IN THE SUPREME COURT OF NIGERIA
On Friday, the 15th day of September 1978
EMMANUEL OSELOKA ARAKA ........................... APPELLANT
MONIER CONSTRUCTION CO. (NIG.) LTD ............................ RESPONDENT
The appellant granted a lease of his house in Port Harcourt on yearly tenancy to the respondents for occupation by their expatriate engineer. In June, 1967 the Biafra rebels ordered all expatriates to leave that area and in compliance with the order the respondents engineer vacated the house. Eventually, the respondents had to suspend their business in Port Harcourt on account of the Civil War. By the end of the Civil War in January 1970, the house had been taken over by the Abandoned Property Authority. Since the vacation of the expatriate engineer in the June 1967 in compliance with the order of the Biafra rebels, the tenants have not enjoyed the benefits of the lease.
The appellant claimed the sum of
N4,400 being rents due for the period of 1st December 1967 to 30th of November 1969. The respondents denied liability on the ground that the tenancy agreement was determined by frustration.
The trial Judge found that there was a lacuna in the case of the appellant in that there was no evidence of the terms of the tenancy agreement for the period of 1st December 1964 to 30th December 1966 and there was no such evidence for the period in question either. He further found that the occupant of the house, who as an expatriate, vacated the house in June in 1967 which was six months before the next rent was due and that he did so because all expatriates had been asked by the Biafran Civil War. He thereafter dismissed the appellant's claim It is against that judgment that the appellant has appealed to the Supreme Court.
(1) Having given proper consideration for the matter, we are inclined to accept the view that the doctrine of frustration may in certain circumstances apply to a lease. We think it may tantamount to injustice to deny a tenant the benefit of frustration in cases, where owing to circumstance of intervening event of change of circumstances so fundamental as to be regarded by the law as striking at the root of the agreement, it has become impossible for the tenant to enjoy the fruits of his lease and at the same time to expect him on account of the abstract estate concept to honours his obligations under the lease.
(2) The lease in the case on appeal was a yearly tenancy and as such was determinable by six months notice. The very purpose for which the lease had been taken was frustrated by the action of the Biafran rebels and that since that day the tenants have not enjoyed the benefits of the lease. Furthermore, the tenants were compelled by the Civil War to suspend their business in Port Harcourt and vacated the area and before the end of the War, the lease property had been taken over the Abandoned Property Authority and consequently, neither the Landlord nor the tenant had a right of access to the house after the succession of hostility in January 1970. Under the circumstances, we think it would be unjust and oppressive to cause the tenant to pay the rent for the period in question. That being the case, we think the learned judge was right in regarding the contract as having been determined by frustration and in holding that the appellant was not entitled to recover any rent thereafter.
A. N. Anyamene Esq. for the Appellant.
E. B. Peter-Kio Esq. for the Respondent.
Cases referred to:
Cricklewood property Vs. Leighton's Investment (1945) A.C. 221.
Denman Vs. Brise (1949) 1 K.B. 22.
Denny Mott & Dickson Limited Vs. Frazer (James) Co. Ltd. 1944 A.C. 265.
High Ways Properties Ltd. Vs. Kelly Douglas Co. Ltd. 17 D.L.R. (3rd) 710 (1971).
Ikomi Vs. Cole F.S.C. 63.
London and Northern Estate Co. Vs. Schlesinger (1916) 1 K.B. 20.
Secretary of State for War Vs. Midland Great Western Railway Co. & Ireland. (1923) 2. II 102.
W. J. Tateni Ltd. Vs. Ganibooa 3 All E.R. 135.
Bello, J.S.C.-This is an appeal from the judgment of Allagoa J. in the High Court of the Rivers State, sitting at Port Harcourt wherein the Appellant as Plaintiff claimed from the Respondents as Defendants the sum of
N4,400 being rents due to the Appellant for the period, 1st December 1967 to 30th November 1969, in respect of the Appellant's house situated at 5 Wenike Tienabeso Street, formerly 5 Umuahia Street, Port Harcourt.
