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Nl:~C(JT.Ll\TING ( Dl~AFTj NC AND hr-1END.l.~G

COMl"IEHC lAL Lgl\.SES

-~--

P. . GEN?:HltL
_ _ r .... + _ _

(a) ~ntroduction

1. I n t 11 e i <J e a 1 sit u a t ion the eli e n t ( pro ~}'P e c t i ve

,/

.landlord) vJould arrive in the Attorney's office \'Jith clear

instructions on the full agreement roacht..'d bet\tJccn th~

parties regarding the letting of the commercial preIl'.ises ar.d

request the Attorney to prepare a formal document erabod1'ing
sucb agre~ment. HOvJevel:, rnore often than not, the Attorney
receives incomplete instructions or is info:-med by his
cl.ient tha~ impor'CCtnt rnatters pertaining to the let.:..~ng \-J(~re
~\ not discussed bt2tween the part ies I much less agre(~d .
..l

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~) ~~~C __ La ~:::__ u f~l!~_~!~.~_~ ~?_:~Ll_C}_Z

2. The Attorney tberefore has the duty to ensure that

the client has considered all the ilnportant iSSUE:s,
'1derf;tand$ the cons~quencet) of the variOl)s options and to
l::: C;'2 .i ve pre cis E: in f..) t rue t i 011 S . t r orn t 11 e c 1 i 0 n ~ . Q II e ~ t i 0:1 ~
;ot~10 cover, fer ~xarnple, the title to the preHlises, :-..~:~
alt:~a to L)e let, the lc.u1dlorct s I fixtures, the ~3ha rl~d

facilities (if any), rights of access and plans for fGtCl"2

/'"

d'~lvelopHl~nt of the rcn:3ind'er of the land. The l\tto.:-ncy's

r () ]~ e in t h ~ f neg 0 t i a ~ in 9 ,
pro c e s s d r aft i n 9 c: :1 d clllE:~ n din 9
0
'-
lr10 .lf~r.1S~ is a large or~2 and if properly played can go c1 far
W2.. y in ~?e2ding the cOIn?letion of tl'~e lease.

•
(ii) ContL-olled Premises
~~_~ -<'-~ _ _ ~_w _ ... _

3. J·o! 1 in <'l u i :.c y s r: :, ~: ide: 1 sob l2 Li d (L2 eft t 2 pre s ~) 2 C t i v l:'

1 d n d lor (i so as to as c t2 r t: a in \-J 11(:; t 11e r L ~~ e p l:' C n~ i s e s pro p 0 sed to 1
be leased a.:-e control :.ed not (see Sl!ctiOll pr-~mises or I
,I
2 ( 1. ) ( e ) ( i) 0 f the R t:: ntH est r i. c t ion Act) and fall vJ i t h in t 11 e
c :l:b i t o f t h~ t Act . T :1 i S vI i 1. 1 a f fcc t e S p (2 cia 11 y t r. e r Q :1 t

chargeable o.~d tho incl-?as~ in rent (if any) from tir:10 to

time. ..., .

t~C'UNClr.; OF [ECAt EDlJCi~TION

NOH.rt:(l\N lvL\NLEY LA. \V SCI-rOOL LIBRAI{ Y
, :U'.\V.L 110N,A:) KINGSTON) 7 JA~'!A.ICA

NO (~ 1\ L'\)I r,; ,1\ N t. f. y L. /\ \ \1 SCH00 L

COUf'~C!L OF LEGAL [l)UCI~
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 t " ~J I - 2 - L-.

(iii) The Initial Draft

~

4. The initial draft lease is usually prepared by the

landlord's Attorney. It behoves the Attorney within the
bounds of the landlord's instructions, to produce a detailed
document that can be considered fair and reasonable to both
parties. The landlord's Attorney may well be doing his
client a disfavour by preparing a draft so heavily weighted
in favour of the landlord that the prospective tenant walks
away from the negotiations or, if not, the negotiations are
affected by it and become "contentious" and more protracted
than they should have been. It is advisabl.e that tte draft
should be studied by the prospective landlord and fully
discussed with the Attorney and if necessary, amended before
dispatch to the tenant's ~ttorney.

5. CGuIDercial activity by definition. is active ana

dynamic. Businesses even when they are failing give ~ise to
myriad issues. A lease of con~ercial premises even after
completion will therefore be subject to constant and close
scrutiny. One or both parties to commercial leases will
more tha~
likely be corporate entities rather than priva~e
individu~ls. The lease will be read and re-read during the
term by t~e various officers of the company, the
accountants, the property manager, the insurance brokers,
attorneys and other advisers. The larger the development
co~plex and the longer the term of the lease the more
frequent will be the reference to the lease. In so far as
is possible, the lease should be a comprehensive agreement
which settles everything necessary between the parties and
leaves ~othing undecided or to be agreed.

