F & B Entertainments Ltd v Leisure Enterprise Ltd

Contract of sale of leasehold effectively rescinded for misrepresentation as to service of notice under rent-review clause–Existence of notice in any event a defect of title, and mere non-disclosure would therefore have been a ground for rescission–Purchaser entitled to return of deposit with interest at contract rate, and to damages as if in an action for deceit This was a claim by F & B Entertainments Ltd against Leisure Enterprises Ltd for a declaration that no enforceable agreement existed between the parties for the purchase by the plaintiffs of two leasehold interests in Market Way, Coventry; alternatively, a declaration that the agreement which existed had been validly rescinded by the plaintiffs; and for connected relief, including the return of a deposit. The defendants counterclaimed specific performance of the agreement and consequential or connected relief. Mr R Wakefield (instructed by David Lewis & Co) appeared for the plaintiffs, and Mr I E Jacob (instructed by Brian Lincoln & Co) represented the defendants. Giving judgment, WALTON J said: This is a dispute between two companies, both of whom are actively engaged in the leisure entertainment industry. A certain piquancy is added to the matter because the leading actor on behalf of the plaintiffs, a Mr Louis Frederick, was formerly an employee of Scotia Investments Ltd, which is the parent company of the defendants. The dispute concerns a contract for the sale and purchase of a lease and an underlease of premises in the shopping precinct in the city of Coventry. These were, and still are, held by the defendant company under, first of all, a lease dated February 2 1962 relating to nos 37 and 39 Market Way, Coventry, for a term of years extending to December 31 1988 at a current rent, in 1973, of £2,400 per annum; and secondly, an underlease of the first floor of no 32 Market Way, with a term of years extending to October 11 2009 at a current rent of £2,250. Both lease and underlease contained a rent-review clause. That in the lease, of which the Coventry Corporation were the landlords, is in the following form: Provided always and it is hereby agreed and declared that . . . on or before the 24th day of June 1973 the corporation may give to the tenant notice in writing of their desire to increase the rent hereby reserved in respect of the period from the 1st day of January one thousand nine hundred and seventy-four until the expiration of the term hereby created; and if the tenant and the corporation shall thereafter agree upon the amount of such increased rent, then the rent so agreed shall become payable hereunder in respect of the said period in substitution for the rent hereby reserved, but without prejudice to any of the other terms and conditions herein contained. And then there were provisions as to what was to happen to fix the rent if no agreement was reached between the landlord and the tenant. The rent-review clause in the underlease is in these terms: If the landlord shall by giving notice in writing to the tenant not earlier than 18 months nor later than six months before the expiration of the relevant period on the basis of the rent at and thirty-fifth years of the said term require a review of the rent payable hereunder, the said rent shall be revised at the expiration of the relevant period on the basis of the rent at which, having regard to the terms of the lease other than those relating to rent, the demised premises, as then let or unlet, might then reasonably be expected to be let in the open market by a willing lessor for a term of seven years or for a term equivalent to the residue then remaining unexpired of the term hereby created with vacant possession. –various matters being disregarded. Both the lease and the underlease contained a clause under which the landlords’ consent to any assignment had to be obtained. On the premises comprised in these two documents, the defendant company ran a club known as ‘The Forty Thieves.’  The manager apparently allowed drinking on the premises by non-members of the club to take place and in consequence, when the history of this matter starts in May 1973, or possibly shortly before, the club was closed. The defendants, however, contested the closure in court. They were successful, and apparently were also successful in obtaining a new club licence. So far as the defendant company was concerned, however, the club, which was basically, I gather, a discotheque, was a ‘one-off’ venture; principally, they appear to have been interested in bingo halls. So the directors, of whom Mr Robert Gibb was a leading actor, decided to sell the premises. The plaintiffs, who operate a much larger discotheque at 101 Market Street in the precinct, were interested in acquiring the premises, principally with a view to providing facilities for slightly older persons whose idea of a blissful night