The case for the Plaintiff in the trail Court was stated in paragraphs 2 to 6 of his statement of claim as follows:
"2. As from the 1st day of December, 1963, the Defendants took on sublease the said house paying thereof to the Plaintiff the sum of £1,100 (
N2,200.00) as rent in advance for a year on every 1st day of December each year.
3. On the 1st day of December, 1966, the Defendants paid the sum of £1,100 (
N2,200.00) to the Plaintiffs as rent in advance for the said house for the period 1st December 1966, to 30th November 1967.
4. The Defendants remained in effective occupation of the said house as from the 1st December, 1967 and failed or neglected to pay the Plaintiff, despite repeated requests, the sum of £1,100 (
N2,200.00) as rent in advance for a year on every 1st day of December each day.
3. On the 1st day of December, 1966, the Defendants paid the sum of £1,100 (
N2,200.00) to the Plaintiff as rent in advance for the said house for the period 1st December 1966, to 30th November, 1967.
4. The Defendants remained in effective occupation of the said house as from the 1st December, 1967 and failed or neglected to pay to the Plaintiff, despite repeated requests, the sum of £1,100 (
N2,200.00) as rent due in respect of the house for the period 1st December, 1967 to 30th November, 1968.
5. The Defendants made no attempt whatsoever to return the keys of the said house to the Plaintiff ever since. And in particular, the Defendant gave no notice to the Plaintiff at any time that they ever intended or were ever about to give up possession of the said house.
6. Between the period 1st December, 1967, and up to May, 1968, the Plaintiff and his agents made repeated enquiries at the said house and found that the Defendants were still in effective occupation of the said house. Some Nigerian employees of the Defendants were then occupying and making use of the said house. The furniture of the Defendant were all in the house. All the bedrooms remained air-conditioned."
In their Statement of Defence the Defendants, having admitted that they were tenants of the Plaintiff set out in paragraphs 3 to 5 as the spearhead of their defence as follows:
"3. Save that the Defendants aver the tenancy between the Plaintiff and the Defendants was a yearly tenancy based on the exchange of letters to that effect, the Defendants admit paragraph 3 of the Statement of Claim.
4. The Defendants deny paragraphs 4 to 6 of the Statement of Claim and will put the Plaintiff to the strictest proof of the averments in those paragraphs.
5. In further answer to paragraphs 4 to 6 of the Statement of Claim the Defendants aver that any tenancy arrangement between the Plaintiff and the Defendants was on the understanding that the house would at all material times be occupied by an expatriate employee of the Defendants but that the tenancy for the year ended 30th November, 1967 was frustrated by the facts and declarations of a hostile (Biafran) Government which prevailed on all expatriates to vacate Biafra."
At the trial of the action the Appellant gave evidence and called one witness. The Respondents did not adduce any evidence. They rested their case on the evidence of the Appellant and the correspondence between them and the appellant which were admitted in evidence through the Appellant which were admitted in evidence through Appellant. In a reserved judgment, the learned trial Judge found that there was a lacuna in the case of the Plaintiff in that there was no evidence of the terms of the tenancy agreement for the period 1st December 1964 to 30th November 1966 and there was no such evidence for the period in question either. He further found that the occupant of the house, who was an expatriate, vacated the house in June 1967 which was six months before the next rent was due and that he did so because all expatriates had been asked by the Biafran rebels to leave that part of the country on account of the Nigerian civil war.
The learned trial Judge then concluded as follows:
"Having regard to the circumstances under which the Defendant left Port Harcourt (since it was admitted by the Plaintiff under cross examination that all expatriates were ordered by the head of the Biafran Government to leave in June 1967) at the material time and the inconclusive evidence of Plaintiffs witness I am unable to reach the decision that the mere fact that the Defendant left some furniture and servants behind in October 1967 is proof of the Defendant's intention to remain in occupation after 30th November 1967. It would have been different if after the war Defendant returned and resumed occupation of the premises."
He thereafter dismissed the Plaintiff's claim. It is against that judgment that the Plaintiff has appealed.