6. The skill of the draftsman will be required to

produce d dOCulnent that is both "understood by. its audience
or readership"l and which sets out "clearly, unambiguously
and as simply as possible the tcrm~» of the bargc3.i~ struck
between the partie::;". 2

( i v) So_m~_g~~~_E~~_9U_~_?~_~_~_~_(=_~

I' . Murray J. Ross bas catalog'Jed a series of general ,I:

~uidelines that I can do no better t~an repeating he~e.

"Drafting: what to do. It is suggested that leases can

a:ooshouIaOeclraI"tea in normal English, rather than in '
....

the pompous, wordy, artificial style that conveyancers

have often uS8d. The ~odern drafts~n should depart

-.

.
 - 3 - L-r

from normal English only where there is a good reason,

" . and should be aware that the reasons out forward
example, the need to be unambiguous and
(for
comprehensive)
will frequently be suspect. Although it may take some
effort, the draftsman ought in most instances to be
able to produce a clause in normal English that will be
every bit as certain and comprehensive as its 'legal
Englis~' predecessor. Our landlord-clients·, their
te~ants and both parties' successors will have cause to
thank us for that effort, because it will produce
leases that they will be able to read more quickly and
uqderstand more easily. Good drafting involves two
sets of guidelines - those to be followed and those to
be avoided. The good draftsman will decide what he is
going to say before he begins drafting. He will use
plain modern words in short, simply constructed
sentences. He will state who does what, and will cdopt
the active rather than the passive voice, and whenever
possible, the affirmative rather than the negative. He
will gather sentences into clauses of manageable length
and avoid long clauses by. dividing them into several
sub-clauses, or by introducing paragraphing. To avoic
repetition and to cre~te certainty he will use defined
terms, and put into schedules material that otherwise
would 'clutter' the document. He will present the
document in a 'user friendly' way - for example,' the
provisions that deal with a particular topic will
appear together, and the various topics will be set out
in a logical order. The document will be complete.
The clauses and su~-clauses will be well spaced, the~e
will be a margin on all four sides of the page and each
line will be of a sensible length. Every clause will
have a heading and all but the simplest documents will
have a list of contents. The number of each clause
will appear in full and the numbering system will
facilitate paragraphing. Punctuation will be ~scd as
an aid to readi~g but not as an aid to con3tr~ct~on.
Any cross-referencing will be correct, and there will
be no pages or plans missing and no plans uncolou~ed."3

and

"Drafting: what not to do. The good draftsr.l3r: \·:ill

avoIa-al~ aspects--or-legdlese - fo~ ~xample 'hereby'
and 'thereby'; 'hereof' and 'hereto'; 'such' and 'the
saffic'; 'said' and 'aforesaid'; the exagge~ated use of
'any', 'each', 'every', and 'all'; unnecessary
expressions (e.g. 'In consideration of ... ' or 'Bubject
to the terms of this Agreement ... '); superfluous pairs
(e.g. 'agreed and declared', 'execute and pe~form' and
'well and sufficiently'); circurn':'ocations (e.g. 'in
the event that' replaced by 'if' OY Is~all be at
liberty to', 'shall be entitled to' replaced by 'may');
Latin terms; and unnatural uses of the future tense.
He vlill avoid technical language, 'buzz words' or
jargon relating to the subject roatter of the dOClanent.
He will never change his language unless he wishes to
chCinge hIs meaning but will always change his la~guagc
when he does wish to change fiis-illeaning. "4

I wonoer aloud how many practitioners have been following

these guidelines.
."..

,----.., ...
 /
·./ ' ~
- 4 - L-
l:'
(v) When does the term start?
f" •

It is of critical ilnportancc to know the exact

date when the term begins as this will indicate when the
term will end. Also various time provisions may hinge on
the comme~cernent date of the lease. The inquiry is often
made whether the date expressed in the lease is included in
the term. The general rule is that a term expressed to
commence -
from
-
a certain
,
date commences from the first moment
of the next day unless the contrary intention clearly
appears from the document - Ladyman v Wirral Estate Ltd.
[1968] 2 All ER 197.

(c) Amending
(i) Review by t~e tenant's Attorney

8. Once the tenant's Attorney receives the draft he

should undertake a careful study of the qocument clau~e by
clause noting as he goes along any matter he wishes
clarified, amended, deleted or included. The tenant's
Attorney should resist the temptation to amend for the saK2
of amendment or seek to redraft the document in his own
style. It has been said 5 that there are only four good
reasons for amending a draft document, viz, ....-.

(i) accuracy (to more acc~rately reflect the ~ntcrest

of the parties);

(ii) omission (to deal with a point omitted totally

from the? draft);

(iii) ambiguity (to remove a possible ambiguity); and

(iv) to make the document more favourable to the tenant . \

(in a matter of detail not previously "agreed"

between the parties).