out is not a perpetual percussion assault upon their ears. In fact, they had been interested from before the restoration of the licence, and there were a number of meetings prior to the really vital meeting on September 21 1973. Of these meetings, Mr Frederick and Mr Gibb gave me rather different accounts. I do not pause to sort out these differences, for the really crucial question is what happened at the meeting which can be pinpointed as having taken place on September 21 1973. It is common ground that on that occasion Mr Frederick went to Mr Gibb’s office in a Coventry bingo hall, that they had a business discussion there, and that they then went to what Mr Gibb described as a very pleasant luncheon at an hotel in Warwick. Mr Frederick’s version of the business part of that meeting is that he had on a previous occasion offered £20,000 for the premises, he having some idea of what the rents payable under leases were, and that on that occasion Mr Gibb had said he would consult with his fellow directors. I think that it was well understood between them that any bargain which was reached at this sort of stage was only a bargain subject to contract, and that there would be formal contracts exchanged at a later date. So that there was no binding agreement envisaged, I think, by either of them at this sort of stage. Mr Frederick said that he having77 previously offered £20,000 and Mr Gibb having said he would consult with his fellow directors, on this occasion he (Mr Frederick) started by asking whether Mr Gibb had spoken to them, to which Mr Gibb replied that he had not, but that the sum mentioned would be sufficient. Mr Frederick then asked whether it was possible to expedite the sale, as he wanted to take over in time for the Christmas trade. Mr Gibb said, ‘Yes, I have the leases here which you can have,’ and he handed Mr Frederick a copy of the lease and of the underlease, those copies obviously having been prepared with a view to a sale. Mr Frederick then said that he would take the leases back to his solicitor, and his solicitor could look at them, and he asked Mr Gibb (he said) if there were any complications. According to Mr Frederick, Mr Gibb then said that there was a rent review in the early part of the year, but no notice had been given. Mr Frederick said he was delighted with that, because he had an excellent relation with the Coventry Council, and when the time came he could negotiate with them. Mr Gibb said that that was exactly what he himself had thought, and he then went on to talk about the rent freeze and said that he doubted that the rent would go up anyway. Now if indeed Mr Gibb did say that no notice had been given, he was clearly, to say the least, in error. Coventry Corporation had given notice under the lease by letter of May 14 1973, and the landlords under the underlease, CIN Properties Ltd, had given a notice on August 2. Of course there was an essential difference, in that by the time of this conversation it was too late for the corporation to serve a valid notice if they had not already done so, with the result that the rent would remain frozen to the end of the lease, whereas CIN Properties Ltd had until March or April of the following year in which to serve notice. As for the events which followed, Mr Frederick’s version is that he then rang up Mr Gibb from time to time about the transaction, and in one of these conversations Mr Gibb said the price had gone up to £23,000. Mr Frederick said that he did not want to get into a ‘Dutch auction.’  Mr Gibb then said that if he, Mr Frederick, raised his bid above £23,000, he, Mr Gibb, was sure that he, Mr Frederick, would clinch the deal. Mr Frederick said he would raise it £100, and if Mr Gibb thought of going any higher he could forget about the deal as far as Mr Frederick was concerned. Now, that is Mr Frederick’s version of the genesis of the deal, and the explanation of the somewhat esoteric figure of £23,100 as the purchase price. Mr Gibb’s story is totally different. He agrees with the bare bones of the story, a meeting at his office and lunch at a Warwick restaurant, but he says that the only discussion which took place took only an extremely short space of time. He says that he said he wanted £23,000 for the premises and that Mr Frederick, in an expansive mood, said that he would be generous and said, ‘Let us call it a day at £23,100.’  