United Kingdom House of Lords Decisions

THE LORD CHANCELLOR (Lord Cairns ) :-

My Lords, the decree of the Court of Appeal which is brought before your Lordships in this case is one which has the support of all the five Judges who constituted the Court of Appeal at the time. One of the learned Judges, Mr. Baron Cleasby , no doubt assented to the decision with some hesitation, but it was a unanimous decision of the Court.

My Lords, I own that the able argument which your Lordships have heard has raised no doubt whatever in my mind as to the propriety of that decision. I say the propriety of the decision, although at the same time I am not able, as to one part of the case, to take the view which one, at least, of the learned Judges who pronounced the decision, appears to have taken. Lord Justice James , in the observations which he made, is reported to have said this: "I am of opinion" "from all this correspondence, that the lessor" (that is the present Appellant) "lulled the Defendants to sleep, intentionally lulled them to sleep, until it was too late for them to do the repairs, that he intentionally induced them to wait till the six months were nearly over, and then sought to enforce the forfeiture." That not merely states a case which would entitle the Court of Equity to give relief, but states a case as against the Appellant which imputes to him a serious offence in point of morals. My Lords, I am bound to say, and I think the Appellant is entitled that I should at once say, that I see no evidence whatever for fixing upon the Appellant the stain which these observations would fix upon him. I am unable to see that there is any evidence in this case, that there was any intention on the part of the Appellant, to lull the Defendants to sleep, in order that he might wait until the six months were nearly over, and then take advantage of a forfeiture. For reasons which I am about to state, I am of opinion that the Appellant cannot take advantage of a forfeiture, but in my opinion there was no intention whatever on his part to practise any wrong upon the Respondents. I think that both parties, almost unintentionally - I have very little doubt, without reflection - placed themselves in a position in which the one, the Appellant, as against the other the Respondents, was not entitled to enforce the forfeiture which he might have enforced at law; but that arose, not from any intention on his part to do a wrong to the Respondents, but merely from circumstances which had occurred, and to which I am now about to refer.

My Lords, the Appellant was the landlord of certain premises in the Euston Road , the lease of which, an old and a long lease, was vested in the Respondents. There were in the lease covenants to repair, and to repair after notice. Notice had been given and served upon the Respondents by the Appellant on the 22nd of October, 1874; it was a notice to repair the premises within six months; that six months would therefore expire on the 22nd of April, 1875. Nothing was done by the Respondents between the 22nd of October and the 28th of November. On the 28th of of November the agents of the Respondents wrote to the solicitors of the Appellant a very important letter. There can be no doubt that the letter refers to the premises in question, although it refers also to other premises. It states that the notice to repair had been received, and that the repairs required by the covenants of the lease "shall be forthwith commenced," but then it adds: "It occurs to us that the freeholder may be desirous of obtaining possession of the company's interest, which, as you know, is but a short one, and so we propose to defer commencing the repairs until we hear from you as to the probability of an arrangement such as we suggest." Now, if these two parties, the Appellant and the Respondents, were really minded to treat for the purchase of this lease, of course it was to the interest of both parties that the doing of these repairs should be suspended, and that the property should be bought as it then stood, because it might be desired to apply it to purposes for which the repairs would be useless - and I read this as a definite intimation on the part of the Respondents that they would not proceed to execute the repairs (although they stated their readiness to commence them forthwith), if they found that there was a probability of an arrangement to purchase being come to.

The Appellant, when he received that letter, might have said, I have no intention of becoming a purchaser; or he might have said, I may become a purchaser; but if a negotiation is to be commenced you must understand that it is to be without prejudice to my notice to repair; you must go on and make the repairs as if there was no negotiation; or he might have said simply, I will adopt what you propose and enter upon a negotiation, saying nothing farther. That third course is the course which he took, and it is a course which, as it seems to me, when taken, carried with it the intimation that he was satisfied with the footing upon which the matter was put by the letter which he was answering. This is what his solicitors say in their letter of the 1st of December: "If the company are the owners of" certain other houses, "and are willing to sell them all" (that is all the houses), "and give immediate possession, our client will, on learning the price, consider whether it is worth while to acquire the company's interest or not. In mentioning the price, please to give us particulars of the tenancies and rents paid to the company."