9. The tenant's Attorney should try to avoid absolute.

covenants and to qualify them, where possible, by the use of
such ter~llS as It reasona~le" or "use bE'st e~dcavour". The ~
effect of ~he3e amendments (where accepted) w~ll g2~erdlly
mea~ that the tenant will not bo in breach of his
obligations in circumstances beyond his control. If~
poss·ible, the landlord s right of access should be
I
•..
r•

appropriately restricted. ~lso.L---- wher..~_2!Dgl.OJ~dIS

,/p~rrhiSSi.on is__ ~.:qL:~.~e~ then ~he qualifiCc.~:.~n.~~~.:t_.._:t_':~10Uld

not be unreasonab"Ty vllthheld or delay€d"'Is'~' suggestea. --n.nEl

t\
"
' . /I;i
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- 5 -
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.,'

where the tenant has to comply with the terms of any #

~ ~ · document (for example, rules of the complex or an insurance

policy) then. provision must be made for same to be given to·
him by the landlord.

10. Once this review is complete the t'enant' s Attorney

should discuss the lease with the tenant. However,
depending on the results of the review and his relationship
with the client the tenant's Attorney can choose to discuss
the ctanges directly with the landlord's Attorney if the
matters concern merely 1I1 ega l" ones in order to save time
and to speak to the. 'client only if there are fundamental
departures from his instructions as reflected in the
document. In many instances and perhaps all too often
tenants prefer to leave the finalisation of the lease to the
Attorney.

(ii) The duty to the tenant

~

11. Despite this perception the tenant's Attorney

should at some stage fully explain the provisions of ~~e
lease to his client and in particular any 'unusual or
onerous' terms. After all it is the tenant whq will have to
fulfil the obligations and enjoy the benQfit under the
le~se.

12. In Sykes v Midland Bank Executors (1970] 2 All ER

473, the sub-lease prevented the sub-tenants from changing
the user of the leased premises without the permission of
the superior lessors and suc~ permission could be
arbitra~ily withheld. It was held that the sub-tenant's
solicitors were negligent in not bringing this to the
attention of the sub-tenant. Salmon L.J. said at page 477:

II In l:1y vie\-J, it is quite impossl~lc ~o lay dOW:1 any

code setting out the duties of a solicitor when
advising a client dbout a lease. A great deal depends
on the facts of each particular case. A solicitor's
duty is to use reasonc:\ble care and skill in giving such
advice as the facts (0
the:fact9of the particular case
demand. 11 - -

Harman L.J. said at page 475:

"When a solicitor is asked to ad'vise on a leasehold

title it is, in my }udgrnent, his duty to call his
client's attention to .clauses in an unusual form which
may, affect the inter~sts of t~s client as he knows
them." ...,. .

.~

~
,jl,; , - 6 -
~
it \' '\

~ ...
Karmins~i L.J. was more expansive at page 481:

'I[the solicitor] should have expressly drawn to the

Plaintiff's attention that the freeholder had an
absolute right to refuse consent to a change of user.
Cli~~ts rely on their solicitors to draw their
attention to unusual clauses or dangers in conveyancing
matters. This is so even if the clients concerned are
experienced professional men, including architects and
surveyors. The solicitor is consulted as an expert in
conveyancing matters. Those in other professions have
usually no knowledge or experience in this field; that
is why they consult solicitors."

13. The additional advantage of fully explaining a~d

involving the client in the negotiations is that oftentimes
wten issues between the respective attorneys become bogged
down or positions appear. to hardc~, the well-informed
parties can discuss the matters between themselves and may
resolve any differences more quickly.
"'-
14. It is advisable that the reasons for any suggested
changes ~to the lease b~ indicated by ,the te~ant's Attorney
as this may also assist the parties in reaching a speedier
compromise once the landlord's Attorney knows the reasons
for the proposed am~ndments.

(0) Subsequent negotiations

15. After the proposed changes by tte tenant are

known, whether by return of the draft ..
--~-----.,,"-_.,_.- ~.~.-
lease amended or by
~~ter-Sllggepti~ the changes, the landlord's Attorney will
-------.. .... - - ... - - - - - - . - - - ~~. ,._-.. +..11-

be able to assess how far Gpart the parties are and, wheth2r
in those rare cases, it makes sense to go on with the
. -
negotiations. Usually however the landlord's Attorney will
be able to amend the lease and return it ~o the tenant's
Attorney or to respond to the tenant Attorney's letter. At
this juncture or even o~ =eceipt of the tena~t's ame~dments
a meeting of all the parties might prove us~ful. If the
client is a corporate one, it is suggested that a senior
officer or officers attend. Binding decisions can be taken
inunediately and tinle saved in not having ::0 seek
authorizations for decisions. Also, tho face to face
intoraction between the parties with the opportunity to
explain more fully may speed finalisa~ion of an agreement.