Mr Gibb interpreted this as a generous gesture and in keeping with the mood in which Mr Frederick was in on that particular day. Per contra, of course, Mr Gibb denies that he made any such statement as that which Mr Frederick attributes to him. And there the two versions rest. Mr Frederick had in the meantime reported his version of the events to his solicitor, Mr David Lewis, who is also the chairman of the company. Mr Lewis spotted that if the statement from Mr Gibb that no notices had been served was true, the rent under the lease was frozen until 1988. It was accordingly on this basis that the plaintiff company entered into the contract which is dated November 13 1973. The contract between the parties in fact consists of four documents. There is first of all a form of agreement; there is secondly a letter dated November 12 from Mr Lewis to Mr Lipson, the defendant company’s solicitor; a letter dated November 13, the following day, from Mr Lipson to Mr Lewis, and finally a letter dated November 15 from Mr Lewis to Mr Lipson confirming that the agreements had been exchanged on the basis as set out in Mr Lewis’s letter of the 13th. The letter of November 13 1973 contains some material matter as follows. This is Mr Lipson writing to Mr Lewis: I confirm my telephone conversation with you on November 12 and this morning, when it was agreed that contracts were to be exchanged with effect from today, on the following basis: (1)  My clients will allow your clients to take occupation of the premises as licensees, subject to your clients being responsible for the cost of reconnecting all mains services to the premises, including water, gas, electricity and telephone, all outgoings of whatsoever nature in respect of the premises from December 1 1973, and the cost of carrying out any works of decoration or otherwise to the premises, any such works to be carried out entirely at your clients’ own risk pending completion. (2)  The date for completion inserted in the contract is to be December 13 1973, subject, of course, to my obtaining the necessary licences to assign in accordance with the terms of the contract by that date. . . . (Then I need not read any more of that particular clause.) (3)  If the transaction is not completed by June 1 1974, for any reason other than my clients’ wilful act, neglect or default, the purchase price shall be increased by £1,000 for every period of six months or part thereof after that date. From that paragraph it is abundantly clear that, contrary to the usual rule when one is dealing with the sale of leases or underleases, time was not of the essence of the date for completion of December 13 1973. Hence, in order for time to become of the essence, either a notice under the National Conditions of Sale would have to be served, or else the defendants–for the plaintiffs had practically completed their obligations by, in fact, depositing the purchase-money where it was readily available–would have to delay for an unreasonably long time, peradventure beyond November 13 1973, but more likely beyond June 1 1974. Now, although some case thus was sought to be set up in the pleadings, that the contract had been discharged because the defendants had failed to obtain the consent of CIN Properties Ltd by December 13 1974 to the assignment of the underlease to the plaintiffs, such consent was available early in February 1974, and so far as this part of the plaintiff’s case is concerned, I do not pause to consider it further. Contracts having been exchanged on this basis, the plaintiffs went into possession of ‘The Forty Thieves,’ promptly renamed the place ‘Sophia’s Club,’ and spent, as is alleged, around £4,000 on equipping and preparing the premises for use. It must be emphasised that there were no preliminary inquiries, nor were there at any stage any requisitions on title. Matters were proceeding without either of these usual conveyancing pastimes being indulged in. Then on December 5 1973 Mr Lipson’s firm, Cowan, Lipson & Rumney, sent Mr Lewis, who is the sole partner in David Lewis & Co, the following letter. Omitting the first paragraph: We are now dealing with the licences to assign, and we have been informed by CIN Properties Ltd, who are now the landlords of 32 Market Way, that subject to satisfactory references and to the point which we shall mention later in this letter, they will be prepared to grant a licence to assign. They have raised the question of the rent-review clause in the underlease, and have stated that the revised rent payable from October 12 1974 under the provisions of the rent-review clause should in their view be £6,500. They state that if this revised rent is not agreed, then the matter will be referred to arbitration pursuant to the provisions of the underlease. We have been informed that before dealing with the question of the licence to assign they would like confirmation from you, on behalf of your clients, that they agree to the revised rent of £6,500 per annum, and they have suggested that the question of the licence to assign and the increased rent should be dealt with in the same document. We would also mention that our clients have been informed by Coventry Corporation, the landlords of 37-39 Market Way, that subject to the approval of the city development and estate management committee, the new rent of those premises under the rent-review clause in the lease for the period from January 1 1974 to the end of the lease should