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G. B. OLLIVANT LIMITED
V.
SIR ADEYEMO ALAKIJA
THE WEST AFRICAN COURT OF APPEAL, HOLDEN AT LAGOS, NIGERIA
12TH DAY OF MAY, 1950
2PLR/1950/39 (WACA)
OTHER CITATION(S)
2PLR/1950/39 (WACA)
(1950) XIII WACA PP. 63 – 67
LEX (1950) – XIII WACA 63 – 67
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BEFORE THEIR LORDSHIPS
BLACKALL, P.
AMES, AG. C.J. (NIGERIA)
LEWEY, J.A.
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BETWEEN:
G. B. OLLIVANT LIMITED – Defendants-Appellants
AND
SIR ADEYEMO ALAKIJA – Plaintiff-Respondent
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ORIGINATING COURT(S)
Appeal from the Supreme Court, W.A.C.A. CIV.APP.3216/50
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ISSUE(S) FROM THE CAUSE(S) OF ACTION
REAL ESTATE AND PROPERTY LAW – LAND:- Landlord after Tenant – Right of purchase of reversion to claim rent paid in advance by tenant to former landlord – Effect of purchase having actual or constructive notice of such advance payment.
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CASE SUMMARY
The appellants were the defendants.
Toe respondent became the landlord of the appellants, having bought the right, title and interest in the property of one da Silva at a sale in July, 1947, made by the Sheriff under a writ of fi. fa. and obtained the usual certificate of purchase.
The trial Court found as a fact that at the sale the bailiff announced that rent had been paid in advance, and that this statement was beard by the respondent’s agent, who attended the sale on his behalf and bid for him.
The appellants had been granted three leases of the property, the second lease being current at the date of the sale. In April, 1944, during the currency of the second lease, the appellants made two payments of rent in advance. The first payment covered all rents up to the end of the second lease and was evidenced by a receipt which stated that the payment completed all obligations under the second lease. The second payment covered the first thirteen years of the third lease.
The respondent gave notice to the appellants immediately and required them to pay rent to him from the 1st of January, 1948. The appellants refused on the grounds that they had already paid. The respondent took action in the Supreme Court against the appellants, claiming forfeiture of the lease for non-payment of rent, and for rent for the year 1948, which was part of the first payment covered by the receipt already mentioned. The trial Judge gave judgment for the respondent, following certain decisions to the effect that where rent has been paid in advance, the assignee of the reversion bas a right to recover again from the tenant rent due after notice of assignment.
The appellants appealed on the ground that where the tenant has paid his rent in advance to the landlord, prior to the sale of the reversion, the purchaser of the reversion with actual or constructive notice of such payment cannot claim to be paid again.
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DECISION(S) OF THE WEST AFRICAN COURT OF APPEAL
Held (allowing the Appeal) that:
1. (per Ames, Ag. C.J.) It was still good law that, normally, where rent has been paid in advance the assignee of the reversion has the right to recover again the rent due after notice of the assignment; but that rule did not apply in the special circumstances of this case. The receipt given in respect of the first payment of rent in advance was more than a payment in advance and amounted to an acceptance of a lump sum in discharge of all rent to become due under that lease. After that transaction the lessors could not have sued the appellants for any rent due under that lease, and the respondent could not be in a better position.
2. (per Blackall, P.) A purchaser is affected by notice of an equity where it has come to the knowledge of his agent in the course of the transaction. The respondent had not only constructive but actual notice of the appellant’s equity.
3. In these circumstances it would be clearly inequitable to permit the respondent to exact from the appellants a rent already paid.
Cases referred to:
(1) de Nicholls v. Saunders, L.R.C.P. 589.
(2) Cook v. Guerra, L.R.C.P. 132.
(3) Greene &, Another v. Rheinberg, L.T.R. 104, W.S. 149, 1911.
(4) Ashburton v. Nocton, L.R. 1915, 1 L.H.D. 274.
(5) Nash v. Grey, cited in Wood/all, 24th Edition, 324.
