defender in the present case argued that the decision in the case was unsound, that the Judges were not agreed as to the legal principles entitling them to give the remedy they accorded, and that, if the case could be read as deciding that there had been eviction in the legal sense, it was at variance with the decision of the House of Lords in the English case of Matthey v. Curling,  2 A. C. 180. A Judge of the Outer House is not concerned with such considerations. Whatever may have been the opinions delivered by the Judges who took part in the decision of the case, I am bound by the decision. Now the decision as set out in the interlocutor was that in fact there had been total eviction from the subjects leased, and that in law there had been a breach of warrandice and total eviction, which entitled the tenants to abandon the lease. Accordingly it is now matter of decision binding upon me that, if the executive takes possession of subjects leased, there is a breach of warrandice, and, if the eviction be total, the tenant is entitled to abandon his lease.
Further, it must be noticed that in Speedie's case the tenants had not been extruded from the whole of the subjects let. They were extruded from subjects amounting in value to seven-ninths of the whole subjects let. But Lord President Clyde, after pointing out (at p. 601) that it is always a matter of degree whether an eviction is partial or total, held in the circumstances of the case that the eviction "was practically complete expulsion" amounting to "complete eviction." Lord Sands (at p. 603) put the question as being whether the tenants could prove "that the exercise of their right has been substantially destroyed by being rendered unprofitable, or that, in so far as the right can still be profitably exercised, it is on so small a scale that the character of the fishing is entirely altered, just as if a large agricultural farm were reduced to a small holding." Lord Morison put it that the eviction was "for practical purposes complete." In deciding that there was what Professor Rankine calls "constructive total eviction," all the Judges laid stress on the purpose for which the heritable subjects had been taken on lease, and on the fact that that purpose could not then be practically realised.
It results that the tests to be applied in deciding whether there has been total or partial eviction from subjects leased are the same in the case of eviction by the action of the executive as in the case of eviction resulting from rei interitus.
In Allan v. Markland, (1882) 10 R. 383, Lord Shand (at p. 389) described these tests thus:—
"If the premises let have been so destroyed or seriously injured that they have become no longer fit for occupation for the purpose for which they were let, the tenant being deprived by damnum fatale of the subject for which he agreed to pay rent is free from obligation to do so … The destruction of a part of the subject of the lease will not release the tenant, unless the part be essential for the purpose for which the premises were let; and in determining the question whether the subject was either entirely or in a material part so destroyed as to make it unfit for the purposes for which it was let, a case of destruction is not made out by showing that the premises have been made uncomfortable, and, I would add, unsuitable for the purpose of the lease for a short time."
The pursuer avers that the purpose of this lease was to provide the tenant with a furnished residence in which he could live. The defender meets this on record by a reference to the lease for its terms and, quoad ultra, by a denial. It is plain from the lease that its purpose was to provide a furnished country residence for the tenant, with the offices appropriate to such a residence. She has been evicted from the residence and can make no use of the furniture. She is left with cottages for her servant and groom, with some small amount of stabling, with two paddocks and a garden. These are mere appurtenances to a country residence. The rentals allocated to them amount to some £52, 10s. The total rental now payable by the tenant is some £442, 10s. The tenant has been deprived of by far the greater part of the subjects let, and the part of which she has been deprived was essential for the purpose for which the premises were let. Moreover, the eviction has not been for a short time. It has already lasted for eleven months, and there is no indication of its early termination.
In my opinion, on the authority of Speedie's case there has been a constructive total eviction of the pursuer from the subjects let, which entitled her to abandon her lease.
It was argued that section 2 (2) of the Compensation (Defence) Act, 1939, must be held to have abrogated the rule of the common law whereby a tenant, who has suffered total eviction as the result of action by the executive, is entitled to abandon his lease. It was said that that section now confined the tenant in such a case to a claim for compensation from the Government. I do not read that section as restrictive of the rights of a tenant, but rather as conferring in Scotland an additional remedy to the tenant who has been dispossessed.
It was argued that, when the tenant, who has been totally dispossessed by the action of the executive, abandons his lease, the landlord has no claim for compensation under the Compensation (Defence) Act, 1939, and that the manifest injustice of such a situation indicated an intention on the part of the Legislature to alter the common law of Scotland and withhold the right to abandon the lease in such a case. It would not be right that I should express a concluded opinion as to whether the landlord in such a case has a good claim for compensation. The matter does not arise for decision in this case. It seems permissible to say that the contrary view prima faciedemands a narrow construction of the words of the Act, and a construction which is repugnant to the general intendment of the Act.
In any event, I cannot find in the words of the section any expression of an intention to alter the common law of Scotland as exemplified in Speedie's case.
I shall repel the first plea in law for the defender, sustain the third plea in law for the pursuer, and grant decree of declarator in terms of the conclusions of the summons.
The defender reclaimed, and the case was heard before the First Division on 23rd and 24th October 1941.
At advising on 7th November 1941,—
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.
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.
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