Archive for the ‘agreements for lease’ Category

Intended common law lease taking effect in equity

March 11, 2013

In Parker v Taswell ((1858) 2 De Gex & Jones 559, 44 E.R. 1106) P sought specific performance of an agreement to grant a lease for a term of ten years. The agreement was signed by both parties but not under seal and P had gone into possession. T argued that the agreement was unenforceable since the intention had been to create a lease that would be valid at common law. This failed. In principle, the agreement could take effect in equity and the relevant legislation did not lead to a contrary conclusion (570 – 571 per Lord Chelmsford).

T also sought to argue that the terms of the agreement were too uncertain in certain respects. This failed too:

‘The agreement, moreover, is admitted to be sufficiently certain as to all the substantial parts of it, and the only portions of it to which uncertainty is attributed are subordinate matters. No authority has been cited to shew that in such a case specific performance may not be decreed.’ (571 – 572 per Lord Chelmsford).

Does CPO s.31 apply to equitable leases? Does the tenant need to sign an agreement for lease to bring the lease within CPO s.31?

August 26, 2011

CPO s.31 allows assignees of the reversion to enforce the terms of a written agreement for lease. This is true even though only the landlord has signed the written agreement.

In Rye v Purcell ([1926] 1 KB 446) L’s authorised agent wrote to T granting T a lease of property. T remained in possession under the terms of the lease and paid the rent mentioned in the letter. L assigned the reversion and the assignee brought an action claiming that T had failed to keep the property in repair in breach of the terms of the written agreement. T argued that the assignee did not have the benefit of the covenant. It was accepted that the equivalent of section 31 of the Conveyancing and Property Ordinance covered agreements for lease. T argued, however, that there was no agreement as T had never signed any written agreement. The assignee succeeded. The letter was a sufficient agreement to bring the lease within CPO s.31. Further, either party could have obtained specific performance of the agreement based on the landlord’s signature or the tenant’s remaining in possession. In any event, privity of estate arose where T went into possession under the terms of a deed or written agreement executed or signed by L without any need for T to execute or sign a counterpart.

Defendant’s letter to own bankers as CPO s.3 memorandum

January 10, 2011

A letter to a third party by the defendant in an action for breach of contract could be a sufficient memorandum for CPO s.3(1). Damages for breach of an agreement for lease are the difference between the agreed rental and that obtainable on the open market. Where part performance is relied on, the court can grant specific performance but not damages (unless in lieu of specific performance).

In Chan Yat v Fung Keong Rubber Manufactory Ltd ([1967] HKLR 364) the plaintiff and defendant had orally agreed that the plaintiff would grant the defendant a lease of a factory. They had agreed the property, the rental, the term and the commencement date. The defendant then sought to back out of the transaction. A letter by the defendant to its own bankers setting out the agreed terms was a sufficient memorandum. Damages were awarded to cover the difference between the agreed rental and that obtainable on the open market. Obiter Pickering J stated that had the plaintiff succeeded on the basis of part performance (also a real possibility on the facts) then the plaintiff would only be entitled to specific performance or (at the court’s discretion) damages in lieu thereof. The plaintiff relying on part performance does not have an election between specific performance or damages. The judgment also contains interesting observations on the question of whether a solicitor’s letter referring to a draft lease that accompanies it could amount to a memorandum. Pickering J thought that, on the right facts. it could do so.