Now, that being a letter which, as it appears to me, acceded to the suggestion that the repairs were to be deferred until it was ascertained whether an agreement could be made for the purchase, on the 4th of December that letter of the 1st was replied to, and replied to in this way: "We are in receipt of yours of the 1st instant. The particulars and terms asked for shall be sent in the course of a few days." Again, on the 30th of December, the agents of the Respondents write to the solicitors of the Appellant: "We send you herewith a statement of the company's receipts and payments in respect of the houses in Euston Road as requested by you. The company will agree to surrender the whole of the leases in consideration of a payment of £3000. We shall be glad to hear from you at your early convenience." That is followed by the particulars of the Metropolitan Railway Company's interest in the houses in Euston Road , the property of Mr. Hughes . There is a somewhat lengthy schedule, and it is obvious that the preparation of that schedule was a work which would easily account for the lapse of time between the 4th and the 30th of December. It was a schedule which was required by the Appellant. Time was required to prepare it, and your Lordships come therefore to the 30th of December with clear proof that no time whatever had been lost between the 28th of November and that day.

The offer, then, standing upon the letter of the 30th of December, that letter is replied to by the solicitors of the Appellant in these words: "We have duly received your letter of yesterday's date enclosing a statement of the company's receipts and payments in respect of the houses in Euston Road , and at the same time intimating that the company will agree to surrender the whole of the leases in consideration of the payment of £3000. Having regard, however, to the state of repair in which the houses now are, and to the large expenditure which will be required to put them in a proper condition, the whole of which the company are liable to bear under the covenants in the leases, we think the price asked for is out of all reason. We must therefore request you to reconsider the question of price, having regard to the previous observations, and to the fact that the company have already been served with notice to put the premises in repair, and we shall be glad to receive in due course a modified proposal from you."

My Lords, I think it unnecessary to go beyond that letter. That is a letter which, a price of £3000 having been proposed, repudiates that price, refuses to give it, and asks for a modified proposal. No modified proposal, in point of fact, was made. But I will put the matter in the most favourable way for the Appellant. I will assume that in place of asking for a modified proposal that had been a letter which had at once terminated the negotiation. No farther proposal having been made in substance the negotiation then determined. I will assume that the letter, upon the face of it, had terminated the negotiation, and now I ask your Lordships to consider what would be the consequence. There had been a notice in October to repair in six months. The effect of the letter of November, as it seems to me, was to propose to the Appellant, and the farther letter of the Appellant had the effect of an assent by the Appellant, to suspend the operation of that notice in order to enter upon a negotiation for the purchase and sale of the lease. That negotiation was entered upon, and, as I have assumed, came to an end on the 31st of December. My Lords, it appears to me that in the eye of a Court of Equity, or in the eye of any Court dealing upon principles of Equity, it must be taken that all the time which had elapsed between the giving of the notice in October and the letter of the 28th of November was waived as a part of the six months during which the repairs were to be executed, and that all the time from the 28th of November until the conclusion of the negotiation, which I have assumed to be on the 31st of December, was also waived - that it was impossible that any part of that time should afterwards be counted as against the tenant in a six months' notice to repair. The result would be, that it would be on the 31st of December, as the first time, that time would begin to run, for the purpose of repairs, as against the tenant.

Then occurs the question, what time from the 31st of December would be given? My Lords, what a Court of Equity would have done if it had found that the tenant after the 31st of December had taken no steps to make the repairs, and that a period of six months had run from the 31st of December without any repairs having been made, it is not necessary here to consider. In point of fact the repairs were made within six months, from the 31st of December; and my Lords, I cannot but think that the lease having prescribed a period of six months, as that which in the eyes of the contracting parties was a reasonable period, within which to make such repairs as those, a Court of Equity would hold, and would be bound to hold, that the negotiation having been broken off on the 31st of December, the repairs were in this case executed within that which according to the view of the parties was a reasonable time for the execution of such repairs.