16. Hopefully the negotiation drafting and amending

process will proceed with expedition to a satisfactory
...,.,
conclusion. Much will depend on the reasonableness of the

11\
. }

l( 01
"',

'l'
1~ - 7 - L--

parties and their willingness to compromise. In the end an

important factor will be the relative strength of the
parties as rarely will the parties be evenly balanced. If
there is great dem&nd for the premises to be leased, the
landlord nay be able to take a more inflexible position
while if the premises have been empty for a while, the
landlord may be willing to be more amenable to the tenan~'s
p~oposals.

B. SOME SPECIFIC PROVISIONS

(a) Description of the leased premises

17. It goes without saying that great care should be

taken to ensure that the premises to be leased should be
described with absolute certainty and accuracy. T~~s
usually presents no problem in a stand alone building with
its own certificate of title. In multi user premises
~

(shopping plazas, office complexes and industrial estates)

the problems can arise and where part of a floor or bUilding
. is being leased, the task can become very complicated.

18. The ready solution is to have a proper and a

detailed plan prepared of the leased premises by a surv~yor

~ which is attached to the lease and init~alled by the parties
for identification. In this way there can be little dispute
as to the exact dimensions and a~ea of the leased premises. ~

19. The Attorney should also exaQi~c the relevant

j duplic&te Certificate of 7itle or a copy thereof to con:i~m
that the title description and volume and folio numbers are
correct, the parties are the correct ones and properly
~ described, the endorsed' restrictive covenant? °do not prevent
the user of the premises for the PU~P8SC iDtended a~d
whether a~y consents to lease are requi~ed to be obta~ned
Jfro~ mortgagees.

20. It should be noted that in the absence of a

provision to the contrary the lease of a part of 3 building
desc=ibed horizontally or vertically inc~~des tho ~xtern&~
walls o~ the part so demised - Hope Bros. Ltd. v Cowan
[1913] 2 Ch 312 and Goldfoot v Walsh [1914] 1 Ch 213.

21; This p03ition would be different from the lease of

a ~trata lot where the boundaries are the ce~tre 0: tho ...
, I

floor, walls or ceiling between the strate lots or b€twec~ a

, ~

~
· /'1';;1 • L-·~
- 8 -
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strata lot and common property. Section 7(3) of the

Registration (strata Titles) Act.

22. The Attorney should be especially put on notice

when a part only of a bUilding is being leased that there
may be the need to make the necessary exceptions and
reservations and include the necessary regrants in the
lease. Such rights should be expressly set out in the lease
so that there can be no doubt regarding their existence.
These would include rights of way, right to parK, right
through co~ducting media (water, electricity, sewage and
telephone and television service), right of light and air,
right to develop adjoining land and right to use cornmon
toilets.

23. The tenant's Attorney will usually try to restrict

the rights of access by the landlord to re~sonable hou~s of
the day and after reasonable notice to the tenant. ,

(b) Interest on the late payment of rent

24. Care should be taken in fixing the rate of

interest so as not to impose on the tenant a penalty instead
of just liquidated damages fo-i-his breach of the covenant to
pay rent. Dunlop Pneumatic Tyre CCQpa~y Ltd. v New Garage
and Motor Co. Ltd. [1915] AC 79.

(c) Service charge

25. The payment of a service or maintcn~nce charge by

the tenants is one of the ways in which the landlord ensures
that no part of the rent is used in the upkeep of the leased
premises as the tenants bear tne responsibility to reiQburS8
fl
the landlord for'such exper:diture. These "clear l.cases
were described by Lord Wilberforce as -
"leases in which the tenants bear all the costs and
risk of repairing, maintaining and running the building
of which their demised premises form a part so that the
rent payable reaches the la~dlord clear of all expenses
and overheacs". O'~dY v City of Lo~don'Rent ?roperty
Co. Ltd. [1982] l-AII--ER-660~7-i.

25. Clear leases have become the norm in modern

corr~e~cial lettings. T~c draftsman needs to consider the •.., .
list of serv':'ces and charges to be -covered by the servic~!

~
 · /1
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jf75:::~~
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charge, how often it is to be paid and how it is to' be

,divided among the various tenants.

27. As regards the latter it is usual to apportion the '1vv-t 61

service charge on a fixed percentage basis rather than /0 ~~~/)
"'-- -..
leaving it to the landlord or his expert to exercisG
discretion in dividing same on " a fair proportion basis".
While this method (" a fair proportion basis") has
flexibility in that it allows for the tenant who uses a
particular service more to bear d greater p~oportion of the
expenditure connected with it, tenants tend to be quite
suspicious of leaving the apportionment to the landlord's
expert. The fixed percentage is usually based on the floor
area, that is, the proportion which the floo~ area of the
leased premises bears to ~he entire lettable area ~n the
bUilding.

28. The practice is for the landlord to adju~t and

reconcile annually the regular service charge payments with
the actual expenditure incurred by him with respect to the
bUilding or complex on the prod~ction of the audited
accounts.
1431L~

(d) GUarantors

29. Where the landlord is unsure about the financ~al

position of the tenant or where the tenant is a corporate

e~tity (especially with a nominal share capital)
consideration should be given to having third pa=tics
guarantee the tenant's obligation under the lease. Th~s
gives the landlord additional safeguard should the tenant
Gxperience financial difficulties or go into liquidation/
bankruptcy.

