Spencer v Esso Standard Oil S.A. Ltd

• Jurisdiction: Antigua and Barbuda
• Court: Court of Appeal (Antigua and Barbuda)
• Judge: Lewis, C.J,Gordon, J.A.,Lewis, C.J.
• Judgment Date: 10 March 1969
• Neutral Citation: AG 1969 CA 6
• Docket Number: Civil Appeal No. 4 of 1968
• Date: 10 March 1969

Court of Appeal

Lewis, C.J., Gordon and Lewis, JJ.

Civil Appeal No. 4 of 1968

Spencer

and

Esso Standard Oil S.A. Ltd

Real property - Landlord and tenant — License — License distinguished from lease — Real Property Act, Cap.289, s.25(1)

Contract - Breach — Damages

Facts: Evidence revealed that the respondent's company agreed for the appellant to manage and operate a service station, with the provision that the agreement could be terminated by either side with one month's notice for any reason whatsoever. The issue was whether it was necessary for the respondent's company to give reason for notice

Facts: Evidence revealed that contrary to an agreement the appellant refused to give up possession of a service station after being given notice to quit

Held: The agreement was a license, since it passed no interest in the land to the appellant who was only allowed possession for the sole purpose of operating the service station. Further, in relation giving notice, the parties used words with the widest possible meaning and must be presumed to have understood their meaning. The appellant had no reason to inquire as to the reason for the notice. Appeal dismissed.

Held: The respondent should have sued for damages and not for rent. Damages were calculated on the basis of the minimum monthly licence fee times the period for which the appellant refused to hand over possession. Appeal dismissed. Court order varied.

Lewis, C.J

1 I had have the advantage of reading in advance the judgments which are about to be delivered by my Lords. I agree with the conclusions they have reached and do not wish to add anything.

Gordon, J.A.

2 On the 29th August, 1956, the appellant in this case, Spencer, leased a portion of land situate at Factory Road, Skerritts, in the island of Antigua, to the respondent Company for 20 years. On the same day, the 29th August, 1956, the respondent Company vested the same property in the appellant and by so doing extinguished the lease.

3 On this land the appellant operated a small gasolene station until 1st December, 1963, when the appellant and his wife 1eased the land in question together with an additional piece comprising in all 26,881 sq. ft, to the respondent Company The lease was for a term of 30 years with 3 optional renewal terms of 10 years, at a rental of $35.00 per month.

4 On this newly leased portion of land the respondent Company erected a modern service station at a cost $31,000.00, after having demolished the original station. On the completion of the new station the respondent Company handed the station over to the appellant to operate on certain terms and conditions which were set out in an agreement it dated 1st August, 1964.

5 Business seemed to have gone well until 1965 when difficulties arose between the parties over the appellant's accounts. These difficulties appear to have been resolved in some way, and the business continued until the 7th march, 1967, when by a letter of that date the respondent Company gave the appellant notice of their intention to terminate the agreement of 1st August, 1964, with effect from 30th April 1967, in accordance with clause 6(c) of the agreement. Clause 6(c) of the agreement is as follows:–

“(c) This agreement may be terminated for any cause whatsoever by either party hereto on giving to the other of them one month's notice in writing to that effect such notice expiring at the end of any calendar month.”

6 The appellant refused to give up possession of the station, and the respondents on the 7th June, 1967, filed a Writ in the High Court against the appellant, claiming:

• (1)possession of the premises

• (2) rent due

• (3) damages.

7 The appellant counterclaimed for:– water rate from August 1956 to April 1967 $1,150.70 electricity supply from August 1956 to April 1967 $5,116.07 totalling $6,266.77 goods supplied and services rendered:– repairs and supplies to two Tank Wagon

8 Trucks from March to April 1967 $306.00, value of two Grooved Brass Pulley $26.00, value of one Three Phase Electric Motor $380.00 totalling $6,978.77

9 The action was heard by Louisy J, on 24th June, and on the 5th July, 1968, judgment was entered for the respondents on their claim as follows for $2,600.00 in respect of rent due and owing, with costs to be taxed, and an Order for possession on or before 3 1st August, 1968, made.