be £6,500, exclusive of rates. Please confirm that this new rent will also be acceptable to your clients. Mr Lewis was quite horrified, because this was quite contrary to what he believed to be the position. He rang up the assistant solicitor to Coventry Corporation, and was told–though in fact quite erroneously–that not only had a notice under the rent-review clause been served as far back as May, but a new rent had in fact been agreed. This fact was unfortunate, as it tended to obscure the plaintiff company’s real complaint if they had one, although I think that in the circumstances their real complaint is made with force and clarity in the letter which Mr Lewis wrote to Mr Lipson on December 6, in which he says: I am more than surprised at the contents thereof as regards the rent-review clauses. Dealing in particular with Coventry Corporation, you ask us to confirm that the new rent would be acceptable to our clients. What you have omitted to state is that a notice was served on your clients in May regarding the rent-review clause, and was agreed by your clients in October at a rent of £6,500. I cannot imagine that the same situation applies to 32 Market Way. In our opinion, there has been a misrepresentation which induced our clients to enter into the contract, and which could well have been made fraudulently by your clients’ agents, and which would entitle our clients to rescind the contract. Even if there was a non-fraudulent misrepresentation of the material fact, our clients, in our opinion, are entitled to claim a rescission of the contract, because they entered into the contract relying on a series of facts which were not true, and in the absence of certain facts on which it was reasonable to assume that they would not have entered into the contract. I would bring to your notice the fact that your clients’ agents informed our clients that no negotiations regarding the rents had taken place with either of the parties concerned, when this obviously was a completely untrue statement. There followed a telephone conversation on December 10 between Mr Lewis and Mr Lipson, in the course of which Mr Lipson appears to have understood Mr Lewis as having indicated that a third party was present at the crucial meeting between Mr Frederick and Mr Gibb. I am certain that this was merely a misunderstanding on Mr Lipson’s part, and that Mr Lewis never said that. What he did say emerges quite clearly from Mr Lipson’s own letter recording the contents of the conversation, a letter which he sent to Mr Lewis on December 11 1973 and in which he says this: You told me, during that telephone conversation, that my clients’ agent to whom you refer in your letter is, in fact, Mr R D Gibb, and you also told me that the allegations which your clients were making were as follows: (a) that Mr Gibb, acting on behalf of the vendors, told Mr Frederick, acting on behalf of the purchasers, that no notice of increase of rent had been served by Coventry Corporation in respect of the lease of which they are the landlords; (b) that no agreement had been reached with Coventry Corporation for any increase in rent; and (c) that the purchasers would be free to negotiate with the corporation direct. My clients completely deny that any oral or written representations were made to your clients on any of the above matters. I need not read any more of that letter. On their view of the matter, the plaintiffs were in a difficult position, but the view they ultimately took was that they would, if they were able, rescind the contract, and they purported to do so. Naturally, having gone in and spent their money, they remained in over Christmas, pulling out on January 2 1974. In the circumstances, this was clearly a rational approach to the situation in which they found themselves, and Mr Jacob, for the defendants, has not–and in my view, very properly not–criticised their actions in this regard in any way. The plaintiffs then commenced this action on February 7 1974. The relief they seek is (1) a declaration that there is no enforceable agreement for the assignment of the first lease and the second lease–by the second lease they mean the underlease–by the defendants to the plaintiffs; (2) by way of alternative to (1), a declaration that they (the plaintiffs) have validly rescinded the agreement; (3) an order that the deposit may be repaid to them; (4) all necessary accounts and inquiries pursuant to the licence they were granted to go into the property; and (5) damages for misrepresentation, further or other relief and costs. Of course the claim for damages–indeed all of it–is based upon the allegation of an innocent misrepresentation by Mr Gibb to the effect already noted, coupled with the provisions of section 2 of the Misrepresentation Act 1967. I permitted Mr Wakefield, who appeared for the plaintiffs, to make an amendment at the trial by adding a fact which is not really in