(6) Johnston v. Debs, 13 N.L.R. 73.
(7) Barnhart v. Greenshields (1893), 9 MOO. P.C.C. 18.
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MAIN JUDGMENT
The following judgment was delivered:
AMES, AG. C.J.
This appeal raises an interesting point of the law of Landlord and Tenant.
The appellants are the tenants of the property in question, which is at Lebanon Street, Ibadan. The respondent is now the landlord, having bought the “right, title and interest” in the property of one da Silva at a sale in July, 1947, made by the Sheriff under a writ of fi. fa and has the usual certificate of purchase issued by the Court and dated 29th September, 1947, as one of his documents of title.
Da Silva was not the original lessor; the original lessor had been the father of his wife, both of whom have died. It was argued before the Judge in the Court below that da Silva’s interest in the property, which the respondent bought, was not such as to have enabled him to give a valid discharge for the rent, for which the respondent sued. The learned trial Judge held, however, that it was; and there is no appeal on that point, and so this appeal has to be decided on the basis that da Silva was the landlord and reversioner at the time of the Sheriff’s sale.
There have been three leases of the property to the appellants. In the first, the original lessor in December, 1923, leased it to the appellant for a term of ten years from the 1st January, 1926. The second lease was in March of 1929, by which time the original lessor had died, and by it the executors and trustees of his will leased the property to the appellants for a further term of fifteen years from the expiration of the first lease. This third lease is still current. The third lease was in February, 1944, by which time da Silva’s wife had also died, and by it the surviving executor and trustee of the will and da Silva leased the property to the appellants for twenty-one years from the 1st day of January, 1951, which will be the day after the expiration of the current lease.
In April, 1944, the appellants made two payments of “rents in advance” (as they are stated in the receipts to be) to their then landlords, one in respect of rent due under the second and current lease, and the other in respect of rent due under the third lease. The former paid the rent due under that lease up to the end of the term (less deduction of interest at 6 per cent) and the receipt, after setting out the dates and figures, ends with this statement:-
“This payment completing all obligations under lease dated 19th December, 1923, supplemented by an extension dated 19th March, 1929, in respect of the property at Lebanon Street, Ibadan.”
This receipt was signed by the lessors of the second lease. The other payment was for rent (less interest at 6 per cent) on the third lease for the first thirteen years of its term. These two payments have been referred to as payments of rent in advance, and I will call them the first and second payments, respectively.
These first and second payments, of course, were before the date of the sale by the Sheriff, and at the sale the bailiff announced, as the Judge found the fact to be that rent had been paid in advance, without saying how much or for how long. The respondent was not present at the sale, but his agent, deputed to bid on his behalf, was present. Moreover, the respondent knew, as he admitted, that the property was leased to the appellants.
The respondent gave the appellants notice of his purchase immediately and required them to pay the annual rent to him thereafter. That was in 1947.
On the 1st January, 1948, the appellants failed to pay him any rent for 1948. This led to correspondence between the parties, the appellants saying that they had already paid the rent then due. The respondent claimed that they were liable to pay him again, and, as they did not, he took this action against them, claiming a declaration that the appellants had incurred a forfeiture of their lease through non-payment of rent, and secondly the payment of £350 being annual rent due for the period up to the 31st December, 1948, or alternatively, £262 10s. 0d being rent payable up to the 30th March, 1948, and thirdly recovery of possession of the property. The suit was heard in the Supreme Court, Ibadan, and on the 12th March last year, judgment was given in favour of the respondent for £262 10s. 0d., being rent payable up to the 30th March, 1948. The ground of appeal is (there was one other, but it was abandoned) that –
“the learned trial Judge was wrong in holding that where a lessee has paid his rent in advance to his lessor prior to the sale of the reversion, the purchaser of the reversion with actual or constructive notice of such payment, can claim to be paid again the rent covering the same period “.
