IIN THE COURT OF APPEAL BETWEEN. HEATHER BLACKMAN and. And
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1 REPUBLIC OF TRINIDAD AND TOBAGO IIN THE COURT OF APPEAL Civ.A No 66 of 1999 BETWEEN HEATHER BLACKMAN and WINSTON MILLER Appellants And TAURUS SERVICES LIMITED Respondent Panel: R. Nelson, J.A. W. Kangaloo, J.A. S. John, J.A. Appearances: Mr. J. Phelps and Mr. B. Primus appeared on behalf of the Appellants Mrs. D. Peake and Mr. C. Williams appeared on behalf of the Respondent Delivered: 27 th January, 2003.
2 JUDGMENT Nelson, J.A. 1. This appeal concerns the lease and reversion of a very valuable parcel of land in an exclusive residential area. A successor lessee mortgaged the lease. The present freehold reversioner claims to have forfeited the lease for breach of a qualified covenant against assignment and to have permitted the appellants to occupy the disputed premises. The successor lessee/mortgagor is grossly in default, and the successor mortgagee seeks an order for possession against the appellants pursuant to Order 85 of the Rules of the Supreme Court Stollmeyer J. made an order for possession against the appellants on April 29, 1999; the appellants appealed against that order on June 4, The lease 2. On May 20, 1958 Highland Park Limited, then the freehold reversioner of a parcel of land comprising 10, 840 square feet known as No. 103 Windsor Drive, Goodwood Park ( the disputed premises ), leased those premises to Arthur Martin Leanza for a term of 199 years for the sum of $6, This lease contained a covenant against assignment without written consent, which is set out at paragragh 9 hereof. 3. The devolution of the disputed premises from Leanza to Norbert Shanghai is not clear from the documents exhibited, but there is no dispute that the lease eventually passed to Shanghai.
3 4. Shanghai mortgaged the lease to the Workers Bank of Trinidad and Tobago ( the old bank ) on March 27, 1982 by a deed of the same date, in which it is recited that the consent of the freehold reversioner was given by a written document annexed to that deed. 5. By that deed Shanghai purported to assign by way of security for the advance of $427, all and singular the said lands and hereditaments to hold the same unto and to the use of the Bank in fee simple subject to certain rights of way, the performance of the covenants in the lease and to a proviso for redemption. It is manifest that since Shanghai merely had the residue of the term of years, this deed must be read as a legal assignment of the residue of the term of 199 years to the Bank subject to the equity of redemption. Both parties have proceeded in this court and in the court below on that basis. 6. By Legal Notice No. 124 of 1989 the Minister of Finance by a vesting order under the Banking Act, Chap. 79:01 vested the undertaking of the old Bank including the mortgaged lease and the mortgage debt in the Workers Bank (1989) Ltd. ( the new bank ). 7. By deed dated December 12, 1992 the new bank transferred some of the mortgages vested in it, including the mortgaged lease and the mortgage debt to Taurus Services Limited, the respondent herein. There is no recital in this deed of the previous written consent of the lessor having been obtained.
4 The reversion 8. Highland Park Limited, which later became Goodwood Park Limited ( Goodwood ) and Sandown Park Limited ( Sandown ), which had entered into a contract for sale of the reversion, both in voluntary liquidation, by their liquidator, David Collens, sold the freehold reversion to International Real Estate Consultants Limited ( IRECL ) by a deed dated March 19, The date of execution of this deed, March 19, 1993, was deposed to in sworn affidavits by David Collens, a signatory to the deed, Veronica Pancham, a witness to the signatures, and the attorney-at-law who witnessed the execution, Judith Bowen. In argument counsel for the appellants accepted that that was the effective date of that deed. 9. By letter dated April 7, 1999 IRECL purported to forfeit the lease for breach of clause 2(12) of the original 1958 lease to which all assignments of the lease must have been subject. Clause 2(12) of the 1958 lease provided as follows: (12) Not to assign underlet or part with the possession of the demised premises or any part thereof without the Lessors previous written consent such consent not to be unreasonably withheld in the case of a respectable and responsible person or persons company or corporation. The letter was addressed to the new bank, the previous mortgagee, but not to the successor mortgagee, the respondent Taurus. IRECL claimed to have effected a re-entry on the disputed premises. The alleged breach
5 was said to be occasioned by the transfer of the mortgage on December 12, 1992 by the new bank without the written consent of IRECL. 10. The respondent, Taurus, as the current mortgagee, claimed possession of the disputed premises by originating summons dated December 22, 1998 pursuant to Order 85 of the Rules of the Supreme Court 1975 from the individual appellants, who contended that they were in occupation of the disputed premises under an oral agreement with IRECL, the current reversioner, for a 199 year lease of the disputed premises at a rent of $ per month. Further facts 11. By an agreement dated March 10, 1986 Shanghai agreed to sell the residue of the 1958 lease of 199 years to IRECL. Upon execution of that agreement IRECL, through Miller, a friend of Shanghai and a director of IRECL, took immediate possession of the disputed premises. Shanghai then emigrated to Canada. 12. During the course of argument in this appeal counsel for the appellants indicated that the appellants no longer relied on this agreement. 13. The appellants claimed that by letter dated March 22, 1993 IRECL forfeited the lease for non-payment of rent, the lessor never having consented to the assignment in 1982 from Shanghai to the old bank. The deponent Miller later deposed that he had sworn to this lack of consent in error.
