The defendants held a lease from the plaintiffs of a garage, the lease containing a solus-site agreement, preventing the defendants from selling any petrol but the plaintiffs’ and requiring the defendants to pay for petrol on delivery. The defendants missed two payments and the plaintiffs demanded payment in advance. Both sides were in serious breach of the contractual arrangements. The defendants found another supplier, whom they continued to use even when the plaintiffs offered to resume cash on delivery. When the plaintiffs sued for an injunction to enforce the solus-site agreement, the defendants claimed that the plaintiffs had repudiated by demanding payment in advance and that they had accepted the repudiation by going to other suppliers. The question was whether this by itself had put an end to the solus-site covenant by acceptance of repudiatory conduct or whether, when the plaintiffs offered to go back to the contractual arrangement, they were still in a position to put themselves in the right.
Held: A lease cannot be ended by the tenant accepting a repudiatory breach by the landlord: ‘Mr Thompson for the dealer says that the oil company have repudiated their contract by insisting on the new stipulation of payment before delivery. He says that the dealer accepted that repudiation. He treated the agreement as at an end and got deliveries elsewhere. Seeing that the repudiation was accepted, the oil company can no longer insist on the agreement being performed.’
Lord Denning MR said that the plaintiffs’ demand for advance payment was repudiatory and that the defendants ‘had a good deal of justification’ for finding another supplier. The covenant was not severable from the rest of the lease and: ‘The second point is: what is the effect of the repudiation by the oil company which was accepted by the dealer? Does it put an end to the lease? I think not. A lease is a demise. It conveys an interest in land. It does not come to an end like an ordinary contract on repudiation and acceptance. There is no authority on the point, but there is one case which points that way. It is Leighton’s Investment Trust Ltd v Cricklewood Property and Investment Trust Ltd [1943] KB 493 . . . [1945] AC 221. Lord Russell of Killowen and Lord Goddard were both of opinion that frustration does not bring a lease to an end. Nor I think does repudiation and acceptance.’
Edmund Davies LJ said that the elements of the lease were not severable and must stand or fall together, and: ‘Despite the repudiation by the Plaintiffs of part of the lease and the defendants’ acceptance thereof, I cannot accept that, as to the latter’s occupancy during the remainder of the 14-year term, they would be able to say, ‘We are entitled to remain in possession without regard being paid to where we obtain our petrol supplies.’
Stephenson LJ said: ‘This complex of lease and trading agreement has not been repudiated.’
Judges:
Lord Denning MR, Edmund Davies LJ, Stephenson LJ
Citations:
[1972] 1 QB 318
Jurisdiction:
England and Wales
Cited by:
No longer binding – Hussain v Mehlman CC 5-Mar-1992
(County Court) The defendant landlord granted the plaintiff a three year assured shorthold tenancy. He now appealed a finding that he was in breach of an implied covenant to maintain the space heating, and otherwise. The tenant had returned the . .
Cited – Reichman and Another v Beveridge CA 13-Dec-2006
The defendants were tenants of the claimant. They vacated the premises and stopped paying the rent. The claimant sought payment of the arrears of rent. The defendants said that the claimants should have taken steps to reduce their damages by seeking . .
Cited – Lidl UK Gmbh v Hertford Foods Ltd and Another CA 20-Jun-2001
The respondent had contracted to supply tinned corned beef to the appellant, but had become unable to fulfil the orders because of industrial action in Brazil. The appellant had purchased supplies elsewhere and set off the cost of that against the . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 14 May 2022; Ref: scu.247625
