C.F.A.O. v. THOME [1966] GLR 107

Division: SUPREME COURT

Date: 31 JANUARY 1966

Before: AZU CRABBE, APALOO AND BRUCE-LYLE JJ.S.C.

CASES REFERRED TO

(1) Artillery Mansions, Ltd. v. Macartney [1947] K.B. 594; [1947] 1 All E.R. 686; 63 T.L.R. 388.

(2) Keane v. Clarke [1951] 2 K.B. 732; [1951] 2 T.L.R. 77; 95 S.J. 399; [1951] 2 All E.R. 187, C.A.

(3) Veale v. Cabezas [1921] W.N. 311.

(4) Bolger v. Daly [1925] 2 Ir.R. 42.

(5) White v. Richmond Court, Ltd . [1944] K.B. 576; [1944] 1 All E.R. 689; 113 L.J.K.B. 497; 171 L.T. 41; 60 T.L.R. 391, C.A.

(6) Clifton Securities, Ltd. v. Huntley [1948] 2 All E.R. 283; [1948] W.N. 267; 64 T.L.R. 413; 92 S.J. 499.

NATURE OF PROCEEDINGS

APPEAL from a decision of the High Court giving judgment for the plaintiff for recovery of premises in a state of repair and mesne profits. The facts are sufficiently set out in the judgment of Apaloo J.S.C.

COUNSEL

B. J. da Rocha for the appellants.

W. Ofori-Atta for the respondent.

JUDGMENT OF APALOO J.S.C.

The respondent (whom I shall hereinafter refer to as the plaintiff) is the owner of a building situate on plots 21 and 22, Antoa Road, Kumasi. That building comprises a store on the ground floor and flats on the first floor. The evidence shows that the building was erected in 1930. Early in 1949, the appellant company (hereinafter called the company) were desirous of letting the entire premises. It seems that the terms of the letting were orally agreed upon between the plaintiff and the company. These terms were subsequently embodied in a letter written by the company to the plaintiff and dated 1 April 1949 (exhibit A). It seems to have been the intention of the parties that these terms should be embodied in a formal lease to be subsequently executed between the parties. It appears no formal lease was in fact executed between the parties but nothing in this case has turned upon this.

Although this was a home-made agreement, it in fact contains most of the terms usually met with in leases drawn up by professional conveyancers. The agreement reserved a rent of £G45 which was to be paid quarterly in advance. The company were entitled to sublet the whole or part of the premises without consent, to have quiet possession and so forth. It would seem that at the date of the letting, the premises were in a state of disrepair. Accordingly, the company agreed to put them in a habitable condition and to spend for this purpose a sum of money estimated at £G500. As an addendum to [p.110] of [1966] GLR 107 the letter embodying the terms of the agreement, there was also written in long hand, the following: “At the expiration of the tenancy, the premises to be handed over in good and tenantable condition.” According to the agreement, the entire premises were let to the company for a term of five years certain, with an option for a similar duration on the same terms and conditions.

This agreement took effect from 1 April 1949. The initial term expired on 31 March 1954, but the company exercised their option and renewed it for a further five years. The whole agreement expired by effluxion of time on 31 March 1959 and the company were then under an obligation to give to the plaintiff vacant possession of the entire premises and in accordance with their agreement, in a “good and tenantable condition.” The company however renewed their tenancy of the stores only. They offered to pay the plaintiff rent at the rate of £G75 per month. This, the latter accepted. They relinquished to the plaintiff, the backyard and magazine of the premises. They were however unable to give vacant possession of the first floor to the plaintiff apparently because, it was at that time in the occupation of a tenant protected by the Rent Control Ordinance, 1952.1 The evidence shows that at some time prior to January 1960, the tenant was ejected but even at this time, the company were unable to deliver the first floor to the plaintiff, obviously because they could not conformably with their agreement deliver it to him in a “good and tenantable condition.” On 18 January 1960, they wrote to the plaintiff promising to carry out certain repairs as would enable them to honour their original agreement and in the meantime, offered to pay to the plaintiff a monthly rental of £G30. The plaintiff declined to accept £G30 but said he would content himself with £G60. The position therefore was that as to the first floor no rent was agreed.