6 14. On March 26, 1993 IRECL sued the new bank for a declaration that it was entitled to the fee simple absolute in possession of the disputed premises. An ex parte injunction was granted to IRECL, which was discharged on the return on April 5, No further steps were taken to prosecute the 1993 action against the new bank. The rival contentions in outline 15. The respondent contends that as successor mortgagee it is entitled to possession as against the appellants because of the failure to repay the mortgage debt and interest. They aver that there was no breach of the qualified covenant against assignment by the transfer of the mortgage to them in 1992 and that no right of forfeiture and/or re-entry arose. 16. The appellants rest their defence on three planks. First, the freehold reversioner as at the date of the assignment to Taurus was IRECL. Secondly, the consent of IRECL to that assignment was neither sought nor obtained. Thirdly, IRECL forfeited the 1958 lease by a letter dated April 7, 1999 and gave the appellants a fresh lease for a further period of 199 years at a rent of $ per month. Accordingly the appellants were lawfully in possession of the disputed premises. 17. Before I examine the question of whether there was a breach of the covenant against assignment without written consent I propose to analyze the status of the appellants as occupiers of the disputed premises from 1986 to 1993.
7 The status of the appellants from 1986 to Although counsel for the appellants placed no reliance on the purported agreement in 1986 of Shanghai to assign the remainder of the 1958 lease to IRECL, that agreement is important because the evidence of the appellants was that immediately upon the signing of that agreement IRECL took possession of the disputed premises from Shanghai. The deponent Miller on behalf of the appellants further stated that since 1986 the appellants had been in possession of the disputed premises with the consent of IRECL. 19. Counsel for the respondent, Mrs. Peake, correctly pointed out that Shanghai could not assign his leasehold interest in the disputed premises because he had already assigned his lease by way of security to the old bank in In the premises since the occupation was pursuant to an ineffective agreement the appellants were trespassers from 1986 to The only question is whether that status as trespassers changed as a result of any supervening events such as the purchase of the freehold reversion by a deed the effective date of which was March 19, The covenant not to assign without consent 20. Clause 2(12) of the 1958 lease is not an absolute covenant against assignment but a qualified covenant against assignment without the written consent of the lessor. Breach thereof is provided for in clause 4 thereof which is a proviso for re-entry or forfeiture.
8 21. Counsel for the appellants submitted that at the time of the transfer of the mortgage to Taurus in 1992 neither the new bank nor anyone on its behalf had requested IRECL s consent to the transfer. Accordingly there was no consent given for the transfer of the mortgage to Taurus. 22. Counsel for the respondent by reference to the effective date of IRECL s assumption of the freehold reversion, March 19, 1993, established that as at the date of the transfer to Taurus on December 12, 1992 if consent was required it would have had to emanate from the liquidator of Goodwood and Sandown. 23. Mrs. Peake relied on section 27 of the Conveyancing and Law of Property Ordinance ( the Ordinance ) for the proposition that there was an implied covenant in the 1982 transfer of mortgage to Taurus that all the covenants contained in the lease had been observed. The effect of this provision was to place an onus on the appellants to rebut the inference that consent had been obtained. 24. I agree with counsel for the appellants that section 27 of the Ordinance has no application to the facts before us. In the first place the section applies only in a conveyance of leasehold property for valuable consideration, other than a mortgage. Secondly, the appellants have asserted positively that no consent of IRECL was given to the said assignment.
