Head 17: 3 Flashcards
(18 cards)
Do all terms of a lease bind successors? (what is the main test)?
The courts have answered this question by saying that there may be some terms which are not binding on a new landlord. The main test is whether the obligations are INTER NATURALIA of the lease (natural/essential parts of the lease) - i.e. are these the sort of terms you would expect to find in a lease of this kind. If the answer is yes then they can bind a successor landlord. If a particular term is an unusual one then it will be regarded as personal and it will not transmit to a subsequent landlord.
Turner v Nicholson (1835)
Landlord made an agreement to compensate the tenant for improvements made to the land. Landlord sold to someone else. It was held the agreement was personal (NOT inter naturalia of the lease) so the new owner was not bound.
Ross v Duchess of Sutherland (1838)
Lease where the rent was £12 a year. The tenant was to be allowed a £5 deduction provided he acted as the ‘ground officer’ of the estate. The land was sold and the new landlord didn’t want the tenant to work for him so discontinued the arrangement that the tenant was acting as a ground officer. It was held by the court that this term was only personal to the original landlord and was not found generally in leases (NOT INTER NATURALIA) - thus it did not bind the incoming landlord.
*Bisset v Magistrates of Aberdeen (1898)
Option to buy in a lease. Land was sold. Held the option did not bind the new landlord. [CF DAVIDSION V ZANI]
Davidson v Zani 1992
In contrast to Bisset in this Sheriff Principle case - an option to buy a shop at the end of a lease was enforced against the new landlord under the offside goals rule.
[Yet for the offside goals rule to apply there must be some form of breach and it was argued that the offside goals rule shouldn’t have applied since there was no such breach. This was the position taken in Advice Centre for Mortgages Ltd v McNicoll [2006] - Outer House case in which the offside goals rule was not applied in similar facts to Davidson. NB an Outer House decision cannot overrule a Sheriff Principle so Davidson is still a valid decision. From tutorial see Gibson v RBS for options to purchase - the offside goals rule was applied to an option to purchase
Optical Express (Gyle) Ltd v M&S 2000
This concerned EXCLUSIVITY agreements. The Gyle shopping centre was owned by Edinburgh City Council who entered into a series of leases with different shops. One of the units was leased to Optical Express and there was a separate letter which provided that the council would not lease any other shop in the Gyle to a rival opticians - an exclusivity agreement. The City Council sold the Gyle to a consortium (of which M&S were one of the parties). The consortium leased one of the units to another optician. Optical Express sued. The defence raised was that the agreement did not bind the new landlords. The court upheld this defence since the agreement was NOT INTER NATURALIA of the lease since it was not about the property that was being leased, it was about other properties, so it did not bind successors.
[CF: DAVIE V STARK]
Davie v Stark (1876)
An exclusivity agreement was enforced against a successor landlord.
What is the effect of a real right lease on heritable creditors (typically standard security holders)?
Since it is a real right, in principle it will bind subsequent creditors, but not prior creditors unless they consent.
Trade Development Bank v Warriner & Mason 1980
There was a standard security over land and one of the conditions of a standard security is that you cannot lease the land without the creditors agreement. The owner leased the property without the agreement of the creditors. It was held that the creditors could set the lease aside.
*Trade Development Bank v Crittal Windows 1983
An agreement to assign a lease and then the lessee (the tenant - the person agreeing to assign) granted a standard security over the lease prior to the assignation. This would mean the standard security was in place before the new tenant takes the lease by assignation and the new tenant is bound by it. However, the standard security holder knew about the agreement to assign and therefore the offside goals rule was applied and the standard security was set aside.
- What governs the rights and obligations of the parties (in general)
These are governed by the express terms of the lease.
What if there are no specific terms or silent on a particular issue in:
1) For residential and agricultural leases
2) For commercial leases
For residential and agricultural leases there are detailed statutory frameworks and the common law rarely applies.
For commercial leases in the absence of specific terms then the common law implies certain obligations upon landlord and tenant (if the parties wish to exclude the common law implied terms then the lease must make this very clear (Mars Pension Trustees Ltd v County Properties & Developments Ltd 2000).
What is the landlord obliged to do in relation to possession?
The landlord is obliged to put the tenant in possession of the subjects and to maintain him in possession through the term of lease.
⁃ The landlord must give the tenant possession of all the subjects of let.
⁃ The landlord may not encroach upon the tenant’s possession and must prevent his total or partial eviction.
What is the TENANT obliged to do in relation to possession?
The tenant is obliged to enter into possession, and to occupy and use the subjects.
⁃ If the tenant fails to enter into possession then he is in material breach ⁃ *Graham & Black v Stevenson (1792)
*Graham & Black v Stevenson (1792)
A hotelier took the tenancy of another nearby hotel with the intention to close it to wipe out the competition. The court held that he couldn’t do this since he had to occupy it rather than simply close it down.
The rule that the tenant fails to enter into possession then he is in material breach is…
Implied by law but often it will also often be written into the lease - (Blair Trust Co v Gilbert 1940)
Blair Trust Co v Gilbert 1940
In this case the lease provided that the said tenant binds and obliges himself and his ??? to reside on the said land. However the court held that reasonable periods of short absence would not breach this. In this case the tenant was in prison and had been absent for a year, so here the tenant was held to be in material breach so the landlord could bring the lease to an end
Mickel v McCoard 1913
A tenant who breaches the obligation to be in possession will be liable for damage sustained to the property due to non-occupation
