Jersey Unreported Judgments

[2010]JRC127

royal court

(Samedi Division)

9^th July 2010

Advocate P. C. Sinel for the Plaintiff.

Advocate O. A. Blakeley for the First and Second Defendants.

judgment

the commissioner:

1.        This is an application for summary judgment in relation to certain parts of the claim set out in the plaintiff's amended order of justice of 16^th November, 2009.  A brief history will suffice for these purposes. 

2.        The plaintiff is the owner of Number 8 Cheapside, St Helier ("the property") which she inherited from her mother.  The property is subject to a fully repairing contract lease passed before the Royal Court on 2^nd April, 2004, which expires on 1^st April, 2025.  The commencing rental was £26,000 subject to review in accordance with the movement in Jersey of the retail prices index and was payable quarterly in advance on the usual quarter days.  The plaintiff's mother had agreed with the defendant that no rent should be paid for the first six months of the term.  It seems that the purpose of that rent holiday was to enable certain works of renovation to be carried out at the expense of the defendant. 

3.        The defendant's obligations under the lease are guaranteed jointly and severally by Robert Gibbons ("Mr Gibbons") and David Jim ("Mr Jim").  From the perspective of the plaintiff the relationship with her tenant has been unsatisfactory for a long time; according to Mr Sinel the rent has been paid on the due date only twice during the term of the lease.  Since December 2008 the rent has not been paid at all.  The current arrears including payment for insurance premiums and interest total £50,883.40.  The rent has not been paid, according to Mr Blakeley for the defendant, because Mr Gibbons was under the misapprehension that his difficulties with sub-tenants entitled him not to pay the rent which was due.  However, even after that misapprehension was dispelled, the arrears have still not been paid. 

4.        The lease provides that the property may not be sub-let without the consent of the plaintiff.  On 24^th May, 2005, the property was sublet with the consent of the plaintiff to Chinese Whispers Limited for a term of 9 years.  Chinese Whispers Limited appears to have got into financial difficulties and the sub-lease was purportedly assigned by deed dated 6^th September, 2008, to Robin Hood Curry House Limited.  We state "purportedly" because the assignment was not made with the written consent of the plaintiff and there is a dispute as to the validity of the assignment.  Following the purported assignment certain building works were started at the property, again without the consent of the plaintiff, and not completed. 

5.        The Court visited the property and it is in a state of disarray and not in any condition to be occupied by a tenant.  Robin Hood Curry House Limited has stopped doing any building work and apparently contests the validity of the assignment of the sub-lease and disputes that it has any obligation to the defendant to put matters right.  In the meantime the plaintiff, who has the benefit of a contract lease which provides that the property shall be maintained in good structural condition and well decorated and repaired, finds that her property is an abandoned building site and that she is receiving no rent from the defendant. 

6.        Mr Blakeley, who has brought some order to the proceedings after receiving instructions at a late stage from the defendant, candidly and very properly, admitted that there was no dispute as to certain elements of the claim.  It is convenient here to set out what the plaintiff does claim in its application for summary judgment.  The plaintiff's skeleton argument provides at paragraph 6:-

"The Plaintiff's application for Summary Judgment relates to the following parts of her claim, namely that the Court:-

6.1 Order that the Defendants jointly and severally forthwith pay to the Plaintiff £44,253 being the rent outstanding since December 2008 and any further sums that may be outstanding at the time of the judgment;

6.2 Order that the Defendants jointly and severally forthwith pay to the Plaintiff interest at the rate of 3% over the base rate on the outstanding rental, this currently being £1,340 and any further sums that may be outstanding by the time of judgment;

6.3 Order that the Defendants jointly and severally forthwith pay to the Plaintiff £1,932.43 being the insurance premium outstanding since December 2009 and any further sums that may be outstanding by the time of judgment;

6.4 Order that the Lease be cancelled and the Property vacated by the First Defendant and delivered up to the Plaintiff immediately on the grounds of the Defendants numerous breaches of the Lease;

6.5 Order that liability be adjudicated upon with respect to the repairs required to the Property with damages to be assessed by the Judicial Greffier;

6.6 Order that the Defendants pay to the plaintiff the costs of and incidental to the proceedings."

7.        Counsel for the defendant conceded that there was no defence to the claims set out at paragraphs 6.1, 6.2 and 6.3 and we therefore give summary judgment to the plaintiff in those respects.  

8.        The application for the cancellation of the contract lease gives rise to an exercise of judicial discretion.  As a matter of law the plaintiff is entitled to apply for the cancellation of the contract lease.  The relevant parts of the contract provide at paragraph 7:-

If the rent or additional sums hereinbefore mentioned or any part thereof shall at any time be unpaid for fourteen days after becoming payable or any covenant on the Tenant's part herein contained shall not be performed or observed...then and in any of the said cases it shall be lawful for the Landlord (after giving the Tenant fourteen days notice of her intention so to do) to enter upon the Premises or any part thereof in the name of the whole and to have this present Lease cancelled and thereupon the term shall determine but without prejudice to the right of action of the Landlord in respect of any antecedent breach of the Tenant's covenants herein contained."

9.        Counsel for the defendant referred us to the headnote of the report of Fort Regent Development Committee-v-Regency Suite Discothéque and Restaurant Limited [1990] JLR 228 which states:-

"(2) a lessor could not treat a lessee's breaches as entitling it to forfeiture since it was obliged to apply to the court for an order to terminate the lease, the court alone having the power to set aside a contract lease once it was satisfied that there was sufficient evidence of breach of covenant."