9 25. While I agree with Mrs. Peake that the consent of IRECL was not required because it was not then the freehold reversioner, I am unable to accept that ergo there was no breach of the covenant against assignment without written consent. It is said there was no evidence of consent. But was there written consent to the Taurus assignment? Certainly the Taurus assignment, unlike the 1982 mortgage to the old bank and contrary to normal practice, does not recite any written consent. 26. It seems to me that the central issue in this case is whether there was a breach of the qualified covenant against assignment. If there was a breach of that covenant, or if there was evidence before the court upon which a court might draw the inference on a balance of probabilities that there was such breach, a court could not turn a blind eye to it and order possession in favour of a mortgagee. 27. The learned judge properly held that there was no evidence before him of consent to this assignment having been obtained. However, he was of the view that in Order 85 proceedings a plaintiff was not required to show that consent had actually been obtained. On the present facts I would with the greatest respect differ, since in this case it is critical to decide whether the lease was forfeited validly or at all for breach of the covenant against assignment without consent. 28. In my judgment the issue whether there was a written consent to the Taurus assignment is a matter which can more easily be proved by a
10 party to that transaction; in this case Taurus. I would therefore on this issue place the burden of proving the existence of written consent on the respondent. I would hold that the proper inference in the face of the respondent s failure to produce such consent is that there was no written consent to the transfer of the mortgage from the new bank to Taurus. 29. The significance of the fact that the consent of IRECL was not required is that any notice of forfeiture or re-entry on that basis would be wholly ineffective. But I do not wish to rest my decision on this narrow ground. The consequences of breach of qualified covenant 30. If, as I hold, there was a breach of the covenant not to assign without written consent, what are the consequences? Lord Templeman in Billson v Residential Apartments Limited [1992] 1 AC 494, 534 said as follows: By the common law, when a tenant commits a breach of covenant and the lease contains a proviso for forfeiture, the landlord at his option may either waive the breach or determine the lease. In order to exercise his option to determine the lease the landlord must either re-enter the premises in conformity with the proviso or must issue and serve a writ claiming possession. 31. Lord Templeman in his speech later went on to say that where equity claimed a power to relieve against forfeiture, relief could be granted
11 whether the landlord had forfeited by entering into possession or by issuing a writ claiming possession. The status of the appellants from 1993 to I have already held that the purchase of the freehold reversion by IRECL became effective on March 19, Three days later by letter of March 22, 1993 IRECL abortively sought to forfeit the lease for nonpayment of rent. 33. On March 26, 1993, four days later, IRECL obtained an ex parte injunction, which was discharged inter partes on April 5, Thereafter that action was never prosecuted. 34. The present proceedings commenced on December 22, No further events occurred between 1993 and 1999 to change the status of the appellants as trespassers. Was notice of forfeiture required? 35. By the letter dated April 7, 1999 addressed to the new bank IRECL purported to forfeit the 1958 lease for breach of the covenant against assignment without written consent and stated that re-entry had taken place. Counsel for the appellants submitted for the first time in this court that the appellants were entitled to rely on breaches of covenant prior to the assignment to IRECL in March Counsel based that submission
12 on section 66(3) of the Ordinance and London and County (A & D) Ltd. v Wilfred Sportsman Ltd. [1971] Ch D. 36. Mrs. Peake for the respondent contended that there was no prior breach of the covenant against assignment without consent so far as the affidavits relied on the lack of consent of IRECL. 37. Her real challenge on this point was that the letter of April 7, 1999, if it was notice of forfeiture, should have been sent to the assignee of the property in breach of the covenant, and not to the assignor, the new bank: see Old Grovesbury Manor Farm Ltd. v W. Seymour Plant Sales and Hope Ltd. [1979] 1 WLR 1397, 1398G, 1399D. 38. In any event there was no evidence that the new bank received the letter of April 7, 1999 or that it was served on the new bank. Ultimately, counsel for the appellants conceded that there was no evidence of the receipt of the letter by the new bank. 39. Counsel for the appellants sought to counter the force of Mrs. Peake s submissions by relying on Scala House and District Property Limited v Forbes [1974] QB 575; [1973] 3 All ER 308 (CA) for the proposition that a breach of a covenant not to assign is not one capable of remedy. In that case the lease of a restaurant allowed assignment with the consent of the landlord, but the lessee sub-let without permission. The court held that 14 days between service of the notice and issue of the writ