Although 12 grounds of appeal had been filed, the appeal was canvassed on two grounds only, namely grounds 5 and 6 which read as follows:
"5. Error in Law: The learned trial Judge erred in law in inferring that the tenancy was frustrated when the Expatriate occupant of the premises left Port Harcourt, as the doctrine of frustration of contract does not apply to leases, and even if it did, there was no frustration of the contract as the keys of the premises were never returned to the Plaintiff, the furniture of the defendant company and the Servants of the defendant remained in the premises throughout the period in question and all the furniture remained in the premises up to the end of the civil war in January, 1970. There was therefore no basis on which judgment could be given for the defendant company.
6. Error in law: The learned trial Judge erred in law in holding that the mere fact that the defendant left some furniture and servants behind in October, 1967, is not sufficient proof of the defendant's intention to remain in occupation of the premises after 30th November 1967."
Learned Counsel for the Appellant argued that the tenancy was not discharged by frustration as the learned trial Judge appeared to have thought, simply because the expatriate occupant of the house was compelled by the action of the Biafran Government to leave Port Harcourt. He contended that for the doctrine of frustration to apply under the circumstances, it must be shown that it was fundamental term of the tenancy agreement that the premises was to be occupied by an expatriate staff of the Respondents and that the Respondents had failed to establish that fact. He further argued that the fact that the Respondent's furniture and servants remained in the premises after the expatriate occupant had left tended to support the contention of learned Counsel that the tenancy continued despite the absence of the expatriate occupier. He urged us to allow the appeal and to cause judgment to be entered for the Appellant.
In his reply, learned Counsel for the Respondents submitted that the decision of the learned trial Judge that the tenancy had been discharged by frustration was amply supported by the evidence before him. Learned Counsel referred to the evidence of the Appellant and the documentary evidence which, in the submission, of learned Counsel, proved that there was clear understanding between the parties that the house was rented by the Respondents for occupation by their expatriate engineer. He further contended that the learned Judge rightly concluded that the mere fact that the Respondents had left some furniture and servants in the house in October 1967 under the circumstances of the case is not conclusive proof of the Respondents' intention to remain in occupation of the house after 30th November 1967.
It is pertinent to observe that despite the assertion in the ground of appeal No. 5 that "the doctrine of frustration of contact does not apply to leases", both learned Counsel argued the appeal on the assumption that the doctrine is applicable to leases. In this connection, we may reiterate the submission of the parties. For the Appellant, it has been contended that in order to apply the doctrine of frustration to the case, there must be some evidence that occupation of the house by an expatriate employee of the Respondents was the foundation of the tenancy agreement and that there was no such evidence before the court. On the other hand, the learned Counsel for the Respondents contended that there was ample evidence establishing that occupation of the house by an expatriate had been the understanding of the parties at all material time. Neither counsel addressed us on the controversial question as to whether the doctrine of frustration of contract can be applied to a lease. Although the point was canvassed at length by learned Counsel for the Appellant in the court below, he did not, for some inexplicable reason, take the point in his argument before this Court. As a matter of fact, learned Counsel for both parties argued the appeal on the basis that the doctrine can be applied to a lease. However, since we think that a doctrine by us on the Question is essential for the determination of this appeal we propose to consider it in depth in the course of this judgment.
The issue as to whether occupation of the house by an expatriate was the foundation of the tenancy agreement would have to be considered first. In his evidence, the Appellant testified that an expatriate engineer had been occupying the house and that he was compelled to abandon it in June 1967 by the action of the Biafran government; that in October 1967 when the Appellant who was then resident at Onitsha visited the house, he did not find the expatriate occupier but saw his servants and furniture; that in November 1967 the Appellant also visited the Respondent's office at Port Harcourt but did not see any of the Expatriate staff of the Respondents. The appellant further testified that he was thereafter detained by the Biafran rebels and did not return to Port Harcourt until at the end of the civil war in January 1970 when he learnt that the Respondents had not been operating in Port Harcourt. He thereon demanded rents due on 1st December 1967 to 1st December 1969 in a letter dated 15th June 1970 addressed to the Respondents at Apapa. By their letter dated 3rd August 1970, Exhibit D, the Respondents informed The Appellant thus:
"No. 5 Umuahia Street, Recreation Layout, Port Harcourt
Thank you for your letter Ref. No. P. 70/1/1 of 15th June, 1970. The contract Expired on 30th November, 1967, and our payment covered up to that date. The house was vacated long before the expiring date. Our expatriate staff who was in that house left the country in June, 1967 and we have not occupied the house since then."