It would seem that by 31 March 1960, the company completed some sort of repairs on the top floor. They intimated this to the plaintiff’s solicitor by a letter dated 31 March 1960 (exhibit 1). They then said they were treating the tenancy as at end with effect from that date. The plaintiff’s solicitor addressed to the company’s solicitor a reply to this letter dated 28 April 1960 in which he took the position that the repairs allegedly carried out by the company did not conform with the contract and insisted that that should be done (exhibit 3). The evidence is imprecise as to what the company’s reaction was to this but it is reasonably clear that the company did not then contend that they had carried out the repairs which the [p.111] of [1966] GLR 107

“good and tenantable” condition clause in the initial agreement of 1 April 1949 obliged them to do. However on 13 June 1961, the company’s solicitor addressed another letter to the plaintiff’s solicitor in which the former claimed that after the tenant was ejected from the top floor, redecoration and repairs were put in hand and on completion the premises were offerred to the plaintiff’s Kumasi representative who declined to accept the same. They therefore disclaimed liability for any dilapidations which the premises might suffer after that date. With regard to the rent for the top floor, the company took the position that as the standard rent of the entire premises was £G45, the plaintiff was not entitled to the £G60 and they therefore reiterated their original offer of £G30. This letter was replied to by the plaintiff’s solicitor on 7 July 1961 (exhibit D). In it, the latter stuck to his position and maintained his contention that the premises “have not been properly repaired.”

It would seem that before this, both the plaintiff and the company agreed to invite two independent persons to assess the value of the repairs. They were Mr. Monta and Messrs. Lang. Both seem to have examined the premises but Mr. Monta declined to submit his estimate of the cost of repair. The plaintiff surmised that this must have been due to the fact that Monta was a customer of the company and was unwilling to cause them any offence. Messrs. Lang however supplied the plaintiff with an estimate. The repairs required to be done were carefully itemised and were estimated to cost an aggregate sum of £G2,337 10s. In his letter of 7 July 1961 (exhibit D) the plaintiff’s solicitor sent this estimate to the company’s solicitor as an annexure. He intimated, among other things, that if the company maintained their position, the plaintiff would himself undertake the repairs and hold the company liable in damages for the cost. In the last paragraph of that letter, the plaintiff’s solicitor informed the company’s solicitor that if the latter were agreeable, the plaintiff would visit Kumasi “in the course of a few days” and inspect the premises with the company’s representative so that the former might point out to the company the repairs required to be done. The evidence shows that the company fell in with this suggestion and on an unnamed date in July both the plaintiff and two representatives of the company, namely, Messrs. Demolins, the company’s Kumasi manager, and Rolland, his relief, visited the premises in question. As the company were still in possession of the premises, they had the keys and let the plaintiff in. The latter then pointed out to the company’s representatives the repairs requiring to be done. It is perhaps worthy of note that neither of the company’s agents took any issue with the plaintiff as to the various defects pointed out. Mr. Rolland gave evidence in this case and admitted that the

[p.112] of [1966] GLR 107 plaintiff complained about various matters but he did not suggest that either he or Mr. Demolins disputed any of the defects pointed out by the plaintiff. After concluding the inspection, the flats were then locked up and the company retained the keys. According to the plaintiff, while they were still on the premises, Mr. Demolins asked him how much he was prepared to settle for. The plaintiff said something between £G2,800-£G3,000. According to the evidence, Mr. Demolins did not commit himself to any sum but promised to pass this on to his superior officers in Accra. It seems however that he did not consider the sum mentioned by the plaintiff to be exaggerated and left the plaintiff with the impression that the matter might be settled amicably. This however did not eventuate. Accordingly, on 29 March 1962, the plaintiff caused to be issued against the company a writ in which he claimed (a) an order for possession of the said top floor in a state of repair and (b) mesne profits at the rate of £G60 per month from 1 April 1959 to the date possession is given. In asking for the premises to be delivered up in a state of repair, the plaintiff was in effect claiming an order for the specific performance of the company’s undertaking to yield up the premises in a “good and tenantable” condition.

The company conceded that the plaintiff was entitled to mesne profits but they argued that this should not exceed 8 April 1960 as they gave up possession of the premises on that day by offering the keys to the plaintiff’s agent at Kumasi. As to the quantum of the mesne profits, they said the plaintiff ought to content himself with £G30. They resisted the plaintiff’s claim to £G60 on the ground that the plaintiff cannot succeed in his claim for £G60 without infringing the penal provision of subsection (1) of section 12 of the Rent Control Ordinance, 1952.

