Walsh v Lonsdale - case note PDF

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Walsh v Lonsdale Equitable lease – Creation of equitable interest by part-performance Facts – L entered into an agreement to lease premises to W. the agreement stipulated the rent and provided that a lease should be prepared by solicitors. Under the agreement, the rent was to be payable yearly in advance. W went into possession and proceeded to pay rent quarterly, but not in advance, for almost 3 years. L then demanded a year’s rent in advance and 2 days later put in a distress for rent. W sought an injunction to prevent L selling the goods seized. Issue – Was the agreement to pay rent yearly in advance under the agreement to lease enforceable? Decision – At CL W was merely a tenant at will, and distress was not available as he was paying rent regularly. But in equity, where there is an agreement for lease under which possession was given, the tenant is treated as if a lease had been granted. Thus, since W had not paid a year’s rent in advance, he was in arrears and L was entitled to distrain his property. The lessor is entitled to exercise the same rights as he would have if a lease had been granted. (The parties conceded that the agreement for lease was specifically enforceable). Held: The Court of Appeal found in favour of the defendant landlord. The Judicature Acts 1873-1875 had fused the two separate legal systems of common law and equity into one system. In any conflict, the rules of equity should prevail. According to the equitable maxim ‘Equity looks on as done that which ought to be done’ the parties were treated as having a lease enforceable in equity from the date of the agreement to grant the lease. Such a lease was held under the same terms and the court could order specific performance of it. Lord Jessel stated [at 14-15]: ‘The tenant holds… under the same terms in equity as though the lease had been granted… He cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted.’

Leases by estoppel Powprop v Valbirn Facts – P began constructing a commercial building on land at Airlie Beach. P alleged that because it modified the design of the building during construction to make the building suitable for V use, V was prevented from denying the existence of an agreement for V to lease the building. The Court dismissed P claim, determining that P did not act upon any promise or representation by V that V regarded as a commitment to lease

the building. The trial Judge stated that P was anxious to obtain a lease and thus was prepared to risk the expense of alterations in the hope that a lease would be concluded. The decision indicates: » The negotiations between the parties must have reached a stage where the prospective tenant has led the owner to believe that it is bound to take a lease before the prospective tenant is prevented from denying a lease. » The owner may not assume that because he constructs a building to meet the requirements of a prospective tenant, that the prospective tenant is bound to take the lease.

Non-Derogation from the Grant Non-derogation from the grant only applies where the demised premises and the retained premises are abutting and, are both owned by the same landlord (Aussie Traveller v Marklea) This covenant is concerned with the use of the retaining part of the land, which makes the demised premises less fit for the purpose for which it was let Ask: Has there been substantial interference with the right of occupation such that the premises are rendered unfit or materially less fit for purpose? (Aussie Traveller v Marklea) -This is a question of fact -Consider if the nuisance was reasonably foreseeable from the position of the landlord (Consider in Norden v Blueport ‘the landlord either knew or shut their eyes deliberately’) -There does not need to be practical frustration of the lease, only substantial interference (Aussie Traveller v Marklea) 

There is old authority that says a lessor is NOT liable to his lessee for acts of a 3 rd party where the acts of those claiming through the lessor are unlawful or wrongful, UNLESS the lessor has expressly covenanted with the lessee against such interference.

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However, now a lessor will be liable for acts of nuisance committed by a person claiming though her or him, even though those acts were not authorised or encouraged by the lessor if the lessor was in a position to correct or terminate the unlawful conduct. Aussie Traveller Pty Ltd v. Marklea Pty Ltd...