30. It should be borne in ~i~d however th~t the

landlord owes a duty of care to the guaranto~ to take
reasonable steps against the tenant if he b~eaches any terms
of the lease and not to act in a haphazard or inconclusive
way towards the tenant as this may enda~ger the landlord's
rights against the guarantor.

31. In Standard Char~ered Bank Ltd. v Walker and

another [1982] 3 All ER 938 A bank made a loan to a company
secured by a debenture and guaranteed by two of the
~ .
company's directors. Tho ba~k later appointed a
A ••

receiver
for the Company under the debenture. The receiver disposed

.~

"
//
i", ' " .
1,'
'I - 10 - L--
~,

of the assets of the Company at considerably. less than its

real value and the sum realised was barely sufficient to
cover the costs of realisation. The bank sued the
guarantors on their guarantee. It was held that the duty of
care owed by a receiver of a company u~dc~ a dc~2nture in
disposing of a compdny's assets was ow~d not only ~o the
company but also to the guarantor of the company's liability
under the debenture.

"Clearly the guarantor's liability is dependent on the '.

company's. He is in a special positipn. The amount of
his liability depends ehtirely on the amount that the
stock realises when sold with proper care. To my mind
he is well within the test of 'proximity'. The
receiver owes a duty not only to the company, but to
the guarantor to exercise reasonable care in the
disposal of the assets" pe:- Lord Denning M.R.I0

(c) Insurance
"It.

32. The usual practice is for the landlord to assume·

the o~ligation to insure. In this way the landlord ensu~es
the protection of his capital investment and fulfils the
obligation to hi3 mortgagee. Notwithstanding th~s

obligation by the landlord, it is the tenant who usually

pays the preInium under today's "clear or net leases". Areas
to be considered ior inclusion in the insura~ce clauses
i:1clude -

(a) the sum insured;

(b) the ~isks to be covered;

(c) what happens on the damage or destruction of

the leased premises by an insured risk.

33. The tenant's Attorney should then review the risks

against which the landlord has covenanted to ~nsure together
with the repai~ing covenant and proviso for suspension of
rent if the leased premises become unfit for use. The.
tenant's Attor~ey should note that the tenan~'s obligatio~
to repair should exclude liability to ~epair damage caused
by an' insured rlsk. Also where the landlord does not-
covenant to insure ..against all r.easonable foreseeable risks
but only say "fire and such other ri:iks as the landlord may
deem tit " then the tenant will te liable under the repairing
coven~nt fbr damage c~used by o~her perils as h~Tricane, -"..
flood, s torln etc.

I ~

"
 // / ' . I
- 11 - ~.---'-'
til. ',',"
I "\'

34. Where the proviso for cesser of rent operates on~y

when darnage is caused by an insured risk, the tenant will be

liable to pay rent if the premises are rendered unfit for
use by a risk which the landlord has not insured. The
tena~t's Attorney should either seek an amendment to widen
the risks to be covered (and obtaining protection under the
repairing covenant and the cesser of rent proviso) or the
tenant takes out insurance in respect of any liability to
repair damage arising from any risk left uninsured by the
landlord and any liability to pay rent during the time he is
unable to occupy the leased premises.

(f) Rent Review

35. "A rent review c~ause is des:'g:1ed to deal wit~ a

particular commercial problem, ~amely, thct of a
tenant who wants security of tenure for a lengthy
term and the landlord who in times of inflation or
a rapidly changing property marxet docs not want
to commit himself to a fixed rent for the wflole of
tr~at term" MFI Properties Limited v BICC Gl."'OUp
Pens ion TrustLta-.-i 986-110-1E"R 974 per Eoffrllan J
at 975.

36. Complex forms of rent review are found in long

leases of twenty five years and up-wards involving various
"assumptions", "disregards", "valuation method", the third
party (arbitrator or expert) Gnd the review procedure
itself. This is usually a time consuming process and tends
to be costly.

37. Other approaches to rent ~cview include -

(a) Shorter term leases of say 3-5 years with fixed

percentage increases at the commoncement of each
yearj

(b) Premium Rents where the/ parties agree to a fixed

rent for the entire/t~m which will result in the
tenant paying an initially higher rent in the
early years of the lease to compensate the
landlord for his It lo~s" ir: tl:e later year::;. 'rhe
following exarilple delnons tra tes -
Annual
-- -- - ---
...
Rent
--_._-
~-
Prernium
..
Rent
_._. - -_ _--- ---- --- - - -
Year 1 $1,000 $1,200
Year II $1,100 $1,200
Year III $1,200 $1,200 -' ...
Year IV $1,300 $1,200
Year V $1,400 $1,200
$6,000 $6,000

'"
 'X
//
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II'" . ,
/ ' / '.:.,.'
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- 12 - ~
" l,'
,I '
1'· "
//
....
(c) Index-linked .rents which ties the increases in
rent to, say, the movements in the cost of living
index. This will not necessarily reflect the
market rent for the premises but it will ensure
that rent increases are kept in line with gene~al·
inflation.