In what strikes me as a well considered judgment, the learned trial judge, Djabanor J., found against the company on both issues. He held that there was no standard rent of the premises and adjudged the plaintiff entitled to recover from the company mesne profits at the rate of £G60 per month. He found that the company did not validly give up possession of the premises in question on the date they alleged or on any other date and ordered them to give this up to the plaintiff but they must do so in a state of repair. Meantime, they were to pay to the plaintiff by way of mesne profits £G60 per month until such possession was delivered. It is against this finding and consequential orders that this appeal has been brought.

The appeal was on four grounds but was argued on two principal limbs, two grounds being combined under each limb. The first limb complains in effect that the learned judge was in error inasmuch as he held that the surrender of the premises could not be effective [p.113] of [1966] GLR 107 without there having been a compliance with the covenant to repair to the plaintiff’s satisfaction. The other limb complains that the learned judge erred in holding that there was no standard rent of the premises. I propose to consider these grounds in an inverse order and deal first with the complaint about the judge’s conclusion that there was no standard rent of the premises. I think that is the more convenient course and that in fact is the order in which the learned judge dealt with the arguments. On the question of the standard rent, it was submitted for the company that the obligation to re-instate the premises up to an estimated sum of £G500 had nothing whatsoever to do with the rent which was fixed at £G45 per month. That obligation, counsel argued, ought to be construed in relation to the covenant to repair and no more. Relying on the definition of standard rent provided by section 3 of the Rent Control Ordinance, 1952, counsel argued that as there was no evidence that the premises were let either before or on 1 January 1948, the standard rent must be the rent at which they were first let after that date. That date, said counsel, was 1 April 1949, and as £G45 was the agreed rent, that by reason of the Ordinance became the standard rent of the premises. Contrariwise, it was submitted for the plaintiff that £G45 cannot be the standard rent because the company, so I understood the argument, undertook an obligation to make initial repairs and the rent was fixed on that basis and on that account the rent was uncertain. It was said that there were special circumstances in this case and that the obligation to put the premises in a habitable condition was a continuous one. Counsel also pointed out the fact that at the expiration of the original term, the company offered as much as £G75 per month for a small fraction of the premises and that, said counsel, shows that the parties themselves cannot have considered £G45 as an adequate rent of the premises. For authority, counsel referred us to Halsbury’s Laws of England (3rd ed.), Vol. 23, p. 852 under the caption “Failure to carry out initial repairs” and to the case of Artillery Mansions, Ltd. v. Macartney2 and to a passage in Hill and Redman’s Landlord and Tenant.

I have looked at the passages to which counsel for the plaintiff referred us and to the case. They do not seem to me to be apposite and I do not therefore find myself helped by them. In my opinion, whether or not the agreed rent of £G45 was the standard rent of the premises depends on the true construction of the Rent Control Ordinance. I shall assume for this purpose that the relevant Ordinance is the Rent Control Ordinance, 1952. It would seem that the policy

[p.114] of [1966] GLR 107 of this particular legislation is to peg the maximum rent that can be charged and to prescribe penalties for charging beyond it. That being so, it is unlikely that any agreed rents would fall outside the purview of this Ordinance. To accept the construction contended for by the plaintiff, it would be necessary to read into the statutory definition certain provisoes. For instance, a proviso to the effect that notwithstanding that the premises were let at one of the periods designaed by the Ordinance, the agreed rent shall not be the standard rent of the premises if the court is of opinion, having regard to all the circumstances that the parties did not regard it as a fair or economic rent of the premises. In my judgment, that will not be a permissible construction of the statutory definition of standard rent in section 3 of the Ordinance. What may motivate parties in agreeing on rent may often be inscrutable and seems to me a wholly irrelevant circumstance in the construction of the Ordinance.