10.      Hamon, Commissioner stated at page 232:-

"We have cited passages from these two English cases in deference to the careful argument of Mr Fielding and to show that in English law it appears that the courts lean against forfeiture.  But in England the legal parameters do not appear to be the same as those we have here.  It appears from what we were told that in England the parties themselves can set a lease aside.  Not so here.  The court alone can set aside a contract lease and only when there has been shown sufficient evidence of breaches of covenant can the court decide whether or not to exercise its discretion to terminate."

11.      Although neither counsel drew our attention to the case, the principles underlying the exercise of that discretion were examined in Grove-v-Baker [2005] JLR 348 at 355, paragraph 14 where the court stated:-

"that the remedy of résolution in Jersey law is available at the discretion of the court wherever the failure to comply with an obligation can be said to be sufficiently serious to justify a cancellation of the contract.  A trivial or insignificant failure to comply with an obligation would not be sufficient.  The failure must go "to the root of the contract" (Hamon-v-Webster and New Guar. Trust Fin. Ltd-v-Birbeck) or involve "a breach of a fundamental condition" (Hanby-v-Moss (2)) or be "sufficiently serious to justify the termination of a contract" (Hotel de France (Jersey) Ltd-v-Chartered Institute of Bankers (3))."

12.      Counsel for the defendant urged us not to exercise our discretion to order the cancellation of the lease on two main grounds:-

(i)        He said that the outstanding rent was to be paid in very short order.  Mr Gibbons has arranged to borrow £50,000 from a finance company.  There had been difficulties in arranging security for the finance company but these difficulties had now been resolved;

(ii)       He submitted that the defendant had invested about £100,000 in the property at the beginning of the lease and that the cancellation of the agreement would deprive the defendant of the benefit of that investment. 

13.      Counsel for the plaintiff reminded us of the maxim la convention fait la loi des parties.  The defendant had agreed that a failure to pay the rent at the due time would render the lease liable to termination.  Counsel described the defendant as the "tenant from hell". 

14.      While we think that that description is a little hyperbolic, we do agree that the defendant has proved to be a very unsatisfactory tenant.  The difficulties with sub-tenants were of no consequence whatsoever to the plaintiff.  The plaintiff was entitled to receive the agreed rent for the premises.  To refuse to pay the rent due under a lease particularly over an extended period is a very serious breach which goes to the root of a contract for the letting of land.  We can well understand why the plaintiff is unwilling to contemplate remaining in a contractual relationship with the defendant. 

15.      In the exercise of our discretion we accordingly order the cancellation of the lease dated 2^nd April, 2004, and we order furthermore that the defendant yield up possession of the property to the plaintiff forthwith.  We also direct the registration of this order in the Public Registry.

16.      We turn to the application for summary judgment with respect to the repairs required to the property.  Clause 5.t of the lease provided:-

At the determination howsoever caused of the term hereby granted peaceably yield up to the Landlord the premised well and substantially repaired, cleansed, maintained, amended and painted in accordance with the Tenant's covenants herein contained.  It is agreed that the Tenant may remove its fittings at the termination of this Lease provided that the premises shall be left in a good state of repair and any damage caused by such removal shall be made good by the tenant. 

17.      The Court attended, as we have stated, at the property and viewed its condition which, as we have said, is in a state of disarray.  The contract lease having been terminated, the defendant is under an obligation pursuant to paragraph 5.t to yield up the property "well and substantially repaired, cleansed, maintained, amended and painted".  It is plainly not in that condition. 

18.      We therefore give summary judgment to the plaintiff in respect of liability but we remit to the Judicial Greffier the question of quantum. 

19.      We wish to add that we should not be taken to endorse the submission that all the works specified in the report of the surveyors J.S. Carney and Co Limited need to be undertaken at the expense of the defendant.  It appears to us, although we make no finding thereon, that there is an element of betterment in those recommendations for which the defendant should not be obliged to pay. 

20.      As a post script we note that the defendant intends, according to his counsel, to seek to convene the sub-tenant or sub-tenants to these proceedings.  Again, without making any finding to that effect, it does appear on the face of it to us, that Robin Hood Curry House Limited and/or the guarantor, Mr Thirkell, are prima facie responsible on a quantum meruit basis to contribute towards the costs of the restoration of the property in relation to the damage they appear to have caused.  Whatever the position may be in regard to the assignment of the sub-lease so far as the plaintiff is concerned, a contract appears to have been made between the parties to the deed of assignment.  We will say no more on that other than to recommend to the parties that differences of this kind might well be resolved more expeditiously and more cheaply at mediation.  That concludes the judgment of the Court. 

Costs Order

21.      The plaintiff having been successful in her application, it appears to me that the usual order that costs follow the event, must be made.  The only question is whether and if so, to what extent, the defendants should be ordered to pay the costs of the plaintiff on an indemnity basis. 

22.      Counsel for the plaintiff has submitted that this is an exceptional case and in part I agree with him.  To fail to pay rent in accordance with a contract lease over an extended period, thereby depriving a landlady of her income from that property is exceptional and unreasonable conduct.  I note however, that the plaintiff's position substantially changed when the order of justice was amended by order of the Master on 16^th November, 2009, and it seems to me that it would be unfair to order the defendants to pay indemnity costs before that period.  Equally the defendants' case has been conducted moderately and appropriately since Advocate Blakeley was instructed by them on 19^th May, 2010. 

23.      My order therefore is that the defendants should pay the costs of the plaintiff on the standard basis save that, between 16^th November, 2009, and 19^th May, 2010, the costs should be paid on the indemnity basis.  That is my order. 

Authorities

Fort Regent Development Committee-v-Regency Suite Discotheque and Restaurant Limited [1990] JLR 228.

Grove-v-Baker [2005] JLR 348.