dispute, namely, an allegation to the effect that the landlord’s notice given by Coventry was not disclosed to the plaintiffs prior to the conclusion of the agreement. The defence, of course, denies the making of the representation and further adds that if it was made the plaintiffs did not rely upon it, but relied upon copies of the lease and underlease with which they had been supplied. By way of counterclaim, the defendants seek specific performance of the agreement; all necessary and consequential accounts, directions and inquiries; damages for breach of contract in lieu of, or in addition to, specific performance; a declaration that the defendants are entitled to a lien on the leasehold property for the unpaid balance of the purchase-money, and interest payable under the agreement; alternatively, a declaration that the plaintiffs have wrongfully repudiated the said agreement, with damages to be assessed and necessary consequential accounts and directions; in the further alternative, rescission of the agreement and a declaration that the deposit has been forfeited. Of course, at the trial the defendants, through their counsel, Mr Jacob, elected against the claim for repudiation, and therefore they have not accepted any repudiation by the plaintiffs, if repudiation there be. Now the first question I have to determine is, did Mr Gibb make the representation alleged, or did he not?  As Mr Wakefield pointed out, it is extremely difficult to suppose that there is any other solution but that (1) Mr Frederick, or (2) Mr Gibb, is lying. On this matter, I have no hesitation whatsoever in preferring the evidence of Mr Frederick to that of Mr Gibb. Mr Frederick was a clear, convincing witness, who was not in any way shaken in cross-examination. Mr Gibb, on the other hand, was far from impressive under cross-examination. I also flatly disbelieve his story about how the purchase-price came to be fixed at £23,100, and accept that the fixing came about as Mr Frederick described. Under pressure from Mr Wakefield, Mr Gibb had to admit, reluctantly, that there had been negotiations with another party in which the figure of £23,000 had been mentioned, and once one got as far as that, I think the truth sticks out a mile. As Mr Frederick said, whatever else he was, he was not stupid, and he certainly would not offer voluntarily an extra £100 above the price he was being asked. Mr Gibb’s attempts to allege that the amount of the rent was wholly immaterial in their kind of business, and that the price was a cheap one so far as the plaintiffs were concerned, because they were really wanting to buy up opposition to the business carried on in their own premises, also rang very hollow. That, however, is not the end of the matter, because Mr Jacob says that even if Mr Gibb did make the representation alleged, this had no effect upon Mr Frederick, because of the words he used immediately after being given this information, namely: ‘I am delighted with that. As you know, I have an excellent relationship with Coventry Council, and when the time comes I can negotiate with them.’  These words show, says Mr Jacob, that both parties were expecting there to be a rent review coming up very soon: ergo, if Mr Gibb did make any representations he made representations both ways, and therefore Mr Frederick cannot say that he relied upon what Mr Gibb told him. I do not accept this submission. It may very well be that Mr Gibb did not realise the effect or importance of his78 misrepresentation. What is quite certain is that Mr Frederick did not either, but that is not what is in issue. It is not what was Mr Frederick’s immediate reaction to the statement which matters, it is what his, or his company’s, ultimate reaction was when they had time to look at the leases and mull over the import of the statement made by Mr Gibb. That statement, if true, justified them in proceeding with the contract at initially £20,000 and later £23,100. Mr Frederick told me–and he was not seriously challenged upon the statement by Mr Jacob–that as soon as the true position with regard to the rent review was brought to his notice, he said that the premises were non-viable. He told me that if he had known the true position he would have gone to the council and asked them what the rent would be, and if they had said that they were thinking about £6,500, which was their asking figure, he would have dropped the matter, and I fully accept that this, indeed, did represent his thinking and the thinking of his company. Indeed, no conceivable reason has been alleged, or can be thought of, for their actually throwing up the contract immediately they did discover this fact, beyond the very obvious point that with a rent increase of this magnitude, the premises had become utterly non-viable. I therefore hold that the plaintiffs were entitled to rescind, and have in fact properly rescinded, the contract for innocent misrepresentation, and