Report No. 70
Effect of Surrender and Forfeiture
Section 115 Reads-
102.1. Effect of Surrender and Forfeiture
"115. The surrender, express or implied, of a lease of immovable property does not prejudice an under-lease of the property or any part thereof previously granted by the lessee, on terms and conditions substantially the same (except as regards the amount of rent) as those of the original lease; but, unless the surrender is made for the purpose of obtaining a new lease, the rent payable by, and the contracts binding on, the under-lessee shall be respectively payable to and enforceably by the lessor.
The forfeiture of such a lease annuls all such under-leases, except where such forfeiture has been procured by the lessor in fraud of the under-lessees, or relief against the forfeiture is granted under section 114."
102.2. Effect of surrender.-
Surrender being a voluntary act, the principle applies that the lessee cannot derogate from his own grant, he cannot, by surrender to the lessor, destroy the rights that he has created in the sub-lease.1 The surrender, therefore operates as a grant subject to the rights of the sub-lease.
1. Sideman Haji v. Dareb Shaw, AIR 1939 Born 98: Born LR 125; Premier National Bank v. Bhairodin Sethia, 1950 ILR 1 Cal 226; Mohammed Ibrahim v. Dani Madhav, AIR 1951 Cal 126.
102.3. Persons in adverse possession.-
The effect of a surrender on persons in adverse possession against the lessee has raised a controversy in England Walter v. Yalden, (1902) 2 KB 304, held that a surrender operates as an assignment, and the lessee can give a title to his lessor by surrender only to the same extent as he could to a stranger by an assignment. This was, however, upset in 1963 by a judgment of the House of Lords.1
The decision in Walter v. Yalden was rendered in a case where the question arose whether surrender affected a person who had acquired a title by adverse possession against the lessee. It was held that he could not be affected until the lease determined in the ordinary course, for the lessee could not, by surrender, give to the lessor what he (the lessee) had not got himself. In St. Marylebone Property Co. v. Fairweather, 1963 AC 510 (546): (1962) 2 All KB 288 (HL), the House of Lords has overruled Walter v. Yalden (Lord Morris dissenting).
Mulla has stated2 that the view taken in Walter v. Yalden was correct, and that the decision of the House of Lords ignores the maxim that nemo dot quad non babet and enables a lessee to collide with the lessor so as to prejudice third parties.3 He agrees with the minority view of Lord Morris.
1. St. Marylebone Property Co. v. Fairweather, 1963 AC 510 (546): (1962) 2 All KB 288 (HL).
2. Mulla, (1973), Comment on section 115.
3. See the dissenting judgment of Lord Morris and Wade Landlord, Tenant and Squatter, (1962) 78 LQR 541; also (1962) 78 LQR 33 (38).
102.4. We also think that the minority view is correct. The logic of the minority opinion is that the landlord has no claim to immediate possession except by virtue of the surrender; and that the tenant has no power to surrender what he has not got, namely, an immediate title as against the squatter. The tenant's title against the squatter has been extinguished by statute. How then, consistently with the principles of property law within which the statute must operate, can the tenant confer upon the landlord a good title against the squatter? After the adverse possessor has possessed the land for twelve years he has, by Act of Parliament, a good title as against the person dispossessed.
H.W.R. Wade's comment is instructive.1 How can it be denied that the landlord claims through the tenant, as the tenant's successor in title, during the residue of the surrendered term? Without the surrender, the landlord had no immediate title to possession at all; for, as Lord Redcliffe explained so clearly, the Squatter can plead the lease against him (the lessor).
After the surrender the landlord has a new element in his title, but that new element is unquestionably derived from the tenant, vis the surrender. It is only on this new element that the Landlord's claim to possession can be founded. It, therefore, seems very difficult to dispute that the landlord claims through the tenant and so is subject to the squatter's estate to the same extent as the tenant, i.e., until the need of the term of the lease.
1. H.W.R. Wade in 78 LQR 541 (550, 551).
102.5. In this context, there is a difference between forfeiture and surrender. A forfeiture, of course, operates by fulfilling a condition and so making exercisable a paramount right of re-entry gested in the landlord from the beginning, which is a conditional legal interest binding on all comers, squatters included. A surrender is, however, something quite different, for it can only operate in favour of the landlords as a successor in title to the tenant. We would, therefore, agree respectfully with the dissenting judgment of Lord Morris and find ourselves in substantial agreement with the view of H.W.R. Wade and Mulla.
102.6. No change.-
We have discussed this point as one of some interest, theoretical as well as practical. No changes, of course, are needed in the section.