Ramsden v City Council of Lusaka [1966] ZMHC 7 (6 August 1966)

RAMSDEN v THE CITY COUNCIL OF LUSAKA (1966) ZR 92 (HC) HIGH COURT PICKETT J 6th AUGUST 1966 Flynote and Headnote [1] Landlord and tenant - Breach of convenant - Forfeiture of lease - Form of notice under s. 14, Conveyancing Act, 1881 - Compensation in money not required. A notice of forfeiture of a lease, given under the Conveyancing Act, 1881, s. 14, is not invalid merely by reason of the fact that it does not require the lessee to make compensation in money for the breach of covenant. [2] Landlord and tenant - Breach of covenant - Forfeiture of lease - Application for relief - Principles on which court will exercise jurisdiction. In an application for relief against forfeiture incurred for breach of covenant in a lease, the court will exercise its jurisdiction sparingly and with caution. The applicant must show that he is blameless and has taken all precautions which a reasonably cautious person would take. [3] Landlord and tenant - Breach of building covenant - Forfeiture of lease - Lessee's lack of intention to perform covenant - No relief. Where a lessee takes a lease containing a building covenant, without any intention of carrying it out, and is, in fact, in breach, the court will not grant relief against forfeiture of the lease. Cases cited: (1) Lock v Pearce [1893] 2 Ch. 271. (2) Imray v Oakshette [1897] 2 QB 218. (3) Rose v Spicer, Rose v Hyman [1911] 2 KB 234; on appeal, sub nom Hyman v Rose [1912] AC 623. (4) Barrow v Isaacs & Son [1891] 1 QB 417. (5) Nokes v Gibbon (1857), 26 LJ Ch. 433; 61 ER 1063. Statutes construed: Conveyancing Act, 1881, s.14. Lands and Deeds Registry (Amendment) Ordinance (Cap. 85), s. 49. Martin, for the plaintiff Masemola, for the defendant Judgment Pickett J: This is an action by way of originating summons brought by the plaintiff against the defendant and paragraph 1 thereof prays for relief, on such terms and conditions as to the court might seem just and equitable, from any re-entry or forfeiture threatened by the defendant by two notices both dated the 13th September, 1965, and given by the defendant to the plaintiff; in 1966 ZR p93 PICKETT J respect of the alleged breach of certain covenants contained in two several leases relating to Stands 1375 and 1376 Lusaka respectively, both of such leases being dated the 5th March, 1958, and made between the defendant of the one part and Joli Estates Limited of the other part, which said stands were duly assigned with the consent of the defendant to the plaintiff by an Indenture of Assignment dated the 13th March, 1961, for all the residue of the respective terms created by the said leases. An additional paragraph was added to the said originating summons by an order of the High Court dated the 3rd June, 1966, which is in the following terms: ' A declaration (a) that on the true construction of the abovementioned leases and in the events which have happened the refusal of the defendant to grant licences to assign the said leases to Lusaka Real Estate Company Limited was unreasonable; and (b) that notwithstanding such refusal as aforesaid the plaintiff without any licence from the defendant is entitled to assign the said leases to the said Lusaka Real Estate Company Limited. The two leases above referred to are in fact dated the 5th March, 1958, and they are in identical terms. The clause the subject matter of this action is clause 3 (v) and reads as follows: ' At the Lessee's own cost within five years from the date of the Lease or such extended period as may be agreed by the Council to erect upon the land hereby demised fit for immediate occupation and use in a substantial and workmanlike manner with the best materials of their several kinds and in conformity in every respect with the plans elevations sections and specifications first approved by the Council and under the inspection and to the satisfaction of the Council on the land hereby demised a building to the minimum parapet height of 35 feet and containing a minimum of three storeys such building to conform to the building conditions set out in the Second Schedule hereto.' The two leases also contain what for the purpose of brevity may be described as the usual covenants and conditions found in such leases, including at paragraph 3 (xv) 'Not to assign the land hereby demised without the consent of the Council such consent not to be unreasonably withheld.' A proviso for re-entry is contained in paragraph 5 of both leases in the following terms: ' Provided always and it is hereby agreed as follows: (1) That if the said rent hereby reserved or any part thereof shall be unpaid for 60 days after becoming payable (whether the same shall have been formally demanded or not), or if any of the covenants on the part of the Lessee herein contained shall not be performed or observed then and in such case it shall be lawful for the Council or any person or persons authorised by the Council on its behalf and at any time thereafter to re-enter upon the land hereby demised or any part thereof in the name of the whole and thereupon the term hereby created shall absolutely 1966 ZR p94 PICKETT J determine but without prejudice to any right of action or remedy of the Council in respect of any breach of any of the covenants hereinbefore contained.' By an assignment dated the 30th March, 1961, and made between the said Joli Estates Limited (then in liquidation) of the first part, Michael Neil Phillips as liquidator of the said company of the second part and the plaintiff of the third part the premises respectively comprised in and demised by the before mentioned leases became vested in the plaintiff for all the residue of the respective terms of years created