The landlord sought to enforce the tenant’s repairing covenants. After the tenancy had been created, he had charged his interest. The tenant said that, since the lessor had conveyed his interest by way of mortgage, the right to sue lay exclusively with the mortgagee.
Held: Section 10 of the 1881 Act conferred on a mortgagor, whose land was let before the execution of the mortgage, the right to sue on the tenant’s covenants.
Farwell LJ set of the historical purpose of section 10: ‘The section provides, in our opinion, for two distinct matters, quite independent one of the other: it first annexes rent and the benefit of covenants to the reversion, notwithstanding the severance of such reversion, and it then makes rent recoverable and covenants enforceable, ‘by the person from time to time entitled, subject to the term, to the income of the whole or any part’ of the demised land. .
The question then becomes simply one of fact: Who is entitled to the income of the mortgaged property? Where land is both demised and mortgaged, the answer depends on whether the mortgagee has taken possession or given notice of his intention to take possession of the mortgaged property or not: if he has done so then he is entitled; if he has not, the mortgagor was always and is still so entitled, and he receives and retains such income for his own benefit without any liability to account either at law or in equity.
The 10th section makes no alteration in the rights of anyone, but merely alters procedure, so as to give the right of action to the person entitled to the proceeds of such action. This is plain if the true nature and character of a mortgage is borne in mind; it is a mere security for the debt, and (subject to the paramount liability to this debt) the mortgagor retains an estate which can be granted and demised, and which descends to the heir. .
As to the ‘practical difficulties’ for the mortgagor in enforcing the lease covenants, it was probable that difficulty seldom arose, because it was to the interest of the mortgagee as well as of the mortgagor that the lessee’s covenants should be performed: ‘It is plain, therefore, that a construction of s 10 that obviates these technical difficulties interferes with no rights, but merely simplifies procedure. It is urged that s 10 falls under Part III of the Act, headed ‘Leases,’ and that ‘Mortgages,’ form Part IV, and that mortgages would have been expressly mentioned in s 10 if leases of land in mortgage had been intended. We are unable to follow this. The Act is not constructed in watertight compartments. The object of the Act was to amend the law of property generally, and mortgages and leases constantly overlap; there are probably few large estates in England all or parts of which have not been in mortgage for the last two centuries at least. The words in s 10, ‘person entitled to the income,’ are perfectly general. ‘Income,’ by s 2(3) includes ‘rents and profits,’ and it would be difficult to find a better definition of a mortgagor in possession than the person entitled to the rents and profits of the land, or to the income thereof, if the land is subject to a lease. It is certainly in accordance with the intention expressed in s 25(11) of the Judicature Act, 1873, that this should be so, and it seems probable that when, in 1878, it was suggested in Fairclough v Marshall 4 Ex D 37 that s 25(5) had this defect, s 10 of the Conveyancing Act, 1881, was framed designedly to cure it.’
Judges:
Farwell LJ
Citations:
[1909] 2 KB 484
Statutes:
Jurisdiction:
England and Wales
Cited by:
Cited – Rhodes v Allied Dunbar Pension Services Ltd CA 1989
The intermediate tenant had charged the lease to the bank, which appointed receivers. Both the sub rent and the head rent fell into arrears. The head landlord then served a notice direct on the subtenant requiring him to pay the rent direct to the . .
Cited – Schalit v Joseph Nadler Ltd CA 1933
Mr Nadler was a lessee of property, part of which he sublet to the plaintiff. In 1931 he made a declaration of trust, under which he declared that the property was held in trust for his company, Joseph Nadler Ltd. Shortly after the company purported . .
Cited – Scribes West Ltd v Relsa Anstalt and others CA 20-Dec-2004
The claimant challenged the forfeiture of its lease by a freeholder which had acquired the registered freehold title but had not yet registered its ownership. The second defendant had forfeited the lease by peacable re-entry for arrears of rent, and . .
Lists of cited by and citing cases may be incomplete.
Land
Updated: 07 May 2022; Ref: scu.264581