Cayman Arms (1982) Ltd v English Shoppe Ltd

• Jurisdiction: Cayman Islands
• Judge: (Harre, J.)
• Judgment Date: 23 June 1989
• Court: Grand Court (Cayman Islands)
• Date: 23 June 1989

Grand Court

(Harre, J.)

CAYMAN ARMS (1982) LIMITED

and

ENGLISH SHOPPE LIMITED, R.E. ARCH and M. ARCH

P. Lamontagne, Q.C. and C.C. Adams for the plaintiff;

N.W. Hill, Q.C. and O. Panton for the defendants.

Cases cited:

(1) Expert Clothing Service & Sales Ltd. v. Hillgate House Ltd., [1986] Ch. 340; [1985] 2 All E.R. 998; (1985), 129 Sol. Jo. 484, dicta of Slade, L.J. applied.

(2) Fletcher v. Nokes, [1897] 1 Ch. 271; (1896), 41 Sol. Jo. 242, dicta of North J. applied.

(3) Fox v. Jolly, [1916] A.C. 1; (1915), 59 Sol. Jo. 665, applied.

(4) Lloyds Bank Plc. v. Rossett, [1989] Ch. 350; [1988] 3 All E.R. 915; (1988), 132 Sol. Jo. 1698.

(5) London & Clydeside Estates Ltd. v. Aberdeen Dist. Council, [1980] 1 W.L.R. 182; [1979] 3 All E.R. 876; (1979), 124 Sol. Jo. 100, distinguished.

(6) Meadows v. Clerical Medical & Gen. Life Assur. Socy., [1981] Ch. 70; [1980] 1 All E.R. 454; (1979), 124 Sol. Jo. 257, dicta of Megarry, V.-C. considered.

(7) Williams & Glyn”s Bank Ltd. v. Boland, [1981] A.C. 487; [1980] 2 All E.R. 408; (1980), 124 Sol. Jo. 443, dicta of Lord Wilberforce considered.

Legislation construed:

Registered Land Law (Revised) (Law 21 of 1971, revised 1976), s.55(2):

‘The right of forfeiture may be-

(a) exercised, where neither the lessee nor any person claiming through or under him is in occupation of the land, by entering upon and remaining in possession of the land. . . .’

s.56: ‘Notwithstanding anything to the contrary contained in the

lease, no lessor shall be entitled to exercise the right of forfeiture for the breach of any agreement or condition in the lease whether expressed or implied, until the lessor has served on the lessee a notice-

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy; requiring the lessee to remedy the breach within such reasonable period as is specified in the notice. . . . ’

Landlord and Tenant-determination of tenancy-forfeiture-notice before forfeiture-notice to be specific-valid under Registered Land Law (Revised), s.56 if fails to specify particular breach but particular breach may be inferred from surrounding circumstances

Landlord and Tenant-determination of tenancy-forfeiture-reasonable notice required to remedy breach before forfeiture-does not include period elapsed before notice during which tenant had knowledge of breach

Landlord and Tenant-determination of tenancy-forfeiture-repossession under Registered Land Law (Revised), s.55(2)(a) of unoccupied premises-whether unoccupied question of fact depending on nature of premises and purpose of lease

The plaintiff applied, inter alia, for a declaration that his lease of the defendants” property still subsisted and that he was entitled to regain possession of it and an order that the defendants surrender the property and be restrained from entering upon it.

The plaintiff leased first-floor premises from the defendants for the purpose of running a bar and restaurant. Clause 2 of the lease committed it, inter alia, to keeping the premises ‘open for business . . . as permitted by the laws of the Cayman Islands.’ By agreement between the parties, the plaintiff undertook reconstruction work on the premises for certain aspects of which planning permission was required.

Accordingly, the Central Planning Authority granted permission for (i) the relocation of a door provided it was acted on within one year; and, on the advice of the Fire Department, (ii) the use of another door as an emergency exit for two months. The Public Health Department also inspected the premises and submitted a report requiring compliance with several matters within 30 days of the service of the report. In response the plaintiff decided to close for business temporarily in order to renovate the premises completely and to extend the business into adjoining premises, although no permission had as yet been given for the extension. The premises were cleared for this purpose. Coincidental with the closure, the Liquor Licensing Board refused to renew the plaintiff”s liquor licence. By this time also the plaintiff was in breach of the planning permission with regard to the use of the emergency door and had only partially complied with the Public Health Department”s report.

