Walsh VS Lonsdale

This is one of the most frequently cited authorities on the effect of the Judicature Acts so far as the fusion of law and equity is concerned. Essentially the question down on whether the defendant could bring a legal remedy (distress) with respect to a lease which formerly would have been regarded as equitable only (effectively an agreement to grant a lease rather than one in proper legal form).

Facts

The Defendant on the 29th of May 1879, agreed to grant and the Plaintiff to accept a lease of a mill for seven years at the rent of 30s.

 year for each loom run, the Plaintiff not to run less than 540 looms. The lease to contain such stipulations as were inserted in a certain lease of-the 1st of May, which was a lease at a fixed rent made payable in advance, and contained a stipulation that there should at all times be payable in advance on demand one whole year’s rent in a addition to the proportion, if any, of the yearly rent due and unpaid for the period previous to such demand.

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The Plaintiff was let into possession and paid rent quarterly, not in advance, down to the 1st of January, 1882, inclusive, having run in 1881 560 looms. In March, 1882, the Defendant demanded payment of $1000 14s. 840 as one whole year’s rent for 560 looms at 30s. , and $165 as the proportionate part of the rent from the 1st of January last), and put in a. distress. The Plaintiff thereupon commenced his action for damages for illegal distress, for an in- and for specific performance, and moved for an injunction.

Fry, J. , granted the injunction on the terms of the Plaintiff paying the into Court. The Plaintiff appealed. JESSEL, M. R. It is not necessary on the present occasion to decide finally what the rights of the parties are. If the Court sees that there is a fair question to be decided it will take security so that the party who ultimately succeeds may be in the right position. The question is one of some nicety. There is an agreement for a lease under which possession has been given.

Now since the Judicature the possession is held under the agreement. There are not two estates as there were formerly, one estate at common law by reason of the payment of the rent from year to year, and an estate in equity under the agreement. There is on]y one Court and the equity rules prevail in it. The tenant holds under an agreement for a lease. He holds, therefore, under the same terms in equity as if a lease had been granted, it being case in which both parties admit that relief is capable of being by specific performance.

That being so, he cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted. On the other hand, he is protected in the same way as if a lease had been granted; he cannot be turned out by six months’ notice as a tenant from year to year. Be has a right to say, “ I have a lease in equity, and you can only re-enter if I have committed such a breach of covenant as would if a lease had been granted have entitled you to re-enter recording to the terms of a proper proviso for re-entry.  That being so, it appears to me that being a lessee in equity he cannot complain of the exercise of the right of distress merely because the actual parchment has not been signed and sealed. The next question is, how ought the lease to be drawn? And that is a question of some nicety. I do not wish now finally to decide it, and on an application of this kind it is not necessary to do so, but I think the Court is bound to say what its present opinion is, because that is material on the question of what ought to be done until the’ trial.

The whole difficulty arises from a single clause.

Instead of taking the trouble to state in detail what covenants the lease was to contain they have adopted this short form:— “The lease to be prepared by the solicitor to the lessorand approved by the solicitor to the lessee, and to contain such covenants, provisos, powers, and conditions as are usually inserted in leases of a similar nature, and particularly those inserted in a lease of the Newfield Mills, Darwen, dated the 1st of May instant, made between T. A. Aspden of the one part, and Robert Bradley of the other part, or such of them as can be made applicable to the tenancy hereby agreed to be created. ” When we look at the lease of the Newfields Mills we find that it is a lease at a rent certain payable beforehand, and the question is how far that provision can be made applicable to the present very peculiar agreement. That agreement provides the lessor at his own expense is to find steam power for driving and running, the machinery, and that the rent is to be $ 10s. for every loom run, but for the first year the lessee is not to run less than 300, and afterwards not less than 540 looms. ‘Then there is a provision that the lessee is to have the right, whenever he shall think fit, to find the steam power for himself, and in that case his rent is to be 30s. per loom. There is a further proviso that until the lessee shall find the steam power the engine-house, boiler-house, mechanics’ shop, stable, and yard adjoining thereto shall be excluded from the demise.

As I read that it means that when the lessee once elects to provide his own steam power, the excepted particulars, are included in the demise, and then the lessor is no longer bound to find the steam power because he has demised the, very thing that produces the steam power, and the lessee is now the lessee of the engine-house, and the rest, and has to find steam power for himself. The lessee has exercised the option to find his own steam power, and the result is that now he is only liable to pay 30s. er loom. Now the lessee agrees to run not less than 540 looms, and the neat question is, whether in drawing the lease a dead or minimum rent ought to be reserved for 540 looms, or is it to be left on covenant. My present opinion is that there ought to be a dead rent. There is no longer any obligation on the lessor to find the steam power; and it appears to me, therefore, that it would be a right thing to reserve in the lease a dead rent of ? 810, being at the rate of 30s. a loom for 540 looms.

If that is so, the stipulation as to paying rent beforehand can apply to that $ 810 a year, and the covenants and provisions in the lease of the Newfield v Mills, Darwen, could be made applicable to this minimum rent. Therefore it is my present opinion, though I do not give it as a final opinion, that the rent is payable beforehand to the extent of $ 810. The result, therefore, will be to vary the order of the Court below by making- the sum to be paid into Court $ 810 instead of $ 1005 14s. The Plaintiff will pay the costs of the appeal.

Consider this issue again when you examine the nature of a trust and particularly the nature of the beneficial interest. Summary of case The plaintiff obtained from the defendant an agreement to grant the Lease of a mill, but the formalities for the creation of a lease were never completed. When the plaintiff defaulted on his payments, the defendant attempted to recover his losses by Distraint. The plaintiff sought an injuction to prevent the distraint on the basis that, since no lease had been granted, he was not bound by its provisions.

The Court of Appeal held that since it could (since the Judicature Acts) exercise the remedies of Equity, it could apply the principles of equity. Since 'equity takes as done that which ought to be done', the Court was prepared to treat the lease as having been granted. The Court of Appeal held that as it now had jurisdiction to apply equitable principle, it would regard that as done which ought to be done, and so the lease had been effective in absence of the formality. The Walsh v Lonsdale principle is now embodied in the recognition by the courts of the equitable lease.

Equitable lease

An equitable lease is created when one person contracts with another to assign or create a lease, in circumstances where the lease should be created by deed or registered. For most purposes the lessee will be treated in litigation as if the formalities had been observed, under the equitable doctrine of 'equity sees as done that which ought to be done'.

Lease

A lease is a form of Estate in land in which the landlord confers the right of occupation of the land on the tenant for a fixed period of time. The lease is a limited form of ownership: the tenant will be expected to surrender the property to the landlord at some (perhaps distant) point in time. DISTRAINT Distraint, or distress, is the procedure of seizing a person's goods to recover losses caused by that person's Unlawful behaviour. It is believed that a general right to distrain still exists in modern English law, although one would have to be very careful how it was exercised. In