by the said leases subject to the payment of the yearly rents and the performance and observance of the covenants on the part of the lessee and the reservations conditions and stipulations by and in the said leases respectively therein contained. This assignment was of course with the consent of the defendant. It is common ground that clause 3 (v) of the two before-mentioned leases has never been complied with by the Plaintiff up to the present time. The original five years' terms specified for the erection of the buildings upon the two plots of land expired on the 5th March, 1963, but several applications have been made by the plaintiff for extensions of time for the carrying out of this building clause, which applications were granted by the defendant, and the effect of the last extension so granted would be to extend the period up to the 1st June, 1965. It is significant that in the letter dated the 8th December, 1964, from the defendant to the plaintiff's solicitors it states: ' Further to my letter dated 27th October, 1964, I would advise that Council at its November meeting recommended that the building clause period in respect of Stands 1375 and 1376 be extended from 31st December, 1964, by an adequate time to complete the building, provided building operations commence by the 1st June, 1965.' On the 3rd June, 1965, the defendant by its Town Clerk addressed a further letter to the plaintiff's solicitors in the following terms: ' I refer to my letter dated 8th December, 1964, wherein I advised that the building clause period in respect of the above stands had been extended by an adequate time to complete the building, provided building operations commenced by the 1st June, 1965. Although plans were approved in principle on the 18th November, 1964, no building operations have commenced to date. I shall be grateful if you will advise me within the next ten days whether your client intends to proceed with the building this month.' On the 15th June, 1965, the plaintiff replied to this letter through his agent, a Mr Watts, and in view of the fact that by this time the plaintiff was well and truly in breach of the before­ mentioned building covenant, I can only describe this letter as a most surprising one. It reads as follows: ' We thank you for your letter of the 3rd instant regarding the above which we have just received and were not, therefore, able 1966 ZR p95 PICKETT J to reply to you in the ten days allowed, for which we tender our apologies. The position at the moment in the United Kingdom is one of severe restriction and the imposed credit squeeze, coupled with this Government's attitude to overseas investment, has meant that until there is a change of Government, or policy, we are prohibited from carrying out our obligations. As non-residents, we cannot obtain overdraft facilities in Zambia and we would ask your Council to appreciate that it is not lack of desire on our part, merely that the actions of others prohibit us from carrying out our intended policy and we feel that the Council should understand and sympathise with us in the situation in which we are placed. However, I shall be visiting Lusaka in October and November of this year and will, of course, be at the Council's disposal to discuss this with them. I trust that this will be acceptable to your Council and that a deferment will be granted pending our meeting in October.' I will merely observe here that having received such a communication the defendants could hardly come to any other conclusion but that there was not the slightest likelihood of the plaintiff himself carrying out his obligations under the before-mentioned building covenants. The next development in this unhappy affair was a letter from the plaintiff's solicitors to the defendant dated the 28th July, 1965, enclosing duplicate forms of licence to assign in respect of both the plots of land numbers 1375 and 1376 to a firm called E. Snelgar Limited. The second paragraph of this letter reads: ' We understand that the purchasers have made an application to the Council for the underlease to them of the adjoining Plot Number 1377, and subject to such lease being granted, and the Council's licence being given to the assignment of the above mentioned plots, it is the intention of the purchasers, who are a firm of building contractors, to proceed immediately with the development of the total site and they hope to be in a position to start work upon the foundations of the proposed building before the end of the year.' This letter, in my view, shows a completely cynical disregard of the fact that the plaintiff was in breach of his undertaking under the above - mentioned building covenants and also betrays what would seem to be a rather patronising attitude towards the defendant generally. In these circumstances therefore, the defendant's reply dated the 13th September, 1965, causes me no surprise at all. This letter reads as follows: ' I refer to your letter dated 28th July, 1965. Council at its meeting held in August, 1965, refused your client's application to assign this property and decided to re-enter upon both Stands. 