The defendant had agreed at auction to buy a leasehold house from the trustees for sale under a will. The lease contained a covenant on the lessee to keep the premises insured against fire, with a clause for forfeiture in the event of non-performance of any of the covenants. The auction was in June 1858, and completion was fixed for July 20, 1858, but was delayed until August 26, 1858. The trustee who was acting for all the trustees, anticipating completion in July, renewed the insurance policy for one month only, and the policy expired on July 24, 1858. On the completion date the purchaser refused to complete on the ground that the lease was forfeited by reason of the breach of covenant. The vendors refused to obtain a waiver of the forfeiture from the lessors (Dulwich College) as a condition of completion. The purchaser then gave notice that the contract of purchase was at an end, and demanded the return of his deposit. The defendant argued that the failure to insure resulted in the title becoming defective.
Held: The question posed was ‘how long did it continue to be the duty of the vendors . . to keep up the insurance, and to perform the other covenants in the lease so as to prevent a forfeiture?’ There was an express covenant to clear all outgoings (including the insurance) until the date fixed for completion, which carried with it the implication that the vendors were not responsible thereafter. The question was whether the failure to inform the purchaser that the insurance lapsed, and the dropping of the insurance, entitled the purchaser to rescind the contract, and that ‘question must be tried upon the same grounds as if upon the dropping of the insurance the lessors had actually entered for the forfeiture and avoided the lease’. In the ‘special and peculiar circumstances’ specific performance was not decreed: the conduct of the trustee operated as a trap and caused great risk to the purchaser, and a court of equity would not lend the vendors its assistance. In the case of a sale of leasehold interests the vendor is under a duty to give good title, and therefore (subject to the express terms of the contract) to take care not to take steps which may result in forfeiture.
Citations:
(1859) 1 Drew and Sm 1
Jurisdiction:
England and Wales
Cited by:
Cited – Englewood Properties Limited v Patel and Another ChD 16-Feb-2005
The claimant was a property developer, which sought to sell a row of shops at auction. One lot was a Woolworths store, where the company owned both freehold and leasehold interests, with Woolworths occupying an underlease, which the claimant had . .
Lists of cited by and citing cases may be incomplete.
Land
Updated: 13 May 2022; Ref: scu.223737