In his letter dated 25th August 1970 Exhibit B, the Appellant replied as follows:
"No. 5 Umuahia Street, Recreation Layout, Port Harcourt
Thank you very much for your letter of 3rd August 1970. This is the first time I am learning that our expatriate staff left the country by June, 1967. In any event I visited the Port Harcourt in October, 1967 and found that the house was occupied by one of your African staff who remained in occupation of the house till May 1968 when the Gallant Federal troops got to Port Harcourt.
The lease has always been renewed from year to year and can only be determined by your expressed intention not to renew or by the return of the keys of the house to me. Up till now I have not yet been given the keys of the house, nor have you expressed any intention to determine the lease.
I do not intend to make matters very difficult for you in view of my long pleasant dealings with you prior to the civil war. As it is the policy of the Rivers State Government to hand over abandoned properties to such occupiers of the properties before the war, I will not hesitate to agree on new terms with you for a new lease, so that the property could be got back from the Abandoned Properties commission.
Please give this matter your most earnest consideration. I am sure that you will not find it difficult to agree that the matter could be settled on the lines suggested above."
The Respondents' answer to Exhibit B is their letter dated 10 September 1970, Exhibit A, which reads:
"No. 5 Umuahia Street, Recreation Layout, Port Harcourt
Thank you for your letter Ref. P70/14 or 25/8/70. It is not true that any of our African staff occupied that house. If you had met anybody there in the month of October, 1967 when you visited the house, you might have seen the driver to the expatriate officer who left the house during the crisis. The driver was there with nightguards watching the premises and not as an occupant.
Because of the war, we suspended our operations throughout the Eastern States and there was no need to renew the lease of your house or any other persons as the expatriate officers who occupy these houses had left the country.
We have now resumed operation and it is very likely that in the very near future, the need to rent houses would arise. When that time comes, we shall write to assist us to get the house back for us from the Abandoned Property Authority."
It is relevant to observe that during the period of the aforementioned correspondence the house in question was under custody, control and management of Abandoned Property Authority established under the provisions of the Abandoned Property (Custody and Management) Edict, 1969 which vested the legal ownership control and management of every abandoned property situated within the Rivers State in the Authority.
We think that upon a proper assessment of the foregoing evidence, it is quite reasonable to infer that it was within the understanding of the parties that the house would at all material time be occupied by an expatriate employee of the Respondents and that understanding formed the foundation of the tenancy agreement. The evidence shows that the action of the Government of Biafra made it impossible for the expatriate staff of the Respondents to occupy the house. One may safely say that the foundation of the tenancy agreement was frustrated by the action of the rebels regime. The question then is: Does the contractual doctrine of frustration apply to a lease of land?
It appears that this is the first time this question has come before this Court for consideration. It seems so because we have been unable to lay our hands on any reported case in that respect and we are not aware of any. Although the state of law in England is a controversial one, it is nevertheless, well Settled by the court of Appeal that a lease is not frustrated by the occurrence of an event which interferes with or temporarily interrupts a tenant's occupation or enjoyment of the demised premises. Thus, in London and Northern Estate Co. Vs. Schlesinger 1916 1 KB 20 where an alien who before the outbreak of the war rented a residential flat in England for a term of years and on the outbreak of the war he became an alien enemy and was prohibited by wartime regulations from residing in the area where the flat was situated, was held liable for the rent during the period he was prevented by Government action from occupying the flat.