1966 ZR p96 PICKETT J I therefore enclose notices under s. 14 of the 1881 Conveyancing Act, in respect of these Stands.' The two notices are in identical terms, one relating to Stand number 1375 and one to Stand number 1376 Lusaka and are in the following terms: ' Notice under s. 14 of the Conveyancing Act, 1881. Having failed to comply with the building clause contained in the above - mentioned lease in spite of repeated demands by the Lessor, you are hereby required to remedy the said breach in terms of s. 14 of the Conveyancing Act, 1881 within three months from the date hereof, and take further notice that if you fail to remedy the aforesaid breach to the satisfaction of the Lessor in the time specified herein, the Lessor or any person or persons authorised by it, in that behalf, at any time thereafter, shall re-enter upon the demised premises and therefore the term therein created shall absolutely determine but without prejudice to any right of action or remedy of the Lessor in respect of any breach of any of the other covenants on the part of the Lessee. If you are aggrieved by this notice you may apply to the Court for relief in accordance with the said statute hereinbefore mentioned within sixty days from the date hereof in which case the operation of this notice will be suspended pending the Court's decision.' Section 14 of the Conveyancing Act, 1881, which is of course the operative statute in this case, is in the following terms: ' 14 (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 specifying the particular breach complained of and, if the breach is capable of remedy, requiring the lessee to remedy the breach and, 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. (2) Where a lessor is proceeding, by action or otherwise, to enforce such a right of re-entry or forfeiture, the lessee may, in the lessor's action, if any, or in any action brought by himself apply to the Court for relief; and the Court may grant or refuse relief, as the Court, having regard to the proceedings and conduct of the parties under the foregoing provisions of this section, and to all the other circumstances, thinks fit; and in case of relief may grant it on such terms, if any, as to costs, expenses, damages, compensation, penalty, or otherwise, including the granting of an injunction to restrain any like breach in the future, as the Court, in the circumstances of each case, thinks fit.' It is not necessary for me to quote the remaining sub-paragraphs of this section. 1966 ZR p97 PICKETT J [1] I am satisfied that the before-mentioned notices under s.14 (1) were good and valid notices, notwithstanding that they did not require the plaintiff to make compensation to be paid in money (Lock v Pearce [1]). It is clear from the arguments of counsel and the documentary evidence placed before me in this case, that there has been no attempt by the plaintiff personally to comply with these notices and remedy the breach of the building covenants to the satisfaction of the lessor, right up to the present time. As Mr Masemola put it in clear and forcible terms, the manner in which he should comply with the covenants was to go down Cairo Road to the site with a couple of workmen, dig the foundations of the building, put a few stones there, a few bricks and mortar on the spot, and generally get on with the erection of the buildings. What the plaintiff has in fact done, besides entering a caveat under the provisions of s. 49 of the Lands and Deeds Registry (Amendment) Ordinance (Cap.85) to prevent any dealings with the said land, is to enter into an agreement dated the 23rd March, 1966, between himself of the first part Lusaka Real Estate Company Limited of the second part and Simon Ber Zukas (as surety) of the third part whereby the plaintiff agreed to sell to the said company at the price of £5,150 the two pieces of land the subject matter of these proceedings, subject to (i) the plaintiff obtaining an order of the High Court granting him relief from the forfeiture of the terms of years created by the before-mentioned leases dated the 5th March, 1958, such order being made upon the terms that the foundations of the said building or buildings to be erected upon the said property shall be laid within three calendar months of the date of such order and that the said building or buildings shall thereafter be completed with all reasonable expedition or upon such other less onerous terms as the said Court shall determine or (ii) the said threat of forfeiture being withdrawn by the Lusaka City Council or declared to be void or otherwise of no effect by the said court within three months of the date hereof. Clause 7 of this said agreement provides as follows: ' Completion shall take place within seven days of the compliance with the conditions contained in Clause 5 hereof and the purchasers (meaning the Lusaka Read Estate Company Limited) shall thereupon be solely responsible for carrying out and complying with the covenants and conditions of the said leases as varied by any such order of the court as aforesaid or as waived by the Lusaka City Council as aforesaid.' There was a supplemental agreement dated the 23rd June, 1966, and made between the same parties as those to the above - mentioned agreement of the 23rd March, 1966, which substituted the words 'six months' for the words 'three months' in the above - quoted condition. It is abundantly clear that the plaintiff has not the slightest intention of personally carrying out these building covenants, and that all he wishes to do is to transfer his liabilities and responsibilities under these covenants to another third party. 