38. In any event the landlord's Attorney us~ally

ensures that on any rent review, the new rent does not fall
below the existing rent, that is, the rent can o:11y be
reviewed upwards.

(9) Proviso for Re-entry

39. It is usual to' insert in leases an express proviso

for re-entry by the landlord and forfeiture in the event of
a breach of the covenant to pay rent (vlhether formally
dema~ded or not) or a failure by the tenant obs~ve the
other covena~ts. Indeed under Section 96(b) of ~he

Registration of Titles Act this right of re-entry is one of

the implied powers of the landlord. These provisions give
the landlord the right to make an actual entry to work the
forfeiture or to sue for recovery of possession instead of
making a re-entry. It is the service and not the issue of
the writ which is equivalent to re-entry and effects a
forfeiture and the lease is determined from the date of
service. Canas Property Co. Ltd. v. K L Television Services
Ltd. [1970J 2 All ER 795.

40. Historically the tenant was entitled. to petition

the old·Court of Chancery for relief from forfeiture for non
payment of rent. In England the position has been codified
and extended by statute. It is sub~itted that the "pre
statutory" position still is in effe£t in Ja~aica so that
equity will relieve a tenant against forfeiture fo~ non
payment of rent but as a general rule not in other cases,
Barrow v Isaacs & Son [1891] 1 Q.B. 417.

41. Accordingly, the proviso for re-entry and

~j
forfeiture in a lease provides another remedy in the
landlord's arsenal. This is of course subject to the 12ased
premises not being co~trolled premises under the Rent
Restriction Act and therefore subje2~ to Section 27 wtich

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p~ohibits the eviction of a tenant without an order or

,judgment of a competent Court.

(h) Security Deposit

42. Another device used by landlord to minimise the~

consequences of a breach of the covenants by tenant is the

taking of a sum of money (usually equivalent to onc, two or
three months' rent) as a security deposit. This SUill is held
by the landlord in escrow to remedy or assist in remedying
the non performance by the tenant of any provisions of the
lease and is refundable, to the extent unused, at the
ter~ination of the tenancy.

43. Under section 24(-1) of the Rent Restriction Act

"no person shall as a condition of the grant renewal or
conticuance of a tena~cy of any controlled premises
requ~re the payment of any fine, premium or othe= like' sum;

or the giving of any consideration in addition to rent ... "

44. The words "fine" and "premiurn" are not defined in

the Act. The Dictionary of English Law has this to say with
respe.:;t to the Gef ini tio:1 of "pre!nil:ill":

"In granting a lease I part of the rent is 30metirr.es

capitalised and paid in a lump SUIfi at the tilne the
lease is granted. This called a fine or premium."

~5. In R v. EWing (1977) 65 Cr. App. R 4 the English,

Cou::.-t of Appeal had to consider the meaning of Sections
85(1) and 92(1) of the English Rent Act. section 85(1) ..
reads as. follows:

"Any person who, as a co~dit~o~ of the grant ~eD~wal or

continuance of a protected tenancy, requires, iD
addition to rent, the payment of any premium or the
making of any loan (whether secured or unsecured) shall
b2 guilty of an offence under this section ... 1'

and Section 92(1) of the same Act reads:

In this part of the

f1 Fact unless the context othcrwi.se
requires ... lpre~ium' includes any fine o~ other like
sum or any other pacuniary consideration in addition to
rent "

46. The appellant had be~Il cOIivicted of obtaining u.

pecuni&ry adva~tage (i.e. the evasio~ of a deb~) by
deceptio~ contrary to Section 16(2) of the Theft Act in that ."..
he had paid the rent and security deposit to the landlord by
cheque in a false name Hhich he later stopped there being no
money in the account 01: which the cheque was drawn. It was

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a~g~ed onhis behalf that the returnable deposit was an

u~lawful premium under Sections 85 and 92(1) of the Rent Act
a~d was therefore an unlawful payment and could not
constitute a debt or charge within Section 16(2) of the
Tt2ft Act.

Lav.:3an J said:

"In our jUdgment the payment of the returnable deposit,

as it is described in the agreement, was not a premium.
It was not either a fine or other like sum and it was
not 'any other pecuniary consideration in addition to
rent'. It was what it was specified to be, ~hat is to
say, a deposit as against the tenant's obligation to
pay various accounts such as electricity, telephone and
service
f
accounts and other matters in . respect of any
d~lapidations, bearing mind that this was a furnished
tenancy."

Accordingly the appeal was dismissed. ,

47. This case is authority for saying that the demand t

of a refundable security deposit need not be contrary to !