The actual sum claimed is part of the first payment, which was, as I have said, called a payment of rent in advance. The law as to payment of rent in advance, which is followed by an assignment of the reversion, is quite clear. It was stated thus by Willes, J in the case of de Nicholls v. Saunders (1):-
” … payment of rent before it is due is not a fulfilment of the obligation imposed by the covenant to pay rent, but is, in fact, an advance to the landlord, with an agreement that on the day when the rent becomes due such an advance shall be treated as a fulfilment of the obligation to pay the rent. The receipt of the rent could not be treated here as a discharge by the landlord, because by assigning the reversion before the rent was received by him he had parted with the power of giving such a discharge.”
The case of Cook v. Guerra (2) is to the same effect and shows that where rent has been paid in advance, the assignee of the reversion has a right to recover again from the tenant rent due after notice of the assignment to the tenant, but not rent due before notice to the tenant of the assignment.
Both these cases were decided before the Judicature Acts, but it is clear that they are still good law.
The former of them, de Nicholls v. Saunders (1), was referred to in Greene & Another v. Rheinberg (3), of 1911, in the Appeal Court, in which Farwell, J., in his judgment, distinguished it as being of no application to that case. In 1915, and also in the Appeal Court, both de Nicholls v. Saunders (1) and Cook v. Guerra (2) were referred to in Ashburton v. Nocton (4). Indeed, the correctness and currency of the two decisions were not really questioned. What was questioned was whether the principles stated in them applied also to an assignment by way of equitable mortgage of the reversion after a payment of rent in advance.
If these were the only aspects of the matter it would seem that the respondent’s argument should prevail. The appellant, however, relies on the case of Greene & Another v. Rheinberg (3), which I have already mentioned. This case was not cited to the Judge in the Court below; and, as it happens, Woodfall’s Landlord and Tenant does not mention it, although Halsbury does. The argument of the appellant is that this case shows that a different principle should be applied to the facts in the appeal now before us. The relevant facts of Greene & Another v. Rheinberg (3) can be stated quite briefly. One, Reeder, let a house to Rheinberg for four years certain from 29th September, 1908, and then from year to year at the yearly rent of £75 payable on the usual quarter days by equal amounts. The agreement for the lease was made in July of the year and Rheinberg entered into possession. In October of the same year he paid Reeder £219 and Reeder gave him the following documents:-
“In acknowledging receipt of cheque for £219 10s 0d in full settlement of rent of No. 25. The Avenue, for the four years ending 29th September, 1912, I beg to state that I am willing to do all reasonable small repairs that may be necessary from time to time during that period, and that the prepayment of rent will not affect the conditions of the agreement of the 20th July, 1908, during that time. But I agree that you shall have the option to continue the tenancy thereafter at the annual rent of £70. If you should decide at the end of the four years to purchase the house, then I am agreeable to accept the sum of £800 for same.”
After this payment but still in the same October, Reeder mortgaged the property to Greene, who knew nothing of the payment of rent in advance, although he knew of the existence of the lease and had seen the counterpart lease. The Court of Appeal held that Greene was bound by the arrangement made between Rheinberg and Reeder and could not recover from the former any part of the rent reserved by the lease.
The reason for this decision was that Reeder agreed to accept a lump sum (less than the total of rent would have been) paid down in satisfaction of the rent for the whole of the term of four years, and that after that agreement the landlord could not have sued or distrained upon the tenant for any of that rent. In other words, the landlord, on payment of the lump sum, agreed to, and did, release the defendant from his obligation to pay rent. That payment to Reeder was thus more than merely a payment in advance of the rent to the landlord such as took place in the other cases which have been mentioned.
For example, in Ashburton v. Nocton (4) the landlord got from his tenant six months’ rent before it was due; and an advance payment of rent like that does not prevent a landlord from suing for the rent when it is due, but it provides the tenant with a good equitable defence to the action; (this was the decision in the case of Nash v. Grey (5), of which no report is available here) for this statement of the law.