they are accordingly entitled to a return of their deposit. When purchasers’ deposits are paid to vendors, as distinct from being paid to stakeholders, they are returnable with interest. Now, there is here a clash between Mr Wakefield, who submits to me that the agreement provides that if the vendor is kept out of his money the appropriate rate of interest is 6 per cent above National Westminster Bank Ltd’s base rate, and that that ought therefore to be the rate payable by the vendor to the purchaser when it is the purchaser who has been kept out of his money; and Mr Jacob, on the other hand, who says that the two situations are in no way comparable, and that I should fix the amount of interest payable by reference simply to the base rate, or minimum lending rate. But speaking for myself, I cannot see why what is sauce for the vendor is not also sauce for the purchaser. If the right rate of interest to pay, as fixed by the agreement, is 6 per cent over National Westminster Bank Ltd’s base rate in one case, I can see no reason why it should not be the same in the other, and I propose to order the payment of interest at that rate, with an inquiry, if necessary, to determine what the rate is if it cannot be agreed. I now turn to a much more difficult matter, the question of damages for the representation. Such damages, of course, arise under the provisions of the Misrepresentations Act 1967, section 2, which provides that where a person has entered into a contract after a misrepresentation has been made to him by another party thereto, and as a result thereof he has suffered loss, then, if the person making the representation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable, notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe, and did believe, up to the time the contract was made, that the facts represented were true. While no such case as is indicated in the proviso there has been made out before me, the whole case has been that the representation was not made. So the measure of damages, quite clearly, is the same as those in an action for damages for deceit. Mr Jacob sought to shelter behind the terms of the letter of November 13 which I have read, whereunder it will be remembered that the plaintiffs went into the premises at their own risk, but I do not think this will do. It was the misrepresentation that induced the plaintiffs to enter into the whole of the contract which contained these provisions, under which they acted to their ultimate disadvantage. Their acts are directly referable to the misrepresentation, including the act of entering into the precise contract with the precise terms which they did. If that be not right, then I would apply the provisions of section 3 of the Misrepresentation Act 1967, under which I am entitled to disallow any reliance upon exempting provisions of the agreement. The crucial question here however, is, what is the true measure of damages?  The measure of damages for deceit is a matter which still is engaging the attention of a large number of people, and I do not think that the last word on the matter has yet been spoken, but it appears to me that in this particular case the true measure of damages is all such expenditure, properly and not prematurely or extravagantly incurred, which in the event is not reflected in any tangible asset of the plaintiffs. I think this is in line with what Winn LJ said in Doyle v Oldby (Ironmongers) Ltd [1969] 2 QB 158 at the bottom of p 168, when he said: It appears to me that in a case where there has been a tortious wrong consisting of a fraudulent inducement, the proper starting-point for any court called upon to consider what damages are recoverable by the defrauded person is to compare his position before the representation was made to him with his position after it, brought about by that representation, always bearing in mind that no element in the consequential position can be regarded as attributable loss and damage if it be too remote a consequence. It will be too remote, not necessarily because it was not contemplated by the representor, but in any case where the person deceived has not himself behaved with reasonable prudence, reasonable commonsense, or can in any true sense be said to have been the author of his own misfortune. I think the formula which I have suggested–properly, not prematurely, not extravagantly–is in line with that approach to the matter. There is one other point to which I should advert. If I had otherwise been against the plaintiffs on the point of misrepresentation, I should then have had to consider whether, nevertheless, they were entitled to rescind the agreement because of the non-disclosure of the fact of the service of the notice by Coventry Corporation. In this event, they would not have been entitled to any damages, as, without expressing any view as to whether damages could ever be recovered for breach of this