Maple Leaf Diamond Drilling Co (Zambia) Ltd v Peter Coutlis (Action No. 1970/HN/763) [1971] ZMHC 15 (26 January 1971)

MAPLE LEAF DIAMOND DRILLING CO (ZAMBIA) LTD v PETER COUTLIS (1970) ZR 101 (HC) HIGH COURT CHOMBA J 15 26TH JANUARY 1971 (Action No. 1970/HN/763) Flynote Landlord and tenant - Agreement to give option to purchase at the same price or six months' notice to quit in the event of a third party wishing to buy 20 property outright - Notice to quit given by intending buyer - Whether sufficient to terminate the lease. Headnote The defendant had leased property from the owner. An agreement between them provided that "in the event of any third party wishing to buy the property outright the tenant will be given the option to purchase 25 at the same figure or six months to vacate". The owner entered into an agreement with the plaintiff to sell the property to it. The plaintiff served notice on the defendant to vacate and on expiry sued for possession of the property. Held: 30 When an agreement for sale of land is concluded the purchaser only acquires a right in personam vis -à-vis the vendor to require the latter to assign the property to him in certain circumstances, but he does not acquire all the rights of the vendor and does not have the right to terminate the lease of a lessee of the property under a lease 35 agreement. Cases cited: (1) Farrow v Orttewell [1933] Ch. 480. (2) Thompson v McCullough [1947] KB 447. Jaques & Partners, Ndola, for the plaintiff. 40 H K Smallwood & Co., Ndola, for the defendant. Judgment Chomba J: This is an action by Maple Leaf Diamond Drilling Company (Zambia) Limited hereinafter to be referred to as the landlord against Peter Coutlis to be referred to hereinafter as the tenant, for 1971 ZR p102 CHOMBA J possession of Plots 510 and 511 Luanshya hereinafter referred to as the property. The facts of the case in so far as they have emerged from the evidence of the landlord on the one hand and the tenant on the other, may be outlined as follows: 5 On the 1st May, 1961, the tenant leased the property aforesaid from one George Hayward, hereinafter referred to as the former landlord. The tenancy agreement contained a number of clauses, but for the purposes of this case I need refer only to one of them. By clause 6 it was agreed - "In the event of any third party wishing to buy the property outright, the 10 tenant will be given the option to purchase at the same figure or 6 months' notice to vacate. This will only apply after 1st May, 1962." On the 23rd March, 1970, an agreement was made between the former landlord and the landlord for the sale of the property to the landlord. On the 26th March, 1970, a notice to quit dated 24th March, 1970, was served 15 on the tenant by Messrs Russell Cook & Partners, now known as Jaques & Partners, acting on behalf of the landlord, requiring the tenant to vacate the property on the 30th September, 1970. The contract for sale was completed on the 8th May, 1970, by which date the former landlord assigned the property to the present landlord. By the 1st October, 1970, 20 the tenant was still in possession of the property and so remained in possession on the 9th October, 1970, the date on which a specially endorsed writ was issued by the landlord claiming possession of the property and mesne profits. In a defence dated 23rd October, 1970, the tenant stated, inter alia, 25 that he admitted that on the 26th March, 1970, what purported to be a notice to quit was served on him, but averred that that notice was invalid and therefore that it did not determine the lease to which I have already referred. Other points were raised, but in my view a solution of the issue dealing 30 with the validity of the notice to quit might render unnecessary appraisal of those others. I shall, therefore, dispose of that issue first and then consider those others, only if the said solution does not dispose of the entire action. One of the points Mr Reilly, counsel for the landlord, made in 35 supporting the validity of the notice was that on entering into the contract for sale the landlord, as intending purchaser, assumed the rights of the former landlord, vis-à-vis, the tenant. Is this in fact so? One thing about which there is no doubt is that when a contract for sale of land is concluded the purchaser acquires a right in personam, 40 vis-à-vis, the vendor, so that the former will be entitled to require the latter to assign the property to him in certain circumstances. To state that on conclusion of the contract of sale a purchaser assumes all the rights of the vendor is to declare that the purchaser acquires rights in rem in relation to the property, the subject matter of the contract. And if such 45 rights are acquired then the intending purchaser would have power to give notice to quit. In my view a contract for sale does not confer on the intending purchaser rights in rem. My opinion is based on two authorities. 