In the case of Greene v. Rheinberg (3), on the other hand, after the receipt of the lump sum, Reeder, the lessor, could not have sued for the rent, and therefore, neither could his assignee. Swinfen Eady, L.J., put it thus in his judgment in Ashburton v. Nocton (4):-
“Greene v. Rheinberg (3) was a clear case, as there the landlord had, prior to the mortgage, released the rent to the lessee and tenant in possession, and under the doctrine of Daniels v. Davison the subsequent mortgagee was effected with notice of the interest which the tenant had in the land.”
I have already set out the terms of the receipt for the first payment, and the agreement made in reference to the payment. Although stated to be a payment of rent in advance, it was, in my opinion, more than that, and was an acceptance of a lump sum in discharge of all rent to become due under that lease (the second and current one). After that transaction the lessors could not have sued the appellants for any rent due under that lease. The respondent cannot be in any better position than they. What was sold to him by the sheriff was not the reversion in so many words. It was the unspecified right, title and interest of the judgment debtor in the property. That is the effect of section 49 of the Sheriffs Enforcements of Judgments and Orders Ordinance (Cap. 205) and that was all that is to be deemed to have been transferred to him by the certificate of purchase.
This suit has brought to light more precisely what it was that the respondent bought. It now comes to light that he bought the reversion subject to an equitable right possessed by the tenants, namely, the right to (to adopt the words of Farwell, J., in Greene v. Rheinberg (3)) an injunction restraining any attempt by the landlord to enforce payment of the rent (which had been released by the acceptance of the lump sum in satisfaction thereof).
In my opinion, therefore, the learned Judge ought to have given judgment for the defendants. I think this appeal should be allowed and the judgment appealed from he set aside and in its stead judgment should be entered for the defendants.
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BLACKALL. P.
I agree that this appeal should be allowed, but I prefer to rest my decision upon the broad ground that a purchaser is affected by notice of an equity where it has come to the knowledge of his agent in the course of the transaction. (See Snell’s Principles of Equity, 22nd Edition, page 40.)
Hallinan, J., conceived himself bound by a passage in Woodfall on Landlord and Tenant which was based on an authority cited with approval in Johnston v. Debs (6). The passage in question is undoubtedly a correct statement of the law as to the legal position of a tenant who has paid his rent before it became due: such a payment does not relieve him of his legal obligation to pay rent to an assignee of the reversioner where he received notice of the assignment before the rent became due.
But the Courts of Equity have ever been vigilant to prevent parties exercising their legal rights in an unconscionable manner, and the equitable doctrine of notice was evolved for that purpose. And so, where a tenant is in possession, a purchaser with notice is bound by all the equities which the tenant could enforce against the vendor. This equity of the tenant extends not only to interests connected with his tenancy, but also to interests under collateral agreements. (Barnhart v. Greenshields) (7).
In the present case the former landlord, having received rent in advance from Messrs. G. B. Ollivant (the appellants), was in equity bound to treat that advance as a fulfilment of the latter’s obligation to pay rent and the respondent who purchased the right, title and interest of the former landlord, is bound by the tenant’s equity against him.
Now, in the appeal before us the respondent had not only constructive but actual notice of the appellant’s equity for Hallinan, J. found as a fact that the bailiff announced at the sale that it was understood that rent had been paid in advance up to 31st December, 1963.
Further, the learned trial Judge was satisfied on the evidence before him that the witness Somorin, whom the respondent had appointed as his agent at the sale, heard this announcement. There was also the evidence of Dr Agbaje one of the respondent’s witnesses, who said that he was aware that the rent had been paid in advance and consequently he was prepared to bid up to £1,500 only, although he would otherwise have gone to £3,000. As a result, no doubt of the bailff’s announcement, other bidders likewise held back, so the respondent was able to purchase for £2,000 a property which is let at a rent of £350.
In these circumstances it would be clearly inequitable, in the popular as well as the legal sense, to permit the respondent to exact from the appellants a rent which they have already paid.
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LEWEY. J. A.
I have had the advantage of reading the judgments which have now been delivered by my brother Ames and the President, and I agree that this appeal should be allowed and that the judgment of the Court below should be reversed,
Appeal allowed.
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