1966 ZR p98 PICKETT J On the 21st April, 1966, the plaintiff's solicitors by letter applied for the licence of the defendant to the proposed assignment of the leases to the said Lusaka Real Estate Company Limited and such licence was refused by letter dated the 29th April, 1966. [2] There are a considerable number of leading cases dealing with the principles involved in dealing with applications for relief against forfeiture incurred for breach of covenant in leases. In Imray v Oakshette [2], it was stated that this jurisdiction to grant will be exercised with caution and sparingly, and the under - lessee asking for its exercise must show that he is blameless and has taken all precautions which a reasonably cautious and careful person would use. Where, therefore he purchased an under - lease under a contract which did not give him a right to call for the title of the original lessee, who was bound by covenant not to assign or underlet without licence, and he purchased with the intention of laying out a considerable sum upon the property: Held that he had been guilty of negligence in entering into such a contract that he was precluded from properly investigating the title, and that relief against a forfeiture by the original lessee for breach of the covenant ought not to be granted to him. I have considered the cases of Rose v Spicer, Rose v Hyman [3], to which I was referred by Mr Martin, but I feel that they are not of any particular relevance to the present case. In Barrow v Isaacs & Son [4], in a lease for years the lessees covenanted not to underlet the premises, or any part thereof, without the consent in writing of the lessor, which consent the lessor agreed should not be arbitrarily withheld in the case of a respectable or responsible person, and power to re-enter was given to the lessor in case the lessees did not well and truly observe and perform their covenants. The lessees underlet part of the premises without obtaining or asking for the lessor's consent. The under - lease was prepared by their solicitor, who omitted to look at the head lease, and forgot that it contained the covenant not to underlet without consent. Both the lessees and their under - lessees were respectable and responsible persons, and no injury was done, or likely to be done, to the lessor by reason of the underlease, nor could he have had any valid objection to it if his consent had been asked. In an action by the lessor to recover possession of the premises for breach of the covenant Held that the omission to ask the lessor's consent was not a mistake in respect of which the court would grant the lessees equitable relief against forfeiture for breach of the covenant, and therefore that the plaintiff was entitled to succeed in the action. In the case of Nokes v Gibbon [5], the plaintiff being the mortgagee of the lessee of a house under a building lease, took possession of the property upon the original lessee neglecting to fulfil the covenants. The plaintiff was afterwards ejected in pursuance of a judgment in an action at law for breach of covenants, and filed a bill to be reinstated in the property, on the ground that there had been no breach of the covenants under the lease. The particular covenants as to which relief was prayed were - to make and provide a roadway in 1966 ZR p99 PICKETT J front of the house and to construct good and sufficient drains and sewers to carry off the foul water. The plaintiff excused himself from performing the first covenant on the ground that the owners of the adjoining houses refused to complete their portion of the road, and as to the second covenant, the plaintiff had caused drains to be made by competent workmen, but they were found to be insufficient for the purpose. The court held, that there had been a breach of both covenants, and therefore refused to interfere to prevent the lessor from having the benefit of his ejectment. In the instant case there has never been any suggestion that the plaintiff was not in breach of the building covenants contained in the aforesaid leases. I am also fully satisfied that the notices served by the defendant under s. 14 of the Conveyancing Act, 1881 were perfectly in order and properly served on the plaintiff. I am further satisfied that the period of three months stipulated as the time in which the plaintiff was to remedy the said breaches was in all the circumstances of this case a reasonable period. As Mr Masemola stressed in his address to the court, it was not expected that a building three storeys high could be erected within three months What was required to show compliance with the covenants was that the plaintiff should begin to build within that period. That this very fair attitude was indeed the attitude of the defendant can I think be exemplified by again referring to the letter dated the 3rd June, 1965, from the defendant to the plaintiff's solicitors wherein they stated: ' I refer to my letter dated 8th December, 1964, wherein I advised that the building clause period in respect of the above stands had been extended by an adequate time to complete the building, provided building operations commenced by the 1st June, 1965.' [3] After a very careful consideration of the whole of the evidence placed before me in this case, I am satisfied that the Lusaka City Council has behaved in an entirely reasonable manner throughout all its transactions with the plaintiff regarding these leases, and that the plaintiff appears to have purchased these stands as a pure speculation and without any really serious intention of performing the aforesaid building covenants. In these circumstances, therefore, and having particular regard to the fact that there had already been a serious breach of covenant, I feel that there was nothing whatsoever unreasonable in the City Council withholding their consent to the proposed assignment of the leases to the Lusaka Real Estate Company Limited. Accordingly I can see no reason why I should exercise my discretion to grant any relief to the plaintiff against the forfeiture of the said two leases. The summons will therefore be dismissed, the declaration called for therein will be refused, and the costs of this action will be awarded to the defendant, which costs failing agreement will be taxed. I shall also order the plaintiff forthwith to remove the caveats he has placed on this property in the Registry of Lands and Deeds. Order accordingly