Souza Figueiredo Case Law

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Souza Figueiredo - Case Law
Land law Blaw (Islamic University in Uganda)
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Souza Figueiredo & Co Ltd v Moorings Hotel Co Ltd
[1960] 1 EA 926 (CAK)
Division: Court of Appeal at Kampala
Date of judgment: 6 December 1960
Case Number: 42/1960
Before: Sir Kenneth O’Connor P, Gould and Crawshaw JJA
Sourced by: LawAfrica
Appeal from: H.M. Supreme Court of Uganda – Lewis, J.
[1] Land registration – Agreement creating sub-sub-lease – Agreement defective in form –

Registration
refused – Whether refusal justified – Registration of Titles Ordinance (Cap. 123), s. 3, s. 9 (3), s.
51 (U.)
– Uganda Order-in-Council, 1902, s. 15 – State of Victoria (Australia) Transfer of Land Act,

1954, s. 40
(1) – New South Wales (Australia) Real Property Act, 1900, s. 41 – Liquor Ordinance, 1955 (U.)
–
Liquor Rules, 1955, r. 14 (2) (U.).
Editor’s Summary
The respondent was the transferee of a sub-lease of certain club premises for which it held a
liquor licence. By an agreement the respondent let the premises to the appellant for the residue of
the term under the sub-lease less the last three days thereof. This term exceeded three years.
Registration of the agreement was refused by the Registrar of Titles who in evidence said that he
refused to register the sub-sub-lease and that the document was not in a form which could be
registered. The appellant took possession of the premises with the furniture and fittings and
carried on the club there but he was never registered as propriletor under the Registration of
Business Names Registration Ordinance. The iquor licence and the business both remained in the
name of the respondent. The appellant remained in possession from April 1, 1956, until
September 16, 1958, when the keys of the premises were handed to the respondent’s accountant.
There was then Shs. 50,199/96 owing for arrears of rent, and proceedings were instituted for this
amount. The principal defence was that the agreement operated by way of present

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demise of land for a term exceeding three years and since the agreement was not registered it
was
ineffectual to create any estate or interest in land and the covenant to pay the rent was
Page 927 of [1960] 1 EA 926 (CAK)
unenforceable. It was also objected that the agreement was tainted with illegality as the parties to
it
contemplated, and had been permitting, sales of liquor for the appellant’s gain under a licence
held by
and in the name of the respondent contrary to the Liquor Ordinance, 1955, and Liquor Rules,
1955. The
judge rejected these arguments and found for the respondent. On appeal
Held –
(i) section 51 of the Registration of Titles Ordinance provides that no estate or interest in land
can be
created or transferred by an unregistered instrument and that no land can be made liable to the
covenants in an unregistered instrument, but it does not state that an unregistered instrument
cannot operate as a contract inter partes; the instrument was not avoided by the Ordinance and
should be construed “ut magis valeat quam pereat”.
(ii) an unregistered document operates as a contract inter partes and can confer on the party in
the
position of intending lessee a right to enforce the contract specifically and to obtain from the
intending lessor a registrable lease.
(iii) whether the covenant to pay rent contained in the agreement was looked at as a contractual
stipulation in a document of which specific performance could be obtained in equity, or as a term
of common law tenancy at will, it was enforceable.
(iv) a sub-sub-lease is a sub-lease and is registrable under the Ordinance if in proper form.
(v) there was no evidence that, when the agreement was made, the parties intended to act
illegally and

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the failure of the appellant to apply for a liquor licence did not taint a legal agreement with
illegality or render it incapable of enforcement.
Appeal dismissed.
Cases referred to in judgment:
(1) Walsh v. Lonsdale (1882), 21 Ch. D. 9.
(2) Ariff v. Jadunath Majumdar (1930), 58 Cal. 1235.
(3) Maddison v. Alderson (1882), 8 App. Cas. 467.
(4) Ramsden v. Dyson (1886), L.R. 1 H.L. 129.
(5) National Bank of Australasia v. United Hand-in-Hand and Band of Hope Co. (1879), 4 App.
Cas.
391.
(6) Davis v. McConochie (1915), 15 S.R. 510.
(7) Pitman v. Woodbury (1848), 3 Ex. 4.
(8) Toler v. Slater (1867), L.R. 3 Q.B. 45.
(9) Purchase v. Lichfield Brewery Co., [1915] 1 K.B. 184.
(10) Hallen v. Spaeth, [1923] A.C. 684.
(11) Unsworth v. Elder Dempster Lines Ltd., [1940] 1 K.B. 658; [1940] 1 All E.R. 362.
The following judgments were read by direction of the court:
Judgment
Sir Kenneth O’Connor P: This is an appeal from the High Court of Uganda. The appellant and
the
respondent are both limited companies carrying on business at Kampala.
Globe Cinema Ltd. is the proprietor of a lease for eighty-six years and six months of a plot of
land in
Kampala, known as plot 28 Kampala Road, on which now stand premises known as the Black
Cat Club.

