Blackman et Al v Taurus Services Ltd
| Jurisdiction | Trinidad & Tobago |
| Judge | Nelson, J.A.,Kangaloo, J.A.,John, J.A. |
| Judgment Date | 27 January 2003 |
| Neutral Citation | TT 2003 CA 6 |
| Docket Number | Civil Appeal No. 66 of 1999 |
| Court | Court of Appeal (Trinidad and Tobago) |
| Date | 27 January 2003 |
Court of Appeal
Nelson, J.A.; Kangaloo, J.A.; John, J.A.
Civil Appeal No. 66 of 1999
Mr. J. Phelps and Mr. B. Primus appeared on behalf of the appellants.
Mrs. D. Peake and Mr. C. Williams appeared on behalf of the respondent.
Real property - Lease — Breach of covenant against assignment — No credible evidence of reentry by successor mortgagee — Order for possession granted mortgagee.
This appeal concerns the lease and reversion of a very valuable parcel of land in an exclusive residential area. A successor lessee mortgaged the lease. The present freehold reversioner claims to have forfeited the lease for breach of a qualified covenant against assignment and to have permitted the appellants to occupy the disputed premises. The successor lessee/mortgagor is grossly in default, and the successor mortgagee seeks an order for possession against the appellants pursuant to Order 85 of the Rules of the Supreme Court 1975. Stollmeyer, J. made an order for possession against the appellants on April 29, 1999; the appellants appealed against that order on June 4, 1999.
On May 20, 1958 Highland Park Limited, then the freehold reversioner of a parcel of land comprising 10, 840 square feet known as No. 103 Windsor Drive, Goodwood Park (“the disputed premises”), leased those premises to Arthur Martin Leanza for a term of 199 years for the sum of $6,000.00. This lease contained a covenant against assignment without written consent, which is set out at paragraph 9 hereof.
The devolution of the disputed premises from Leanza to Norbert Shanghai is not clear from the documents exhibited, but there is no dispute that the lease eventually passed to Shanghai.
Shanghai mortgaged the lease to the Workers’ Bank of Trinidad and Tobago (“the old bank”) on March 27, 1982 by a deed of the same date, in which it is recited that the consent of the freehold reversioner was given by a written document annexed to that deed.
By that deed Shanghai purported to assign by way of security for the advance of $427,500.00 “all and singular the said lands and hereditaments to hold the same unto and to the use of the Bank in fee simple…” subject to certain rights of way, the performance of the covenants in the lease and to a proviso for redemption. It is manifest that since Shanghai merely had the residue of the term of years, this deed must be read as a legal assignment of the residue of the term of 199 years to the Bank subject to the equity of redemption. Both parties have proceeded in this Court and in the Court below on that basis.
By Legal Notice No. 124 of 1989 the Minister of Finance by a vesting order under the Banking Act, Chap. 79:01 vested the undertaking of the old Bank including the mortgaged lease and the mortgage debt in the Workers’ Bank (1989) Ltd. (“the new bank”).
By deed dated December 12, 1992 the new bank transferred some of the mortgages vested in it, including the mortgaged lease and the mortgage debt to Taurus Services Limited, the respondent herein. There is no recital in this deed of the previous written consent of the lessor having been obtained.
Highland Park Limited, which later became Goodwood Park Limited (“Goodwood”) and Sandown Park Limited (“Sandown”), which had entered into a contract for sale of the reversion, both in voluntary liquidation, by their liquidator, David Collens, sold the freehold reversion to International Real Estate Consultants Limited (“IRECL”) by a deed dated March 19, 1991. The date of execution of this deed, March 19, 1993, was deposed to in sworn affidavits by David Collens, a signatory to the deed, Veronica Pancham, a witness to the signatures, and the attorney-at-law who witnessed the execution, Judith Bowen. In argument counsel for the appellants accepted that that was the effective date of that deed.
By letter dated April 7, 1999 IRECL purported to forfeit the lease for breach of clause 2(12) of the original 1958 lease to which all assignments of the lease must have been subject. Clause 2(12) of the 1958 lease provided as follows:
“(12) Not to assign underlet or part with the possession of the demised premises or any
part thereof without the lessors’ previous written consent such consent not to be unreasonably withheld in the case of a respectable and responsible person or persons company or corporation.”