13 for possession was adequate because as a matter of law the writ could have been issued immediately after the notice. 40. I do not read Scala House as saying that notice was not required in the present circumstances only that it is not necessary in such notice to give the tenant time to remedy the breach before issuing a writ for possession. 41. If notice of forfeiture was required then the letter of April 7, 1999 falls far short of being such notice. Scala House does not obviate the need for notice of breach of a qualified covenant against assignment. Do the statutory provisions dispensing with notice of forfeiture apply? 42. The learned judge held that section 70(7) of the Ordinance disapplied the notice provisions in section 70 in respect of covenants against assignment. 43. Section 70(1) reads as follows: 70.(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice (a) specifying the particular breach complained of; and
14 (b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and (c) in any case, requiring the lessee to make compensation in money for the breach; and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach. 44. Section 70(7) provides: (7) This section does not extend (a) to a covenant or condition against the assigning, underletting, parting with the possession, or disposing of the land leased 45. Section 146(8) and (9) of the Law of Property Act 1925 of the United Kingdom, on which these provisions are based reads in part: (8) This section does not extend (i) To a covenant or condition against assigning, underletting, parting with the possession, or disposing of the land leased where the breach occurred before the commencement of this Act; or
15 (ii) In the case of a mining lease, to a covenant or condition for allowing the lessor to have access to or inspect books, accounts, records, weighing machines or other things, or to enter or inspect the mine or the workings thereof. (9) This section does not apply to a condition for forfeiture on the bankruptcy of the lessee or on taking in execution of the lessee s interest if contained in a lease of 46. It is clear that the UK Act applies the notice of forfeiture provisions to all covenants against assigning except where the breach occurred before 1925: see section 146(8)(i) at paragraph 45 hereof. 47. In my judgment section 70(7) ought to be narrowly construed. I would hold that the sub-section excludes only absolute covenants against assignment and not qualified covenants against assignment without the written consent of the landlord. Accordingly, section 70(7) does not stand in the way of the conclusion that the statutory provisions as to notice apply to a qualified covenant against assignment without the consent of the landlord. 48. Mrs. Peake for the respondent contended that in any event the court had an inherent equitable jurisdiction to give relief against forfeiture. She relied on dicta of Kay LJ in Barrow v Isaac & Sons Ltd. [1891] 1 QB
16 417, 430 where in construing a similar section in the Conveyancing Act 1881 he said: But it is expressly provided that this does not extend to a covenant against assigning Forfeiture for breach of this covenant is left to be dealt with according to the ordinary law and practice of the Courts of Equity. 49. While I am inclined to the view that the court s inherent jurisdiction has survived the statutory intervention in section 70 of the Ordinance the present position remains unclear. In Billson v Residential Apartments Ltd. (supra) in the Court of Appeal Browne-Wilkinson V.C and Parker LJ held that in cases other than breach for non-payment of rent, the court s inherent equitable jurisdiction had been abrogated. Nicholls LJ thought it had not. The House of Lords did not find it necessary to decide the point. In Croydon (Unique) Ltd. v Wright [2001] Ch. 318, 324 the Court of Appeal assumed the existence of the inherent equitable jurisdiction. 50. In Shiloh Spinners v Harding [1973] AC 691 both Lord Wilberforce (at p. 724) with whom the other law lords agreed and Lord Simon (at p. 726) seemed to be in favour of the existence of such an inherent equitable jurisdiction. 51. I express no concluded view as to the existence of an inherent equitable jurisdiction to grant relief against forfeiture because ultimately in
17 this case the evidence of forfeiture is tenuous. I therefore come to the question of whether there was any re-entry. 52. I also turn to the issue of re-entry in case, contrary to what I have held, notice of forfeiture was not required, or, if required, the letter of April 7, 1999 was a proper notice thereof. Was there a re-entry? 53. The law relating to re-entry is stated in 27(1) Halsbury s Laws (4 th ed. reissue) at para 408: The terms of a proviso for re-entry require that if the landlord elects to determine the lease for a forfeiture he must do so by re-entry, which the landlord may effect by physically entering upon the premises with the intention of determining the tenancy or by the issue and service of proceedings for the recovery of possession of the premises. 54. The learned editors later state: Re-entry may be effected by the landlord allowing a third party into possession as a tenant, or by accepting a subtenant as a tenant under the new tenancy. 55. Counsel for the appellants appeared not to be clear as to when the re-entry or forfeiture took place. At one stage he contended that the lease had been forfeited by re-entry as at April 7, At another stage he submitted that the letter of April 7, 1999 together with the subsequent