Sect~on 24(1) of the Rent Restriction Act. Howev~r, it GOOS

not SdY that a d8posit can never be a fine, premium, etc.

48. It is submitted that if the amount demanded of the

tenant was so excessive in relation to the matters it sought
to secure as to be unreasonable, then it may well fall for
consideration as to whether such d penal su~ is not causht
by Section 24(1) of the Act. Indeed, the Court of appeal
itself in EWing referred to this. The weekly rental
dernande~ of Ewing was [12.00 per week (or t4~.00 per month)
and the deposit was [48.00.

(1) To comply with statute '

49. Many leases contain a provisio~ whereby the tenant

is oblig2d to observe and comply Wltt the require~en~s 0:
any statutory enactm~nt, orde~, regulation and bye law under
or pursuant to the Town and Country Planning Act, Local
Improvements Act and any similar or related legislation.
The tenant should be made aware of the full effect of such a
provision. In these times of disaster preparedness a~d
environ~e~tal concern the tenant could well find
installation of required equipment and/or modification of
existing works a costly exerci~e. The Attorney'~,
tenant's
should e~sure that any such obJigations to be assumed by the

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tenant are reasonable and relate to the tenant's user of the ~
premises. .

(j ) Break clause

50. A "break clause" in the lease gives an option

e~ther to the landlord or the tenant or both to determine
the lease usually after giving a period of notice which may
or may not be conditional on the happening of some event.
Where the leased premises are controlled premisos under tho
Rent Restriction Act it would appear that Section 27 would
apply with the consequences discussed at paragraphs 60 to
67.

c. SOME STATUTORY CONSIDERATIONS

(a) The Registration of Titles Act
(i) Effect of registration
""
51. For land under the Registration of Titles Act, the
effect of registration of the lease is to afford the lease
the protection and benefit of that statute and to create a
legal interest in land. Under Section 94 of the
Registration of Titles Act -

"Any freehold lqpd under the operation of this Act

may, be leased for any term not being less than one
year by the execution of a lease thereof in the
form in the Sixth Schedule, and the registration
of such lease under this Act "

52. It has long been decided Crowley v Templeton

(1914) f7 C.L.R. 457, a case in the High Court of Australia
on appeal from the Supreme Court of Victoria, that although
the words "may bell are: permissive or facultative in form
they are, in fact, peremptory and exclusive in effect.

53. Accordingly, any lease for a period of 1 year or

more which is not registered does not create a legal estate
in favour of the tenant. The tenant would not enjoy the
protection of the Act. This is clearly seen from Section 63
of the Registration of Titles Act which runs as follows:

"When land has been brought under the operation of this

P.ct, no instrulnent until registered .in rnanner hcrei:l
provided shall be effectual to pass any estate or
interest in such land, or to render such land liable to
a~y mo=tgage or charge, but upon such registration th~·
estate o~· interest comprised in the instrument shall
pass or, .as the ~ase may be, the land shall become
liable in manner and subject to the covenants and

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conditions set forth and soecified in the instrument or

by this Act declared to b~ implied in instruments of
like. :1ature ... 1t

54. It appears therefore that such an unregistered

lea~e would create only an equitable interest in the land
and not be binding on the registered p~oprietor for the time
bei~g except his own landlord. 6 Of course, as the general
law of leases, not being inconsistent with the Torrens
enactments, will be applicable to leases of land under the
Torrens system. 7

55. The tenant may lodge a caveat against his

landlord's title to protect his equitable leasehold
intere'st.

(ii) Short-term leas~s

--.

56. There is a special problem with leases for a term

not exceeding 1 year (short term leases). The Registration
of Titles Act makes no mention as to their validity and/o~
registrability. Three positions have been identified.
Firstly, such leases may be absolutely void conferring no
interests or rights at all; or secondly they may be valid
as between the parties and as against other persons taking
t.he land with notice but liable to be defeated by a bona
-_..---
fide purchaser without notice; or thirdly they may be valid ~

as registered estate binding on all successive owners of the

land. 8

57. . While in all the Australian states ~~d New Zealand

statutory amendments have been nade to correct this
situation, the position has not been statutorily add~essed
in Jamaica.

(iii) Inconsistency in Provisions

The situation is compounded in our jurisdiction by

the paramountcy provision (Section 70) of the Registration
of Titles Act, the proviso (which limits the indefeasibility
princip12) to which reads -

"Provided always that the land which shall be

included in'any certificate of title or registered ~l'.

instrument shall be deemed to be subject to

the interests of any tQnant of the land for a term
not exceeding three years notwithstanding t~e same

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may not be specifically notified as encumbrances

in such certificate or instrument."

58. This anomaly in the number of years in Sections 94

and 70 and the problems mentioned in paragraph 56 above will
havo to be resolved by the legislature.