I think therefore that, the only criteria for determining a standard rent at any given time are those provided by the statute. I am fortified in this view by the case of Keane v. Clarke.3 In that case the landlord in 1949 let to the tenant premises to which the Rent and Mortgage Interest Restrictions Act, 1939,4 applied. Like our Ordinance in question, that Act defines standard rent as “the rent at which the dwelling house was let on 1 September 1939 or where the dwelling house which was first let after 1 September 1939 the rent at which it was first let.” The house was let in 1949 at 35s. a week. It turned out however that the landlord let the said premises in 1944 at 22s. 6d. a week. There was no evidence of any previous letting. On discovering this, the tenant sued the landlord to recover the excess rent paid and contended that 22s. 6d. was the standard rent of the premises. The English Court of Appeal reversing the county court, held that the tenant was right and was entitled to recover. The Court of Appeal founded itself on the cases of Veale v. Cabezas5 and Bolger v. Daly.6 It seems fairly clear that in fixing the rent at £G45 a month in this case, the parties obviously took into consideration the fact that the company were going to put the premises into repair to the tune of about £G500 and the agreed rent was on that account lower that it might otherwise have been. That fact is irrelevant to the construction of the Ordinance. Indeed if the parties had obtained competent professional advice they might well have provided against the £G45 [p.115] of [1966] GLR 107 being regarded in future as the standard rent. This was what happened in White v. Richmond Court, Ltd.7 In that case, a dwelling-house which had not been previously let was on 24 March 1941, let to a tenant by a lease under seal. The rent reserved by the lease was £200 per annum. By an agreement of the same date, the landlords agreed that, in consideration of the flat being taken in its then undecorated conditions, the rent during the continuation of the lease should be reduced to £150. A dispute having arisen between the parties as to the standard rent, it was argued for the tenant that both the lease and the agreement being entered into on the same day, the substance of the transaction was a letting at £150 per annum. The Court of Appeal rejected that contention and held that the standard rent was the rent reserved by the lease, namely, £200.

I agree therefore with the contention of counsel for the company, that the evidence being that the premises were let in 1949 at the agreed rent of £45 and there being no evidence of any previous letting, the sum became, by force of the statute, the standard rent of the premises and that the position is in no way affected by the fact that the company undertook to make initial repairs to the tune of £500 to put the premises into a habitable condition. If therefore the rights of the parties fell to be determined by the Rent Control Ordinance, 1952, I should accede to the contention of the company that the plaintiff was precluded by the mandatory provisions of section 12 of that Ordinance from demanding £G60 for a part of the premises. But are the rights of the parties governed by the 1952 Ordinance? In my judgment, they are not. The contract from which the parties acquired rights and incurred obligations was entered into in 1949 and it seems to me that those rights and obligations must be judged by the rent legislation then in force, namely, the Rent Control Ordinance, 1947.8 This Ordinance was repealed with effect from 1 March 1952.

It seems to me the question which falls to be answered is: Did the 1947 Ordinance turn the contractual rent of £45 into a standard rent ? To answer this question, it is necessary to consider the statutory definition of standard rent in 1947. That legislation says, a standard rent means, in so far as material,

(a) the rent fixed for any particular premises or any class of premises by the appropriate committee;

(b) where no rent has been fixed—

(i) in the case of premises which were let on 3 September 1939, the rent at which the premises were then let; or

[p.116] of [1966] GLR 107

(ii) in the case of premises which were vacant on 3 September 1939, the rent at which the premises were last let before that date.