The defendants were aware of these developments and, approximately 1 month after the closure and 10 months after the planning permission had been granted, informed the plaintiff that they regarded its failure to comply with the ‘provision of clause 2 as a substantial breach of the terms of the lease’ and that unless it complied with ‘the terms of the said clause within two weeks from the date hereof they would ‘treat the lease as having been forfeited.’ Subsequent to this letter the plaintiff obtained a conditional liquor licence to take effect after such time as the renovation work had been completed. Further communications took place between the parties but relations deteriorated considerably. In particular, the plaintiff had written to the defendants disputing the complaint of breach and seeking to justify the closure. The second defendant threatened to forfeit the lease and refused to accept any more rent. Unsuccessful negotiations took place the following year, and the defendants finally repossessed the property.

The plaintiff then brought the present proceedings against the defendants seeking, inter alia, a declaration and order that it still retained the lease of the premises and to allow it to continue in possession.

The plaintiff submitted that (a) the lease still subsisted because the defendants had not served a valid notice of breach under s.53(h) of the Registered Land Law (Revised) or a valid notice of forfeiture under s.56, since they had not made clear the specific nature of the breach; (b) as it had been in occupation of the premises when the defendants exercised their purported right of forfeiture, the defendants had acted unlawfully and contrary to s.55(2)(a) by entering upon the premises and consequently an ongoing trespass was taking place.

The defendants submitted in reply that (a) their notice had been a proper one under s.56 since it had unequivocally made clear to the plaintiff the nature of the breach complained of; (b) the two-week time period for remedying the breach took account of the fact that several months had already passed in which the plaintiff could have done so and accordingly, after the two weeks specified had elapsed and the breach still persisted, they had acquired a right of forfeiture; and (c) the premises had been unoccupied for a long time and they had a right of reentry without prior notice under s.55(2)(a), or alternatively, in order to protect them.

Held, granting the declaration and order in part:

(1) In the light of the plaintiffs knowledge of all the circumstances prior to the closure, the defendants” reference in their notice to the plaintiff”s ‘failure to comply with the provision of clause 2’ was sufficiently clear to convey to them the specific nature of the breach, thus satisfying the particular requirement of the Registered Land Law (Revised), s.56(a) upon which the right of forfeiture was based. Moreover, the subsequent attempt to justify the closure to the defendants was further evidence that the persons acting on behalf of the plaintiff had a full understanding of the facts constituting the breach. However, even if the breach were capable of remedy, two weeks was

not a reasonable time to allow the plaintiff to effect the remedy and it was irrelevant to the validity of the notice that persons acting for the plaintiff had been aware of the persistence of the breach for some time before the notice had been given. Accordingly, the notice was invalid and the defendants had not acquired a right of forfeiture. The plaintiff would therefore be granted the declaration sought that the lease still subsisted and that it was entitled to regain possession of the premises (page 393, lines 22–29; page 396, line 30 – page 397, line 22; page 398, line 27 – page 399, line 2).

(2) In the circumstances, under s.55(2)(a) the defendants only had a right of peaceable re-entry on to the premises by way of exercising the right of forfeiture acquired under s.56. The question whether a lessee was in occupation of leased premises depended upon the nature of those premises and the purpose of the lease. Since the plaintiff had ceased to use the premises for any business purposes and had also discontinued the renovations, it could not claim that it had continued to occupy those premises during the closure. The defendants had therefore lawfully entered the premises under s.55(2)(a) and would have been entitled to repossess them had they given proper notice to the plaintiff under s.56(a) (page 402, lines 2–24).

HARRE, J.: This is an application by originating summons for
(i) a declaration that a lease of premises known as ‘The Cayman
Arms’ is still subsisting and that the plaintiff is entitled to regain
possession of the premises; (ii) damages; and (iii) an order that
15	the defendants surrender the premises and be restrained from
entering upon them.
The premises in dispute consist of the first floor above ground
of a building owned by the first defendant, the ground floor of
which comprises the establishment known as ‘The English
20	Shoppe.’ The first floor premises known as ‘The Cayman Arms,’
which was a place of entertainment, have been closed since
September 20th, 1987. The legal questions arising from the
circumstances preceding and surrounding this closure are the
matters for determination in this case.
25	The plaintiff”s case rests on the following propositions: (a)
there was no valid notice of defect or breach under s.53(h) of the
Registered Land Law nor any valid notice of forfeiture under
s.56; (b) there was no lawful re-entry by the defendants and
consequently an ongoing

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