10 On the counterclaim judgment was entered for the appellant for $712.00, and costs to be taxed.

11 The appellant has appealed against the judgment entered against him. The respondents on their part have not appealed from the judgment on the counterclaim.

12 The grounds of appeal urged on the Court by Counsel for the appellant were that:–

1

The purported notice of termination of the agreement was not a proper notice in that: (a) it assigned no cause for the termination of the agreement; (b) no cause was alleged to exist or had existed for the termination of the agreement; (c) a proper notice was a prerequisite to the founding of this action. In the result, the action should have been dismissed. 2.No damages or rental was proved to have been due in accordance with the terms of the agreement.

13 In support of the contention that the notice by which the agreement was sought to be determined was bad, Counsel for the appellant urged on the Court that the Agreement of the 1st August, 1964, was a lease, in that it concerned an interest in land, and consequently a Notice in terms of sec. 25 (1) of the Real Property Act (Cap. 289) of the laws of Antigua was necessary.

14 The first point which falls to be determined, therefore, is whether the agreement of the 1st August, 1964, was in fact a lease, or a license.

15 While the wording of the agreement contains provisions which are frequently met in leases, and Counsel for the appellant urged this fact strongly in support of his argument that the agreement was in fact a lease, it is readily observed that the agreement was expressly created for the purpose of regulating operations on the premises as a service station. It made provision for the payment of a licence fee and sought to exercise a strict control over the operator, and even though it gave him authority to go on to the premises and to remain on it, it did so in order to enable him to operate the station. Bearing in mind the following passage from Halsbury Vo. 23 P. 1022:

“The parties to an agreement cannot however turn a lease into a licence merely by stating that the document is to be deemed a licence or describing it as such; the relationship of the parties is determined by law on a consideration of all relevant provisions of the agreement, nor will the employment of words appropriate to a lease prevent the agreement from conferring a licence only if from the whole document it appears that it was intended merely to confer a licence.” It is therefore necessary to examine the circumstances which culminated in agreement, with a view to discovering the intention which the parties wished to give effect to when they concluded the contract.

16 Here we have the respondent Company erecting a service station valued at $31,000,00 on lands which they leased from the appellant on the 1st December, 1963. Their purpose in constructing this station was obviously with a view to furthering their business of selling petrol and such products, and their discussions with the appellant must have been in furtherance of this objective.

17 When therefore they agreed to engage the appellant as their operator of that station, it must be borne in mind that in opening up an avenue for the disposal of their goOds, they had to be circumspect about the capital outlay in their $31,000,00 building, and that in handing it over t o the appellant to operate they had to ensure that their investment was protected and secure. It is obviously with that intention they entered into the agreement with the appellant.

18 The appellant on his part had leased his property to the respondents by a base which was separate and distinct from the agreement which is the subject matter of this case. While the rental was low, he obviously was anxious to have his property yield as much revenue as possible and this opportunity to operate the station for the respondents provided the required desire. The appellant's intention thus was, by operating the station, to ensure that his property invested yielded further revenue if even that increased revenue derived from the sale of petrol products for the respondents.

19 It was therefore in this setting that the parties negotiated the agreement. It is clear from the agreement the appellant was engaged a s an operator of the station on certain terms and conditions which were there set out. Although he was in possession of the station as operator he, the appellant, was limited and restricted in many ways; indeed he was subject to various restrictions in relation to how the station was to be operated and managed. He was only able to use the equipment which always remained the property of the Company who; on their part, could enter for inspection of their equipment which they undertook to replace when out of order. The appellant could only sell the products of the Company, aid he could only utilise that station provided he kept to the terms of the agreement. In Errington v Errington [1952] 1 All E.R. 149 it is there established that licences providing for permissive occupation, fall short of a tenancy. The circumstances in this case provide ample evidence that the intention of the parties was to regard the agreement as a licence, as in fact the trial judge found it was, in his judgment. The exclusive possession which it was urged by the appellant was indicative of a lease went no further than prima facie evidence that it was so, and when considered in the light cf the restrictions by which the appellant was hedged by the agreement, the justification which the...