Lord Elphinstone v Monkland Iron and Coal Co: HL 29 Jun 1886

Lease – Landlord and Tenant – Landlord’s Consent to Assignation
Where a landlord has right to refuse to accept assignees of the tenant’s it is material evidence of his consent to an assignation that the assignee has with his knowledge and without objection by him obtained possession of the subject, but such evidence is not conclusive of his acceptance of the assignee as tenant, and it may therefore be negatived by the other circumstances of the case.
By a contract between landlord and tenant it was provided that the tenant might lay down mineral refuse on certain land, but should within a certain time level and soil over such deposit, and in the event of failure to do so within the time specified, should pay the landlord, to enable him to complete the work, ‘a sum of money at the rate of pounds 100 per imperial acre for all land covered with slag and not levelled and soiled within the foresaid period,’ and interest was to be payable from the date of failure. Held ( rev. judgment of Second Division) that the damage here specified was not penal but pactional, in respect that there was a single obligation, and the sum to be paid bore a strict proportion to the extent to which it was unfulfilled.
Observed (by Lord Watson) that when a single lump sum is made payable by way of compensation on the occurrence of one or more of several events, of which some may occasion serious and others but trifling damage, the presumption is that the parties intended the sum to be penal and subject to modification.
A public company was wound up voluntarily. A claim was lodged in the liquidation by one claiming that the company was liable to fulfil all the obligations and liabilities incurred or to be incurred under certain contracts to which he and the company were the parties. The liquidators made no deliverance on his claim, but settled the claims of other creditors, and then after a correspondence as to whether his claims remained entire against the company or had been transferred by assignation of its interest to a new company and become claims against it, gave him notice that unless proceedings were taken against them within a certain time they would distribute the surplus assets among the shareholders. He brought an action to have it declared that the company was still bound by the contracts with him, and that the liquidators were bound to set aside so much of the assets as should be required to meet his claims. The Second Division, in respect that there was no present debt or liability by the company, dismissed the action, leaving him to claim in the liquidation. The House reversed this judgment, holding that when a limited company is being wound up voluntarily, a creditor asserting future or even contingent claims may have the liquidators interpelled from dividing the surplus assets among the shareholders without making any provision to meet his claims when they arise.


Lord Chancellor Herschell, Lords Blackburn, Watson, and Fitzgerald


[1886] UKHL 870, 23 SLR 870





Landlord and Tenant

Updated: 05 July 2022; Ref: scu.637735