My Lords, it is upon those grounds that I am of opinion that the decision of the Court below is correct. It was not argued at your Lordships' Bar, and it could not be argued, that there was any right of a Court of Equity, or any practice of a Court of Equity, to give relief in cases of this kind, by way of mercy, or by way merely of saving property from forfeiture, but it is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results - certain penalties or legal forfeiture - afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties. My Lords, I repeat that I attribute to the Appellant no intention here to take advantage of, to lay a trap for, or to lull into false security those with whom he was dealing; but it appears to me that both parties by entering upon the negotiation which they entered upon, made it an inequitable thing that the exact period of six months dating from the month of October should afterwards be measured out as against the Respondents as the period during which the repairs must be executed.

I therefore propose to your Lordships that the decree which is appealed against should be affirmed, and the present appeal dismissed with costs.

LORD O'HAGAN :-

My Lords, I am of the same opinion. Your Lordships have no power to relieve against the effect of a forfeiture such as was legally established by the verdict of the jury in this case, merely on the ground that it has pressed hardly on the Defendants. They entered into a covenant: and if they have failed to fulfil their undertaking they must abide the results, however onerous, unless the circumstances excuse their default in the view of a Court of Equity. But if they acted, or failed to act, through a mistake induced by the conduct of the Plaintiff: if they were misled by it into the belief that his strict legal right was abandoned or suspended for the time, he cannot be allowed to take advantage of the forfeiture which was so accomplished.

I am bound to say, with my noble and learned friend on the woolsack, that I see no evidence to impeach the Plaintiff of or misrepresentation or wilful lulling of the Defendants into a disregard of their legal duty or a compromise of their legal rights. But this does not affect the question. If there was real misleading and bonâ fide mistake, it does not matter that the Plaintiff acted honestly and without indirect purpose of any kind. The facts of the misleading and mistake are enough to prevent the forfeiture, although they had their origin in no corrupt intention. Now, we have it sworn, on behalf of the Defendants, that they were put off their guard and induced to postpone the making of the needful repairs, within the appointed time, by the negotiation which was pending. The letters and the oral proof put that negotiation beyond controversy. It continued, at least, from the 28th of November until the 31st of December: and the learned counsel failed altogether in contending that, during that period, at all events, the operation of the notice was not suspended. Both parties contemplated, as the issue of it, a sale of the premises: and, of necessity, the question of repairs was put out of consideration. No doubt they might have agreed that the negotiation should be without prejudice to the notice; but they did nothing of the kind. It seems to me quite clear that time working forfeiture did not run during that negotiation: and I incline to agree with an observation of my noble and learned friend opposite, (Lord Selborne ), in the course of the discussion that the period which had elapsed before the beginning of it, after the notice was given, cannot be taken into account and pieced on to that which elapsed after it had ended, to make up the six months and complete the default. But it is not necessary to pronounce on this point with a view to our decision.

Well, so the negotiation continued until the 31st of December. Did it then conclude? Quite the contrary. The Plaintiff expressly dealt with it as still subsisting; and, having refused the offer already made to him, invited another. To his invitation he got no reply, and he proceeded to act upon his notice. I quite concur with Lord Justice Mellish that his proper course would have been to inform the Defendants, within a reasonable time, that failing to make a new proposal they should understand the negotiation to have been concluded and the parties relegated to their legal rights. This would have been a reasonable and equitable course: but it was not taken, and the Plaintiff must bear the consequences. I think that the judgment should be affirmed, and the appeal dismissed with costs.

LORD SELBORNE :-

My Lords, I am of the same opinion, and for the same reasons. I agree that there is nothing at all requiring your Lordships to throw any doubt upon the good faith of the Plaintiff in this case.

