Walsh v Lonsdale (1882) 21 Ch D 9

Facts: L (the defendant), by an agreement on 5/1879 granted W (the plaintiff) under a lease a weaving shed and other buildings/machinery for 7 years from the time these were put into working order. W provided his own steam power for the running of the machinery at 1 10s per loom with a minimum of 300 looms being operated in the first year and 540 thereafter. The lease, if agreed by the plaintiff, would contain covenants of leases of a similar nature – particularly those contained in lease of other premises including rent being paid yearly in advance and that one year’s rent should be always due and payable in advance on demand in addition to other rent due/payable on demand.

W entered possession on 7/79 and paid rent quarterly, not in advance. In ’81 the plaintiff worked 560 looms. In ’82 L served a notice demanding 1013 4s fir a year’s rent, balances owed and insurance. Two days later a distress (to sell goods to cover arrears) was put. W initiating action to restrain this, moving for an injunction before trial.

Jessel MR:

Since the Judicature Act there is only one court and equity prevails in that court

Tenants in agreement for a lease hold the same terms and protections in equity as if it had been granted and thus cannot complain if the landlord exercise rights that he would have been granted under the lease

Hence a lessee in equity can’t complain where distress is exercised just because the parchment isn’t signed

His honour then drew up the lease – considering that the figure in advance should be corresponding to the minimum number of looms being run (540) + the rent – hence 810

Cotton LJ:

Agreed substantially with Jessel MR – the landlord shouldn’t be deprived of securities instituted for payment of rent so long as a prima facie case exists in the landlord’s favour so that distress can be exercised
- In this case such a prima facie case existed
Commented on the difficulty of drawing up the lease but agreed with the idea of deadrent – minimum rent

Lindley LJ

Disagreed with counsel’s submission that upon true construction all of the rent depends only on the covenant which will be an unascertained sum until the end of the year – hence the lease should be worded so that minimum rent is reserved

A Walsh v Lonsdale (WvN) interest is only equitable – limiting and narrowing its sphere of enforceability as against a legal lease. The limitations include:

Limit: It can be defeated by a bona fide purchaser of the legal estate for value without notice

This is unlikely since possession of premises is likely to give notice of the leaseholders interest to the subsequent purchaser (Hunt v Luck)

A guarantor ‘under the lease’ is not effective in equity

Chan v Cresdon [1989]
- Facts: Cresdon made an agreement to lease land to Sarcourt (S) which had the lease annexed. Chan was named as a guarantor of C’s obligations. The lease was executed but not registered under the Real Property Act and thus didn’t take effect as a legal lease. On S’ default in payment of rent, S took proceedings against Chan to enforce the guarantee
- Held: Chan not liable since the guaranteed only operated in respect of obligations occurring ‘under this lease’ which contemplated a lease at law, not in equity. Hence an equitable lease equivalent to an unregistered lease existed – but the obligations imposed by this didn’t come within the language of the guarantee

A lease requires the readiness and willingness of a court to decree specific performance

Readiness – a court may lack equitable jurisdiction

Foster v Reeves [1892]
- Facts: Defendant (R) agrees in writing to take a lease from plaintiff (F) in excess of 3 years. R enters possession but soon gives F notice of his intention to deliver up possession upon expiration of the first year. F tenders the lease but R refuses to execute. F institutes proceedings in the County Court.
- Held at first instance: Since the HCA would have been prepared to decree SP, the defendant should be treated as a tenant and therefore the plaintiff succeeds in respect of rent for the period after the defendant delivered up possession.
- Held in the Court of Appeal: The County Court judge had to treat matters on the basis of common law rights, as if the court existed before the Judicature Act. Hence judgement would be passed as if specific performance wouldn’t be granted.