(b) The Rent Restriction Act

(i) Termination of a lease

59. A lease for a fixed term of years (as most

commercial leases are) is terminated by effluxion of time.
At common law the tenancy is automatically terminated at the
end of the agreed term without the necessity for a notice to
quit. This position has been so modified in recent times
ttat one writer has commented that "there are comparatively
few cases in which effluxion of time has its normal
effect."g ~

(ii) statutory tenancy

60. Section 27 of the Rent Restriction Act provides

for the protection of the tenant of controlled premises by
requiring an order or judgment of a court as a prerequisite
for the recovery of possession of the leased premises as
follows:

"Except under an order or judgment of a competent

court for the recovery of possession of any
controlled premises, no person shall forcibly
remove the tenant from these premises or do any
act, whether in relation to the premises 0=
otherwise, calculated to interfere with the quiet
enjoyment of the premises by the tenant or to
compel him to deliver up possession of the
premises."

61. The tenant who holds over after the expiry of the
fixed term become!) a "statutory" tenant and puysuant to
Section 28(1) of the Rent Restriction Act usa long as he
retains possession shall observe and be entitled whether a3
against the landlord or otherwise to the benefit of all the
terms and conditions of the original contract of tenancy, 80

far as the same a=e co~sistent with the provisions of the

Act."
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Council confirmed this in Crampad
Internatio~al ~a=keting Company Limited and Clover Brown v.
Val Benjamin Thomas on appeal from Jamaica as follows:

"At thedate of hearing before the judge the

co~tractual term had expired and the question then
arises what was the status of the appellants at that
da~e? The j~dge held that they were entitled to remain
as statutory tenants and that was also the view
expressed by Carberry J.A. in his dissenting judgment.
In their Lordshipsf opinion, this was correct. As
already mentioned, the Jamaican Act is so different in
its scope from the United Kingdom statute that there is
no co~pulsive reason for restricting the statutory
protection against eviction withi:l the limits ;.vhich
have been applied by the English Court of Appeal in
Skinner v. Geany [1933] 2 K.B. 266. The term
"statutory tenancy" is merely a convenient label for
describing the stat~s of the tenant whose contractual
right to remain has determined but who remqins in
possession on reliance upo~ the restrictions contaiDed
in the Act upon the landlardr~ ability to resume
possession. The framework of ~he Jamaican legislation
precludes the argument that the corporate o? other
non-resident tenant cannot be a statutory tenant. 1f

(iii) ?rocedure for Recovery

63. The landlord can then decide whether to proceed to

recover the pre~ises under Section 25 (by serving a one
month notice) or u~der Section 26 (by serving a 12 month
notice in respect of commercial premises) as the Cour~ of
Appeal decided in Marcus Dabdoub t/a Marc's v Eli Saba and
Carole Saba R.M.C.A. No. 13/89 that both these sections of
the Act are independent of each other.

64. · Even if it could be a~gued that the=e is no

requirement for service of a notice to quit on the tenant on
the expiry of a. fixed term, but rather court proceedings
could be immediately commenced the landlord would atill have
the task of satisfying the court in respect of one of the
grounds or r2aso~s set out in Section 25(1) of the Act.

65. The b8tter vi8w (although it is disadvantageous to

the landlord but not the business tenant) is that a noticG
to quit is required in all commercial leases pod depending
O~ wheth2r the landlord has a valid Sec~io~ 25 reason the
tenant could end up with an additio~al year (0= more if he
serves a counter notice) to his fixed term.
...
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66. In event this is an incorrect view, and no notice

to q~it is initially required, the p~udent draftsman would
omit from the lease any provision which created a monthly

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tenancy in favour of the tenant who holds over after the
',expiry of the fixed term lest its presence prejudice the
landlord.

67. It is not legally possible to include a Section 26

notice to quit in the lease as the Act requires the notice
to be given "in the case of premises leased to the tenant
for a fixed term of years not more than twelve months before
the date of expiration of the lease". Section 26(2)(b).

JEROME LEE
30TH NOVEMBER, 1990

NORr.7AN rv1ANLEY LAVV SCHOOL LIBRARY

COUNCIL OF LEGAL EDUCATION
MONA, KJNGSlON, 7. JAMAICA "

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NOT~S

.~:~.
1. Murray J. Ross - Drafting ana Negot ia t ing COlIune rc ia 1
Le~ses (3rd Ed.), page 1.

Z. Ibid page 1.

3. Ibid, page 2.

4. Il)io, page 4.
h
.I. Ibiq page 13.
6. Jarnes Edward Hogg - Registration of Title to Land
thl-oughout the British Elnpire.

7. E. A. Francis I The Law and Practice relating to fforrens

Title in Australasia (volurne 1) page 274 and section 2
of the Registration of Titles Act.
e. Ibid.

9. E. H. Burn-Cheshire's Modern Law of Real Property (11th

Ed.) page 451.
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NORMAn r,lANLEY Lf\\V SCHOOL LIBRARY "
COUI\~CIL OF LECI\L EDUCATION
t,101'1A. l(INGSTO[~. 7. JAMAICA

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