18 agreement for a 199-year lease to the appellants constituted a re-entry. His third position was that forfeiture by re-entry was effected by the contemporaneous letter of April 7, He argued that there was no need for the reversioner to go out and return in order for a re-entry by the freeholder to take place: see the passage from Halsbury s Laws at para 53 hereof; and see Baylis v Le Gros (1858) 4 C.B (N.S.) Counsel for the respondent seized upon the vacillations of the appellants as to the moment of re-entry to point out that there was no credible evidence of re-entry in law or in fact. She submitted that the principle relied on was inapplicable since the evidence of a fresh lease was not admissible. 57. Where parties make an agreement to enter into a lease, as distinct from the actual grant of a lease, the agreement must be evidenced in writing signed by the party to be charged: see section 4 of the Ordinance. Clearly, a term of 199 years as claimed here would be an interest in land within that section. 58. By section 3 of the Landlord and Tenant Ordinance Ch. 27 No. 16 no lease for a term exceeding three years shall be valid unless made by a deed duly registered. An agreement in writing takes effect as an agreement to execute a lease. To date no deed or draft of one has surfaced.
19 59. It is not disputed that there is no note or memorandum of the agreement to lease to the appellants and that the alleged agreement is not in writing. There is no allegation of part performance. Accordingly the evidence as to the oral agreement was not admissible and cannot support the argument that there was a fresh lease amounting to a re-entry by the freeholder, IRECL. 60. Counsel for the respondent invited the court to reject the argument of the appellants that because the assertion by the deponent Miller that a 199-year lease was granted to the appellants by IRECL was unchallenged the court had to accept that evidence. 61. She referred to a dictum of de la Bastide CJ in Attorney- General v M. & M Brokers Ltd. (1996) 50 WIR 462, 474 that the mere fact that evidence on affidavit is not challenged does not mean that the judge must accept such evidence. The facts must be assessed in the light of their inherent improbability or any conflict with other evidence in the case documentary or oral. I respectfully adopt that dictum. 62. Therefore in the light of the appellants uncertain evidence as to the date of re-entry, the fact that the deponent Miller was not at arm s length from IRECL, and the lack of any particulars as to the date of the alleged agreement for a lease I hold that the learned judge was justified in rejecting the evidence as to a fresh lease to the appellants.
20 63. The learned judge was therefore right to conclude that he had little assistance as to whether a right of re-entry was exercised or whether peaceable entry took place under the proviso for re-entry in the original 1958 lease to Shanghai. I accede to the submission by Mrs. Peake that I should confine my finding to ruling that there was no credible or admissible evidence of re-entry in the absence of the reversioner IRECL in these proceedings. Conclusion 64. Accordingly at the date of the hearing before the trial judge until now the appellants were trespassers, and the learned judge rightly made an order for possession in favour of Taurus as a mortgagee. 65. At the end of the day I do not find it necessary to decide whether the consent of the reversioner is required for a mortgagee of a lease to transfer the mortgage to a new mortgagee. In written submissions Mr. Phelps for the appellants relied heavily on Williams v Bosanquet (1819) 129 E.R 714, a case which established that the consent of the lessor was required for an original assignment by way of mortgage. That case, however, provides limited assistance on whether consent is required when the form of mortgage involves an assignment of the residue of the lease subject to the equity of redemption but the substance of the transaction is the transfer of the equity of redemption. Counsel for the respondent submitted that if the mortgage contemplates or permits assignment of the
21 lease by way of security and the landlord has granted consent to that mortgage, then the landlord must be taken to have granted consent to any later assignments of that mortgage and that no fresh consent was required. In the absence of authority and fuller argument I would prefer to leave the point open. 66. My order is that this appeal is dismissed with costs fit for counsel. The order of Stollmeyer J is affirmed. Rolston F. Nelson, Justice of Appeal. I have read the judgment of Nelson J.A in draft. I agree with it and do not wish anything of my own. I also agree. W. Kangaloo, Justice of Appeal. S John, Justice of Appeal.
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