duty simpliciter, I declined to allow Mr Wakefield to introduce an amendment to this effect at the trial, as it would raise a completely new case to any that had been pleaded, and one which it would have been impossible for Mr Jacob, or indeed any counsel, to deal with virtually on the spur of the moment. It is curious that there is no really persuasive authority on this kind of point. It is undoubted law that a vendor is under an equitable duty, if he wishes to hold his contract, to disclose all latent defects in his title. There are many statements in books to this effect, but Carlish v Salt [1906] 1 Ch 335 is an example. The question therefore is, did the service of the notice in the present case constitute a defect of title?  Now, Mr Lipson, who is a very experienced solicitor indeed, took the view that it did not. He said that that was the sort of thing which one would discover by means of preliminary inquiries, and indeed, he expressed his amazement at the fact that there had been no such preliminary inquiries in the present case. I think if he had pursued his thinking along those lines a little further an alarm bell would have rung to the effect that if Mr Lewis had not raised this matter by way of preliminary inquiries it must be because somehow he was satisfied, and satisfied wrongly, about it. However, that did not happen. But contrary to the view of Mr Lipson, in my view it did constitute a latent defect of title, really for the reason that Mr Wakefield urged upon me, namely, that it would lead to–that is to say so far as the remainder of the lease went–a permanent alteration in the rights of the landlord qua landlord and the lessee qua lessee. In some ways, I think it is instructive to compare the facts of the present case with those of the case which Mr Wakefield79 cited to me of Re Leyland and Taylor’s Contract [1900] 2 Ch 625. That was a case where the purchaser had in fact completed, so therefore no question of rescission of the contract arose, but he was trying to claim damages for really a misdescription of title, because the vendor had not disclosed a notice which had been served by a local authority to carry out road-works; that notice had not got any further than having been served, no charge had yet attached. Now the vendor in that case was held to be under no liability to compensate the purchaser under the condition for compensation, because an inspection of the property would have shown that such a notice could have been served at any time, and there was no evidence that the value of the property was thereby diminished, because this was a perpetual matter which could have been implemented at any moment. If one applies that approach to the facts of the present case, in relation to CIN Properties Ltd’s underlease, an inspection of the lease would have shown that the landlord’s notice could be served at any time up to the following April, and hence that would be, I would suggest, so far as that goes, on all fours with the Leyland case. But per contra, as regards the lease, if a notice had not been served before the crucial date it could not be served thereafter, and therefore it seems to me that the approach of the Court of Appeal in the Leyland case would indicate precisely the result at which I have arrived, that is to say, that the disclosure of the notice which now could not be served, but which had in fact been served, was a defect of title which should have been disclosed; the vendor was therefore in breach of the duty of disclosure, and therefore the plaintiffs are entitled on that ground to rescind the lease. Of course, the matter scarcely arises, but going one stage further, even if that were wrong, it is quite out of the question that in a case where an important notice of this sort has not been disclosed prior to contract, any court of equity would under any circumstances grant specific performance. If I had otherwise, on every other point, been in favour of Mr Jacob, I should have refused specific performance. There are many, many cases in the books to that sort of effect. I need only I think refer to Beyfus v Lodge [1925] Ch 350. However, that is entirely by the way, having regard to my earlier findings. Accordingly I shall allow the claim and declare that the agreement of December 13, constituted by the documents I have mentioned, has been validly rescinded by the plaintiffs. I will direct a return of their deposit, with interest as I have already indicated, and, if required, an inquiry as to the rates and times during which they apply, and I shall direct an inquiry as to damages along the lines I have already indicated. There will be an order that the defendants do pay the amount found due on taking such inquiry after setting off against such sum the amount due to the defendants for the plaintiffs’ use and occupation of the premises from November 13 1973 to January 2 1974. The counterclaim will be dismissed.