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BCL Law Notes Commercial Remedies BCL Notes

Rainbow V. Tokenhold Notes

Updated Rainbow V. Tokenhold Notes

Commercial Remedies BCL Notes

Commercial Remedies BCL

Approximately 497 pages

These are detailed case summaries (excerpts from cases - not paraphrased) I made during the Oxford BCL for the Commercial Remedies course....

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Rainbow v. Tokenhold

Facts

The plaintiff, Rainbow Estates Ltd., is the freeholder of Gaynes Park Mansion, Epping, Essex, a grade II listed building. The first defendant, Tokenhold Ltd., is the leaseholder of the mansion (excluding its eastern annex) and the second defendant, Mr. Herskovic, is the leaseholder of the eastern annex.

In 1976 Mr. Herskovic and his brother bought the mansion, and subsequently the freehold was transferred to Venrich Ltd., a 100 company owned by Mr. Herskovic and his brother. In about 1989 Barclays Bank Plc. advanced money on the security of the mansion. In 1993, when the bank was considering enforcing its charge on the property, Mr. Herskovic and his brother revealed to the bank the existence of two leases of the property. Each of the leases was dated 15 December 1987, and each was granted by Venrich: one was to Tokenhold, and comprised the mansion other than the eastern annex; the other was to Mr. Herskovic and comprised the eastern annex. In each case the tenants were granted leases until 14 December 2004 at a rent of 5,000 per annum, with the tenants covenanting "to keep and maintain the property in good and tenant-like repair throughout the term" and "to permit the landlord and its agents at all times reasonable access to examine the condition of the premises.”

In June 1991 Venrich was struck off the Companies Register for failure to comply with filing requirements, and at some time in 1995 the bank applied to have it restored in order to present a winding up petition and appoint a liquidator. In 1996 the liquidator sold the property to Senator Properties Ltd. for 150,000, which on 5 November 1996 then transferred it to Rainbow for 230,000.

Subsequently, in the course of correspondence and in these proceedings Tokenhold and Mr. Herskovic maintained that no rent was due under the leases, and that there was no repairing obligation on the tenants, because the leases were subject to two agreements dated 17 November 1987 under which the repairs were to be the responsibility of the landlord, Venrich, and under which the cost of work undertaken by the tenants could be deducted from the rent.

In an earlier judgment, I decided (on the assumption that the agreements and the leases were genuine documents): (a) that there was a conflict between the agreements and the leases; (b) that, in general, where there is a conflict between a lease and a prior agreement, the rights of the parties are governed by the lease; (c) that there was no credible evidence that the agreements and the leases were part of one transaction. The consequence was that the defendants were responsible for repairs and were in arrears with the rent.

Question

Whether a covenant by the landlord to keep the property in repair can be enforced specifically.

Holding

Earlier view – no specific performance of the obligation to repair

Until relatively recently it was generally accepted that repairing covenants could not be specifically enforced, whether they were landlord's covenants or tenant's covenants. Lord Eldon L.C. said, at p. 405, that the landlord:

“may bring an ejectment upon non-payment of rent: but he may also compel the tenant to pay rent. He cannot have that specific relief with regard to repairs. He may bring an action for damages: but there is a wide distinction between damages and the actual expenditure upon repairs, specifically done. Even after damages recovered the landlord cannot compel the tenant to repair: but may bring another action…”

Two reasons for not permitting specific enforcement of covenant to repair

Mutuality: But, said Lord Eldon L.C.: “The difficulty upon this doctrine of a court of equity is, that there is no mutuality in it. The tenant cannot be compelled to repair.” The view that the landlord's covenant could not be specifically enforced came to be based on the theory that there was no mutuality because the tenant's covenant could not be specifically enforced.

Constant Supervision: The view that the landlord's covenant could not be specifically enforced came to be based on the theory that there was no mutuality because the tenant's covenant could not be specifically enforced, or because the works could...

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