There is no evidence that any committee fixed the rent for the premises in question nor is there any evidence that they were let before 3 September 1939, or on that date. It follows therefore that if this dispute fell to be adjudged either in 1950 or 1951, the plaintiff could successfully contend that there was no standard rent of the premises. It cannot, in my judgment, be argued that his rights were adversely affected by legislation passed three years after the contract. I think therefore that the learned trial judge was right in holding that there was no standard rent of the premises though as I have endeavoured to show, his conclusion was based on wrong grounds. If that view is right, it follows that the plaintiff was entitled to bargain for the top floor unhampered by any standard rent restrictions. As the rent was not agreed on, at what rate are the mesne profits to be assessed? The case of Clifton Securities, Ltd. v. Huntley9 decides that in such a case the mesne profits must be based on the former rent if it represents a fair value of the premises but if the real value is higher than the rent, then, the mesne profits must be assessed on the higher value. It seems to me plain that the rent of £G45 did not in 1959 represent the real value of the premises. That is proved by the fact that the company themselves offered to pay to the plaintiff, for a part of the premises, £G75, a sum nearly twice as much as the former rent. There is also evidence that the plaintiff offered to let the flats for £G120 but was prepared to let the company have it for £G60. The company were well aware of the rent at which the plaintiff was willing to let them remain in the premises and they chose to remain there with full knowledge of this. In those circumstances, it cannot be said to be unjust to them that they be made to pay by way of mesne profits the £G60 which the plaintiff demanded. The learned trial judge thought that in a case such as this, the tenant ought not to be allowed to dictate to his landlord what rent he must accept. That seems to me good sense and I unreservedly agree. In all the circumstances, I think £G60 represents a fair rental value of the two flats and like the learned trial judge, I also think that the company must pay mesne profits at that rate. The next question is: For what period ought the company to pay the mesne profits ? The learned trial judge decided that they must pay this sum from 1 April 1959, for an indefinite period, namely, until the date they deliver up the flats to the plaintiff in a state of repair. As against this, it is objected that the learned judge was in error inasmuch as the company surrendered the premises to the plaintiff [p.117] of [1966] GLR 107 on 9 April 1960, and whatever mesne profits the company were under an obligation to pay must cease from that date. It was argued that in any event, the plaintiff was not entitled, as a matter of law, to refuse to accept a surrender because the tenant committed a breach of covenant to repair. It was said, the landlord was obliged to accept the surrender and proceed against the tenant in damages for the breach. In my opinion, this arguments is not open to the company on the facts of this case. When their sub-tenant was ejected some time in 1960, it was the plain duty of the company to give possession of the top floor to the plaintiff in a state of repair. The company themselves acknowledged that they were in breach of the contract to repair and undertook to remedy this. They themselves offered to pay mesne profits meantime. In those circumstances, the plaintiff was entitled to believe that faith would be kept and thus content himself with mesne profits until the repairs were carried out. Although the company purported to surrender the premises in April 1960, alleging that they had completed the repairs, they did not controvert the plaintiff’s contention that those repairs did not conform with the contract. They remained in possession of the keys and in July 1961, when the plaintiff pointed out to their representatives the repairs still requiring to be done, they acquiesced. I think the inference which can fairly be drawn from the company’s conduct is that they themselves felt satisfied that such repairs as they did still left the premises in an untenantable condition. That seems to be the reason why they still kept the keys. That, I think, is also the reason why they offered to go into terms with the plaintiff. In these circumstances, the learned judge was right in finding that up to the date on which he delivered his judgment, the company remained in possession of the top floor and were liable to pay mesne profits therefor.

As I have said, the learned judge also ordered the company to deliver the premises in a state of repair. That order is tantamount to decreeing specific performance of the company’s contract to repair. I think, in all the circumstances, this order ought not to have been made. Specific performance, like all other equitable remedies, is discretionary and ought not to be granted where the injury complained of can be compensated in damages. An order for specific performance will, on the facts of this case, be difficult of enforcement, especially as the learned judge himself said he was unable to determine what sort of repairs the company should execute. In my opinion, the breach complained of can be adequately compensated in damages and I would therefore vary the order of the learned judge and in lieu of his order for repairs, I would award the plaintiff damages for breach of contract.

[p.118] of [1966] GLR 107

The final question is: What is the measure of damages to which the plaintiff is entitled? In my judgment, it is such sum of money as would put the plaintiff in the same position as if the repairs had been carried out by the company. In other words, the plaintiff is entitled to receive from the company the cost of repairs by way of damages. An estimate of this was made as long ago as 1961 by Messrs. Lang. This estimate was forwarded to the company’s solicitor in July 1961. There is no evidence that the company at any time disputed the accuracy of any of the items or the aggregate nor did they ever call in question the competence of Messrs. Lang to make it. I consider therefore that had the company carried out the repairs as they were obliged to do, they would, in 1961, have spent the sum of £G2,337 10s. in carrying it out. The sum ought, prima facie, to be the damages to which the plaintiff is entitled.

But Mr. Ofori-Atta has asked us to bear in mind not only the decline in the value of money, but also that prices of materials have gone up since the making of this estimate. I think that is a fact of which we ought to take judicial notice. In my opinion, it would cost more to repair those premises in 1966 than it did in 1961 but what that difference is, I have not the material to decide. In all the circumstances, I would assess the damages in a round sum of £G2,500. I think also that the company should be ordered to deliver up the top floor to the plaintiff on a definite and ascertainable date and that the payment of mesne profits should cease with effect from that date. I should think that that date be the day on which the judgment of this court is delivered.

I would therefore vary the judgment of the court below as follows:

(a) That the company do deliver possession of the top floor premises of house No. 21/22 Antoa Road, Kumasi, to the plaintiff with effect from today.

(b) That the company do pay to the plaintiff by way of mesne profits the sum of £G60 per month from 1 April 1959 to this day.

(c) That the plaintiff do recover from the company £G2,500 by way of damages.

Subject to that, I would dismiss this appeal with costs.

JUDGMENT OF AZU CRABBE J.S.C.

I agree.

JUDGMENT OF BRUCE-LYLE J.S.C.

I also agree.

DECISION

Appeal dismissed.