But this principle has been limited

Cornish v Brook Green Laundry [1959] – County Court judge can determine whether a landlord/tenant relationship existed if necessary for a disposition of the issue before the court – as long as the court isn’t asked to enforce the agreement
Kingswood Estate v Anderson [1963] – The County Courts Act permitted a defendant to rely on Walsh v Lonsdale interest as an equitable defence to a claim absent jurisdiction

In NSW the Law Reform (Law and Equity) Act 1972 (NSW) adopts the Kingswood provision by providing that the rules of equity prevail in any conflict as to how common law/equity applies in the same matter. Furthermore that inferior courts, regardless of jursdiction can give effect to both equitable and legal grounds of defence as the Supreme Court could, subject to monetary limits.

Willingness – a court may not want to decree specific performance

Swain v Ayres [1888] – court may decline to enforce the agreement because the tenant breached a term
Cornish v Brook Green Laundry – court refuses to recognize a WvN interest. The agreement for lease required the tenant to carry out repairs before the formal lease was granted but the tenant failed to do so
Warmington v Miller [1973] – CA refuses SP of an oral sublease where the head lease prohibited subleasing without consent. The court refused to order the landlord (tenant under the head lease) to perform an act he couldn’t lawfully do and which would expose him to proceedings for forfeiture

Equitable relief is only granted where a legal remedy (e.g. damages for repudiation) is inadequate

Adderly v Dixon [1824] – It is generally assumed that legal damages are an inadequate remedy for breaches of contract for the sale of an interest in land
- Dougan v Ley [1846] – HCA dismisses an appeal against award of SP in relation to a taxi-cab being sold with its registration plate and license to operate
  - Held: Considering the limited number of vehicles registered and licensed as taxi-cabs and the extent to which price represents the value of the license and because of the essentiality to the purchaser’ calling of the chattel and the license attached thereto – SP should be awarded
  - In other words look to the circumstances of the case
McMahon v Ambrose [1987] – R leases premises to A for 3 years. A orally assigns lease to M who takes possession. A refuses to pay rent under the head lease. R forfeits the lease and takes proceedings against A to rrecover arrears of rent for the period prior to termination. A issues a notice against M claiming indemnity in respect of any amount recovered by R
- Legal Background: The Property Law Act (Vic) provides that in a deed of assignment of the residue of a lease – a term is implied in the covenant to the effect that the assignee pays rent and indemnifies the assignor from proceedings and claims for omissions to pay rent
  - Since the assignment was oral, M couldn’t indemnify A
- Ambrose Argues: He is entitled to equitable damages in lieu of SP since a valid equitable assignment existed
- Held: Since, at the time of the proceedings, the head lease terminated, the court couldn’t grant SP to assign because the lease didn’t exist. It hence couldn’t grant equitable damages in lieu of SP.
  - But even if the court could grant SP it shouldn’t do so because at the time the third party notice was issued to M, A was not RWA himself

Even though it is required that signed writing is required for contracts of sale of land – parties can be bound in equity by the doctrine of part performance.

Mason v Clarke (1955) AC 778

Facts: Appellant transport company owns agricultural estate. The respondent (C) was a yearly tenant of a portion of it – the lease providing that the company can hunt game on the estate. The company agreed with appellant M that he can kill/take rabbits on the estate. C prevents M from exercising this right. M and the company sue C seeking junctions to restrain further interference and damages from trespass. Lower courts give them judgement, order reversed here.

Lord Morton of Henryton:

After establishing the nature of the oral agreement with M (a profit a prendre) and the interference of C with M’s rights

Even though the grant hadn’t been made to M, prima facie its benefits were available under an oral agreement

One relevant argument considered on appeal was made – that when the acts complained of were done Ms agreement was unenforceable because there was no memorandum/note that would satisfy the relevant Act

There wasn’t a sufficient memorandum of the argument but it is clear that the Acts done by M were a part performance of the oral agreement
- He set snares, took rabbits, paid helpers etc. which are expenses that are exclusively referable to the oral agreement
At the relevant time M had a specifically enforceable contract against the company for a profit a prendre and had entered into possession of it. He was thus clearly entitled to bring an action in trespass against M.

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