In the famous case of Cricklewood Property Vs. Leighton's Investment (1945) A.C. 221 the House of Lords was evenly divided on the question as to whether or not the doctrine of frustration can apply to a demised of Real property. In that case a parcel of land was demised to leases for a term of 99 years of which they convenanted to erect a number of shops and to pay annual rent. In an action by the lessors to recover rent the lessees repudiated liability on the ground that the obligation to pay rent had been excused or discharged by frustration since the wartime restrictions placed by the Government had made it impossible to erect the shops. The Court of Appeal rejected the contention of the lessees and held that the doctrine of frustration has never been applied to a demise of real property. On appeal to the House of Lords, Viscount Simon L.C. and Lord Wright held the view that the doctrine may in certain cases apply to lease. They observed that on rare occasions a lease may be frustrated as, for instance, if some convulsion of nature swallowed up the property altogether or buried it up in the depth of the sea or in the case of a building lease, if by subsequent legislation a building on the land was permanently prohibited.
However, Lords Russel and Goddard were of the view that the doctrine of frustration can never apply to put an end to a lease. The rationale of their view is that a lease creates an estate in the land vested in the leasee and that estate can never be frustrated even though some contractual obligation under the lease such as the covenant to build the shops, may be suspended or impossible of performance. Lord Porter, who was the fifth member of House, expressed no opinion on the issue.
It follows therefore that the result of Cricklewood's case in the House of Lords was inconclusive and consequently the rule laid down by the Court of Appeal in that case that the doctrine of frustration does not apply to a lease still prevails in England.
Brief mention may be made of the remarkable case of Denman Vs. Brise (1949) 1 K.B. 22 in which the court of appeal strictly applied the rule in Cricklewood's case. In 1940 a house was let by a landlord to tenant at a rent per month. The house was completely destroyed by enemy action in 1940 and the tenant accordingly ceased to occupy the premises. In 1948 the landlord erected a new house on the site of the old one. In an action for possession of the new house by the tenant, a county Court Judge granted him an order for possession and the Court of Appeal affirmed the order.
It may be observed, however, that apparently on account of the hardship the rule in Cricklewood's case is likely to cause on one of the parties, the property of its rationale - namely, that a lease creates more than a contract in that it creates an estate and that it is the transfer of that estate to the tenant represents the common venture of the parties and that estate can never be frustrated - has been questioned by Judges and jurists. We have already referred to the views of Viscount Simon and Lord Wright denying the proposition that a lease can never be determined by events equivalent to frustration.
Similar view has been recently expressed by the Supreme Court of Canada in Highways properties Ltd. Vs. Kelly, Douglas Co. Ltd. 17 D.L.R. (3rd) 710 (1971) where Laski, J. delivering the judgment of the court, made the following observations at page 721:
"There are some General considerations that support the view that I would take. It is no longer sensible to pretend that a commercial lease, such as the one before this Court, is simply a conveyance and not also a contract. It is equally untenable to persist in denying resort to the full armoury of remedies ordinarily available to redress repudiation of covenants, merely because the covenants may be associated with an estate in land. Finally, there is merit here as in other situations in avoiding multiplicity of actions that may otherwise be a concomitant of insistence that a landlord engage in litigation against a repudiating tenant."
The learned authors of Chitty on Contract, 23rd Ed. have made a strong submission in favour of the views of Viscount Simon and Lord Wright in these terms at p.610 paragraph 1302:
"It is submitted that when the House of Lords finally does decide the issue, it should be laid down on rate occasions (as suggested by Viscount Simon and Lord Wright) a lease may be frustrated. Since the lessor retains the reversion for his own (or his successors) long-term benefit, he ought to bear the risk of some fundamental changes which permanently affect the land or its ordinary use. Although a lease creates an estate in the land, it still continues as a contract involving the regular performance of various obligations, usually by both parties. Since there is no objection to an express limitation in the lease for the automatic determination of the term of years upon a specified event why should there be any objection to a rule of law which peremptorily determines the term of years on the basis of frustration? If a lease could never be frustrated, the contractual obligations of both parties would normally continue to be enforceable; but ought the lessor to be held to be in breach of his covenant to repair, or to reinstate the premises if, after a convulsion of nature, the land were permanently under the sea?"