In reality I think that the difference between the Court of Common Pleas and the Court of Appeal comes to a short and a very simple point. Lord Coleridge in delivering the judgment of the Court of Common Pleas says⁽¹⁾, this: "It appears to us that the effect of the correspondence was this, namely, first to give to the Metropolitan Railway Company a reasonable time to make a fresh offer; and, secondly (if the negotiations were not resumed), to give the company a reasonable time (but not necessarily six months), from the 31st of December to do the repairs required." The real point in difference is, what was a reasonable time under the circumstances of the case? As to the effect of the correspondence down to the 31st of December, and, I may add, for some not definite time afterwards, there really is an agreement of both Courts that the first two and a half months of the notice or thereabouts were waived; and I must say that looking at the terms of the correspondence, I can see no reasonable room for doubt about it, because the first letter of the 28th of November, 1874, says as clearly as possible these two things:- If you require it, the repairs which we have received notice to make shall be forthwith commenced, but we have an alternative proposition to make, and, if you entertain that alternative proposition, then we propose to defer the commencing of the repairs until we hear from you that we shall commence them: that is the effect of it; and the accession

(1)     1 C. P. Div. at p. 129.


to that in the subsequent correspondence by the Plaintiff is as plain as if he had said in terms; I do not require you forthwith to commence the repairs; I am willing to enter into the treaty that you propose; it is not improbable that an arrangement may be made, and therefore I agree that the commencement of the repairs may be deferred as you suggest.

That goes on until the 31st of December, and then, although the notice is referred to, it is manifestly not referred to as putting an end to that understanding at that exact period of time; it is referred to as an element of price, to be considered in the new offer which is invited. I really do not think it necessary to inquire whether the Respondents could reasonably be heard to say that they were at liberty to do nothing for four months afterwards, expecting some farther notice from the Plaintiff. I confess that my impression is not so; but taking it not to be so, what is the result? Why this, you have got the affidavit upon which the present application for the equitable jurisdiction of the Common Pleas Division is made - the affidavit of Mr. Bell - who positively states that "no objection having been raised by the Plaintiff's solicitors to the repairs standing over during the negotiations, the company presumed the repairs need not be commenced until farther notice from the Plaintiff's solicitors." I do not agree to that - at all events, I think that that is a ground which need not be taken as the foundation of the judgment, and could not safely be taken by the company. But he goes on, "and that the six months within which the repairs were to be done would not include any time during which the negotiations were pending." Then he says in the next paragraph that the repairs were actually "finished by the middle of June, 1875, being within six months from the earliest date at which the negotiations for a sale of the company's interest to the Plaintiff might be taken to have been broken off," which manifestly must mean the 31st of December, or a few days afterwards.

Now the question is, whether the conduct of the Plaintiff in the correspondence justified and naturally led to that impression on the part of the company? In my opinion it clearly did; and if it did, what is the consequence? I think the consequence is that which Lord Justice Baggallay derives from it. He says that the circumstances "were of a character to lead the company to consider that the notice to repair was at any rate suspended for some period of time," at least until the 31st of December. What is the meaning, in the view of a Court of Equity, of suspending a notice to repair? Manifestly that during that time the notice is not to be operative. What is the reasonable result of that in the circumstances of this case? Why, when the notice is to become operative, the same will be a reasonable time for the execution of the repairs which would have been a reasonable time if the notice had been given at that period, that is, six months from at least the 31st of December, 1874.

Therefore, my Lords, upon these grounds, I entirely agree that the judgment of the Court of Appeal is right.