The letter was addressed to the new bank, the previous mortgagee, but not to the successor mortgagee, the respondent Taurus. IRECL claimed to have effected a re-entry on the disputed premises. The alleged breach was said to be occasioned by the transfer of the mortgage on December 12, 1992 by the new bank without the written consent of IRECL.
The respondent, Taurus, as the current mortgagee, claimed possession of the disputed premises by originating summons dated December 22, 1998 pursuant to Order 85 of the Rules of the Supreme Court 1975 from the individual appellants, who contended that they were in occupation of the disputed premises under an oral agreement with IRECL, the current reversioner, for a 199 year lease of the disputed premises at a rent of $750.00 per month.
By an agreement dated March 10, 1986 Shanghai agreed to sell the residue of the 1958 lease of 199 years to IRECL. Upon execution of that agreement IRECL, through Miller, a friend of Shanghai and a director of IRECL, took immediate possession of the disputed premises. Shanghai then emigrated to Canada.
During the course of argument in this appeal counsel for the appellants indicated that the appellants no longer relied on this agreement.
The appellants claimed that by letter dated March 22, 1993 IRECL forfeited the lease for non-payment of rent, the lessor never having consented to the assignment in 1982 from Shanghai to the old bank. The deponent Miller later deposed that he had sworn to this lack of consent in error.
On March 26, 1993 IRECL sued the new bank for a declaration that it was entitled to the fee simple absolute in possession of the disputed premises. An ex parte injunction was granted to IRECL, which was discharged on the return on April 5, 1993. No further steps were taken to prosecute the 1993 action against the new bank.
The respondent contends that as successor mortgagee it is entitled to possession as against the appellants because of the failure to repay the mortgage debt and interest. They aver that there was no breach of the qualified covenant against assignment by the transfer of the mortgage to them in 1992 and that no right of forfeiture and/or re-entry arose.
The appellants rest their defence on three planks. First, the freehold reversioner as at the date of the assignment to Taurus was IRECL. Secondly, the consent of IRECL to that assignment was neither sought nor obtained. Thirdly, IRECL forfeited the 1958 lease by a letter dated April 7, 1999 and gave the appellants a fresh lease for a further period of 199 years at a rent of $750.00 per month. Accordingly the appellants were lawfully in possession of the disputed premises.
Before I examine the question of whether there was a breach of the covenant against assignment without written consent I propose to analyse the status of the appellants as occupiers of the disputed premises from 1986 to 1993. The status of the appellants from 1986 to 1993.
Although counsel for the appellants placed no reliance on the purported agreement in 1986 of Shanghai to assign the remainder of the 1958 lease to IRECL, that agreement is important because the evidence of the appellants was that immediately upon the signing of that agreement IRECL took possession of the disputed premises from Shanghai. The deponent Miller on behalf of the appellants further stated that since 1986 the appellants had been in possession of the disputed premises with the consent of IRECL.
Counsel for the respondent, Mrs. Peake, correctly pointed out that Shanghai could not assign his leasehold interest in the disputed premises because he had already assigned his lease by way of security to the old bank in 1982. In the premises since the occupation was pursuant to an ineffective agreement the appellants were trespassers from 1986 to 1993. The only question is whether that status as trespassers changed as a result of any supervening events such as the purchase of the freehold reversion by a deed the effective date of which was March 19, 1993.
Clause 2(12) of the 1958 lease is not an absolute covenant against assignment but a qualified covenant against assignment without the written consent of the lessor. Breach thereof is provided for in clause 4 thereof which is a proviso for re-entry or forfeiture.
Counsel for the appellants submitted that at the time of the transfer of the mortgage to Taurus in 1992 neither the new bank nor anyone on its behalf had requested IRECL's consent to the transfer. Accordingly there was no consent given for the transfer of the mortgage to Taurus.
Counsel for the respondent by reference to the effective date of IRECL's assumption of the freehold reversion, March 19, 1993, established that as at the date of the transfer to Taurus on December 12, 1992 if consent was required it would have had to emanate from the liquidator of Goodwood and Sandown.
Mrs. Peake relied on section 27 of the Conveyancing and Law of Property Ordinance (“the Ordinance”) for the proposition that there was an implied covenant in the 1982 transfer of mortgage to Taurus that “all the covenants contained in the lease” had been observed. The effect of this provision was to place an onus on the appellants to rebut the inference that consent had been obtained.
I agree with counsel for the appellants that section 27 of the Ordinance...
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