Scottish Court of Session Decisions

This was an action at the instance of the trustees of the late William Hart, proprietor of a shop at 69 Shields Road and 1 Houston Street, Glasgow, which until 15th May 1902 was licensed as a public-house, against Archibald Tower Arrol, brewer, and John Urquhart, publican, the tenants of the said shop.

The action raised questions as to the validity of the lease which it is not necessary to report, and also as to the obligation of the defenders to continue their tenancy after the licence of the premises was withdrawn. The material facts relative to the latter question, as they were disclosed after a proof, were as follows:—The lease was for a period of ten and a-half years from the term of Martinmas 1895 at an annual rent of £49. The subjects let were described as “All and Whole that shop situated ( address), all as formerly occupied by J M Picken, wine and spirit merchant there, and now occupied by the second parties” (Arrol and Urquhart). The subjects were let “allenarly for the purpose of the second parties carrying on therein the business of wine and spirit merchants.” The lease contained the following clause:—“But it is hereby specially provided and declared that the second parties (the tenants) and their foresaids shall not be at liberty, without the previous written consent of the first parties or their successors, to assign this lease or any part thereof, or to sub-let the premises hereby let or any part thereof, or to leave the premises in whole or in part vacant or unused, or to use the same or any part thereof for any other purpose than that of the said business of wine and spirit merchants.” The premises let had been licensed as a public-house for a considerable period, but at the Licensing Court held in April 1902 an application by Urquhart (who was then the licence holder) for a renewal of the licence was refused.

The present action, which was raised before the licence of the premises was withdrawn, concluded, inter alia, that the defenders were bound to stock and plenish the shop, and to carry on there the business of wine and spirit merchants. By an amendment of the summons, dated February 20th 1903, the following conclusion was added:—“And that said lease is binding upon the defenders, and that the defenders are liable conjunctly and severally to make payment of the said rent of £49 (so far as not already paid) half-yearly, by equal portions at the terms of Whitsunday and Martinmas, for said shop during the period of said ten and a-half years from and after the term of Martinmas 1898.”

By minute for the pursuers, dated 20th February 1903, it was stated “that the pursuers did not insist on the defenders using the shop forming 69 Shields Road and No. 1 Houston Street, or any part thereof, for no other purpose than that of the business of wine and spirit merchants, and that the pursuers assented to the defenders using said shop for any lawful purpose, and that the pursuers accordingly withdrew any part of the conclusions of the summons to the effect that the defenders were bound to carry on in said shop the business of wine and spirit merchants therein till the expiry of said lease.”

Defences to the action were lodged by Arrol, but not by Urquhart, against whom decree in absence was taken. In his defences Arrol offered to pay the rent of the premises up to Whitsunday 1902.

He pleaded, inter alia—“(6) It having been a condition of this defender's contract of yearly tenancy of the premises that the business to be carried on therein should be that of wine and spirit merchants, and performance of the said condition having been rendered impossible by the lapse of the licence, the said contract was terminated without notice as at 15th May 1902. (8) Esto that the alleged lease be held to be valid, this defender is entitled to absolvitor, in respect that he was bound under such lease to carry on the business of wine and spirit merchants in the premises let, and that performance of that obligation has without fault upon his part been rendered impossible by the refusal of the Licensing Magistrates to renew or transfer the licence.”

Proof was allowed and led. On 12th March 1903 the Lord Ordinary ( Kyllachy) pronounced an interlocutor by which he decerned and ordained the defender Arrol “to stock and plenish, within six months from the date hereof, the premises in question to an extent at least sufficient to afford security to the pursuers for the rent thereof, and thereafter to maintain

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the same in a sufficient state of repair during the currency of the lease.”

Opinion.—“The summons in this case has now been put in shape by the amendment made by the pursuers—an amendment not opposed by the appearing defender. And the decision has been simplified by the minute for the pursuers by which they restrict the conclusion with respect to the mode of occupation of the premises. There has also been a decree in absence taken against the defender Urquhart, so that the only question is as to the liabilities of Mr Arrol, the joint-tenant and sole appearing defender. As to these liabilities, my opinion is generally as follows:—

In the first place, I am of opinion, and see no reason to doubt, that a valid contract of lease in terms of the correspondence which passed in September 1898, the draft lease adjusted in the following year, and the extension of the lease signed by the pursuers and the appearing defender in the year 1901, was constituted as between the pursuers and the defender by the said writings and the possession which followed upon them. It was suggested that that possession was not necessarily referable to the writings, and might be ascribed to a yearly tenancy. But it is in my opinion clear that the possession was in fact unequivocally referable to the said writings as constituting a tenancy for a term of years. I am further of opinion that if any question on that head exists it is sufficiently obviated by the execution of the extended and formal lease by the pursuers to Mr Arrol and the decree in absence obtained against the defender Urquhart.

In the next place, I am also of opinion that the lease so constituted subsists, and that the joint-tenants, and particularly the defender Mr Arrol, are still liable to implement its obligations, subject only (by reason of the pursuer's minute) to the removal of the restrictions against occupation for other purposes than the sale of exciseable liquors.

It is not, I think, possible to contend, nor was it in the end so contended, that the mere loss of the licence extinguished or put an end to the lease. The authorities are against that suggestion, and on principle I can see no reason why—apart from express agreement—a failure of the purpose for which a tenant leases a house or shop should, even if the purpose is expressed in the lease, liberate the tenant from his obligations.

For these reasons I am of opinion that the pursuers must have decree in terms of their first and declaratory conclusion as amended and also in terms of their second conclusion so far as it seeks merely for an order upon the defenders to stock and plenish the shop in question so as to afford security for the rent, and to put and thereafter maintain the premises in a good and sufficient state of repair. In other words, Mr Arrol must pay the rent and keep the subjects in order, and also stock them (if that is required) sufficiently to afford security for the rent. Subject to that he may occupy the premises as he pleases until the termination of the lease.” [ His Lordship then dealt with the other questions in the case.]

Arrol reclaimed, and argued—The lease was terminated by the loss of the licence, on the principle of rei interitus. The res which formed the subject of the lease was a licensed house, and as that no longer existed there was nothing to which the lease could apply. When the subject let ceased to exist the tenant was no longer bound by the lease—Stair, i. 15, 2; Bell Prin., section 1208; Duff v. Fleming, May 18, 1870, 8 Macph. 769, 7 S.L.R. 480; Gowans v. Christie, February 8, 1871, 9 Macph. 485, 8 S.L.R. 341, February 14, 1872, 11 Macph. (H.L.) 1. Donald v. Leitch, March 17, 1886, 13 R. 790, 23 S.L.R. 585, was not an authority to the contrary, because there what was decided was that a tenant had no right to keep on the lease and refuse to pay the whole rent.

Argued for the respondent—The doctrine of rei interitus had no application. The subject of the lease was the shop, and it remained unaffected. The restriction to a publican's business was a condition in favour of the landlord, and he had waived it, so that the tenant could not even plead that he was called upon to perform the impossible. The tenant took the risk of the loss of the licence making the lease unprofitable, just as he took the risk of a change in the law having the same effect— Goldie v. Williamson, 1796, Hume, 793; Holliday v. Scott, May 28, 1830, 8 S. 831; Donald v. Leitch, cit. supra; Newby v. Sharpe, 1877, 8 Ch. Div. 39.