LORD BLACKBURN :-

My Lords, I also entirely agree in the judgment, but I think it right to say that I likewise completely agree in the opinion that there is no ground for supposing that the Plaintiff or the Plaintiff's advisers, who were acting for him in writing the letters of November and December, intended, by acting as they did, to bring the Defendants into a scrape and to take advantage of it. I think Lord Justice James misapprehended the facts when he said so, and I think it is right to say that I consider that that was not the case. But I quite agree that notwithstanding that, there is equity to relieve the Defendants, and instead of putting it in my own words, I will read those which are given to Lord Justice Mellish , adopting them as my own because I think they exactly express what I believe to be the right law⁽¹⁾: "But even if the Plaintiff himself did not intend to abandon the notice, yet if his conduct was such as to put the Defendants off their guard, and to lead them to believe that the six months' notice would not be insisted on, there is a ground for giving relief in Equity. The result of waiver is different, for the notice is gone at Law, whereas Courts of Equity, though they relieve against the forfeiture, will still compel the lessee to put the house into substantial repair, and will give the landlord all that he is really entitled to, only preventing him from enforcing a forfeiture that would be inequitable."

My Lords, I apprehend that that correctly states the rule of

(1)     1 C. P. Div. at p. 135.


equity and justice, and that the only remaining question is, whether in the present case there has been such a misleading as is there described? I think not at all an intentional misleading, but such an inducing the Defendants to think that the actual six months would not be insisted upon, and farther, what period that delay in insisting upon the actual six months would give them.

I shall not repeat what has been said by the noble and learned Lords who have spoken before me as to the effect of the correspondence. I think it quite clear that there was an inducing the Defendants to believe that they need not repair during the period up to the 31st of December, at all events, and that it was not until the 31st of December, or perhaps a short time afterwards, when the time for making a fresh offer had elapsed, whenever that might be, that it could be considered that they were not under an apprehension, induced by the Plaintiff's conduct, that they need not make the repairs at that time. Then comes the question, which after all is the question upon which the Court of Appeal below has differed from the Court of Common Pleas, whether the period within which the repairs ought to have been executed after the negotiation went off (which I will assume to have been on the 31st of December) was a reasonable time, in the sense of such a time as a jury, on the evidence, might say was sufficient to make the repairs of the houses, or whether it was the conventional time of six months provided for in the lease? If it were a reasonable time within which the repairs might have been made, then the fact that the repairs were actually commenced in April and were finished by the middle of June - that is to say, in two months - would shew that the time between the 31st of December and the 24th of April, when the notice had run out by efflux of time, which was three months, would have been sufficient. If in two months the repairs were actually done, no one would dispute that three months would be a reasonable time to do them in. But then, is it correct to say that we are to take a reasonable time, in the sense of an uncertain time, according to the evidence, when we have a conventional time, namely, six months, stipulated for? I think the very object for which the stipulated time of six months was named, was to prevent that uncertainty in saying what would be a reasonable time, and to enable one of the parties to know that he had got six months to do the repairs in, even if that was more than was needed, and to enable the other to know that whether it turned out to be either too much or too little, the repairs were to be done within that time.

Applying that to the present case, when it is once established that the Defendant was entitled to say that out of the six months shall be taken the time up till the 31st of December, because I was authorized by the Plaintiff to hold my hand and not begin the repairs until then, it follows that the time within which he was to do the repairs would be six months after the 31st of December, and that time would not expire until the 31st of June, and, in fact, the repairs were all done before that - they were done by the middle of June. That being so, it appears to me that the judges in the Court of Appeal were correct in the judgment which they gave. The only point that I can see upon which they and the Common Pleas differed was whether it was to be six months, or an uncertain but reasonable time; and it seems to me that it ought to be the conventional time of six months, whether it was more or less than was actually required for the purpose. Consequently, my Lords, I think that the judgment of the Court of Appeal was right and ought to be affirmed, and this appeal dismissed with costs.

LORD GORDON :-

My Lords, I quite agree in the judgment of the Lords Justices, with the exception of that matter in Lord Justice James's opinion to which reference has been made, with regard to the intention to mislead on the part of the Plaintiff. There is really no ground and was no necessity for condemning his conduct in that respect.

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