1971 ZR p103 CHOMBA J In the first instance Woodfall on Landlord and Tenant 26th Ed., Vol I, has the following pronouncement of the relevant law (see p. 986). "But an assignee of a lease with only an equitable title cannot exercise the right to determine the tenancy. Nor can a purchaser who has entered into a Contract to purchase land, subject of a tenancy, before he had 5 completed the purchase; . . ." The two cases cited in support of that pronouncement are Farrow v Orttewell (1) and Thompson v McCullough (2). In the Farrow case the land over which a dispute similar to the present one arose was an agricultural holding. In that case the complainant was a tenant of two farms on a yearly tenancy. The personal 10 representative of the deceased freeholder of the farms entered into a sale agreement with the defendant, the date of the assignment having been fixed as the 16th September, 1930. The purchase was, however, completed on the 30th October, 1930. On the 9th October, the defendant served a notice on the plaintiff to quit on the 11th October, 1931. The plaintiff 15 complied with the notice but claimed compensation for the eviction, a thing he was entitled to do under the Agricultural Holdings Act 1923. The defendant disputed the claim on the grounds that the notice to quit was invalid as at the time he purported to give it he had not completed the purchase of the land. It was held by Bennet, J, that the provisions of the 20 Agricultural Holdings Act 1923 (s. 12, sub-s. 1) did not empower the purchaser of an agricultural holding to give to a tenant, before the completion of the purchase, an effective notice to quit. The facts in the Thompson case, supra, were that the tenant sub-let part of the leasehold property demised to him. On the 5th April, 1946, 25 requiring the whole property for his own occupation, he gave to the sub-tenant notice to quit on the 4th May, 1946. The sub-tenant had on the 1st April, 1946, entered into an oral contract to purchase the freehold of the property from the main landlord and paid a deposit. On the 10th April, 1946, the tenant having heard of the agreement of purchase served 30 a second notice to quit on the sub-tenant, requiring him to vacate the property on the 20th April, 1946. On the last named date the sub-tenant paid a further instalment of the purchase price of the freehold. On the 12th April, 1946, the sub-tenant, purporting to act as the landlord, gave the tenant a notice to determine the latter's tenancy on the 20th April, 35 1946. The conveyance of the property from the freeholder to the subtenant was completed on the 10th April, 1946, but the balance of the purchase price was paid on the 21st June, 1946. The question that fell for consideration was whether the notice to quit given on the 12th April, 1946, by the sub-tenant was valid as the purchase was not completed 40 until 21st June. It was argued on behalf of the sub-tenant that on the final purchase of the property the date of the conveyance related back to the 10th April, the date on which it was made, so that the notice given on the 12th, two days later, was valid. It was held that that was not the case but that if the deed was delivered on the 10th April it was so delivered as 45 escrow; that the payment of the last instalment on the 21st June did not operate retrospectively to validate the notice dated 12th April; and that the sub-tenant therefore had no power to give that notice on that date, since he was not yet the freeholder and might never have become so. 1971 ZR p104 CHOMBA J In principle the authorities outlined above fall on all fours with the present case. On the 26th March, 1970, when the notice to quit was served by Russell Cook & Partners on behalf of the landlord the latter was a mere intending purchaser since the assignment of the property in question was 5 completed on the 8th May, 1970, almost two months later. For that reason I also come to the conclusion that the landlord, Maple Leaf Diamond Drilling Company (Zambia) Limited, gave a premature notice which in the event I find to have been invalid. My decision would have been different if the notice had been given prior to the assignment by the 10 former landlord but it was not he who gave it. In consequence I find that no valid notice has been given to the tenant and therefore that his possession of the property demised to him by the former landlord is not wrongful. The tenant not being a wrongful occupier of the property is not therefore liable to account for mesne profits. The claim of the landlord is therefore 15 dismissed with costs to be taxed in default of agreement. Claim dismissed