Identical view has also been advocated by the learned author of Cheshire and Fifoot's Law of Contract 9th Ed. at p. 556 in these words:
"It is submitted however that if the question should come before the House of Lords, the view that a lease is capable of being frustrated is to be preferred. It is no doubt true that in many cases the object of the parties is in fact to transfer an estate but it surely goes too far to say that this is so as a matter of law. In many cases the parties may contemplate that the risk of unforeseen disasters will pass to the Lessee on the execution of the lease just as surely as if he had taken a conveyance of the fee simple but this will not always be so. If the lease is for a specific purpose which becomes impossible of achievement, there may be a strong case for holding the lease frustrated. Similar arguments may apply if the lease is of short duration and here it is relevant to observe that a contractual licence to use land is certainly capable of frustration and that the distinction between leases and licences is notoriously hard to draw. These views derive considerable support from the decision of The Supreme of Canada in Highway Properties Ltd. Vs. Kelly Douglas & Co., that for the purpose of applying the rules about breach "it is no longer sensible to pretend that a commercial lease ... is simply a conveyance and not also a contract."
Having given proper consideration to the matter, we are inclined to accept the views of Viscount Simon and Lord Wright as being the correct statement of the law that the doctrine of frustration may in certain circumstances apply to lease. We think that it may tantamount to injustice to deny a tenant the benefit of frustration in cases where, owing to circumstance of an intervening event or change of circumstances so fundamental as to be regarded by the law as striking at the root of the agreement, it has become impossible for the tenant to enjoy the fruits of his lease and at the same time to expect him on account of the abstract estate concept to honour his obligations under the lease. Such denial may also suffer injustice to a landlord who finds himself in the same situation as the landlord in Denman Vs. Brise (Supra).
It remains to consider whether the circumstances of the case in hand could be enough to constitute frustration of the tenancy agreement. In this regard as the events that might constitute frustration of the tenancy were brought about by internal rebellion, it may be relevant to point out that acts of rebels had been held to discharge contracts by frustration: See W.J. Tateni Ltd. Vs. Ganiboa (1938) 3 All E.R. 135 and Secretary of State for War Vs. Midland Great Western Railway Co. of Ireland (1923) 2 I.T.102.
In his speech in the House of Lords in Denny Mott & Dickson Ltd. Vs. Frazer (James) Co. Ltd. (1944) A.C. 265 at pp. 274-6, Lord Wright set out the test for deciding the issue of frustration as follows:
"Where as generally happens, and actually happen in this case, one party claims that there has been frustration, and the other party contests it, the court decides the issue and decide it ex post facto on the actual circumstances of the case. The data for decision are, on the one hand the terms and constructive of the contract, read in the light of the then existing circumstances, and on the other hand the events which have occurred ... The event is something which happens in the world of fact, and has to be found as a fact by the Judge. Its effect on the contract depends on the meaning of the contract, which is a matter of law, whether there is frustration or not in any case depends on the view taken by the court of the event and of its relation to the express contract by 'informal and experienced minds'."
We have seen that the lease in the case on appeal was a yearly tenancy and as such was determinable by six months notice: See Chief Ikomi Vs. Cole 5 F.S.C. 63; that in June 1967 the very purpose for which the lease had been taken was frustration by the action of the Biafran rebels and that since that date the tenants have not enjoyed the benefits of the lease. Furthermore, the tenants were compelled by the civil war to suspend their business in Port Harcourt and vacated the area and that before the end of the war the lease property had been taken over by the Abandoned Property Authority and consequently, neither the landlord nor the tenant had a right of access to the house after the secession of hostility in January 1970. Under the circumstances we think it would be unjust and oppressive to cause the tenant to pay the rent for the period in question. That being the case, we think the learned Judge was right in regarding the contract as having been determined by frustration and holding that the Appellant was not entitled to recover any rent thereafter.
Accordingly, the appeal is dismissed and the costs of the appeal in favour of the Respondents is assessed at