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One George Burloyanis is the registered proprietor of a sub-lease of this plot from Globe Cinema
Ltd.
which was registered on March 10, 1953. The term of this sub-lease (hereinafter called “the sub-
lease”)
was ten years from March 15, 1952.
Page 928 of [1960] 1 EA 926 (CAK)
The respondent was at the date that the suit commenced the registered transferee of the sub-lease.
The
transfer of the sub-lease, though dated May 17, 1955, was not registered until September 15,
1958. The
plaint was filed on November 18, 1958.
By a badly-drawn document called an agreement dated April 16, 1956, made between the
respondent
of the one part and the appellant of the other part (hereinafter called “the agreement”) it was
recited that
the respondent was registered as the proprietor of the sub-lease (this was, at that date, incorrect)
for a
period of ten years from March 15, 1952, at an annual rent of Shs. 20,400/- payable quarterly in
advance
on the fifteenth days of March, June, September and December in each year and it was recited
that the
respondent was conducting a club on the premises known as the Black Cat Club and held a
liquor
licence. The following paragraphs, though placed as part of the recitals, must have been intended
as
operative provisions. Paragraph (3) reads:
“(3) The company [i.e. the respondent] agrees to sub-let and the sub-lessee [i.e. the appellant]
agrees to
take the premises together with the hard furniture and fittings at present situate on and used in

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connection therewith particulars whereof are set out in the schedule hereto (all of which are
hereinafter
called the demised premises) to hold to the sub-lessee from the first day of April one thousand,
nine
hundred and fifty-six for the residue of the term of the said sub-lease less the last three days
thereof)
yielding and paying therefor the sum of shillings sixty thousand four hundred (Shs. 60,400/-) per
annum payable as to the said sum of shillings twenty thousand four hundred by equal quarterly
payments in advance on the same days and in the same manner as provided in that behalf in the
said
sub-lease [i.e. the sub-lease] and as to the said sum of shillings forty thousand by equal monthly
payments the first of which will be payable on the last day of April one thousand nine hundred
and
fifty-six and thereafter on the last day of every succeeding month.”
Paragraph (4) reads:
“(4) The sub-lessee to the intent that the obligation may continue throughout the term hereby
created
hereby covenants with the company as follows:
(a) To pay the rent hereinbefore reserved on the days and in the manner aforesaid.
............
(e) To apply or cause application to be made at all proper times to the licensing authority for the
time being and to use its best endeavours to obtain a grant or renewal of the club liquor licence
necessary for using and keeping open the demised property as a properly licensed club and to
pay all fees and duties in respect thereof.”
There followed other covenants whcih it is not necessary to set out.
The agreement, although the operative words are “the company agrees to sub-let and the sub-
lessee

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agrees to take” refers to “the term hereby created”, “the tenancy hereby created”, and “the
demised
premises” and was expressed to take effect from April 1, 1956, that is a date anterior to the date
of the
agreement. It seems that it was intended to be a document of past or present, and not future,
demise. It
was for a term exceeding three years.
The agreement was never registered. The Registrar of Titles was called as a witness in the court
below. He said that he was asked to register the agreement, but refused: he refuses to register
sub-sub-leases. He also said that the document was not in a form which could be registered.
Page 929 of [1960] 1 EA 926 (CAK)
The appellant took possession, under the agreement, of the premises with the furniture and
fittings
and carried on the Black Cat Club there, though the appellant was never registered as proprietor
of the
club under the Business Names Registration Ordinance. The first registration certificate was in
the name
of George Burloyanis. The name was changed to that of the respondent on February 21, 1958,
and so
remained. The appellant was in occupation from April 1, 1956, until September 16, 1958, on
which date
it handed over the keys of the premises to Mr. Jones, of Kerr Jones & Co., accountants of the
respondent,
who accepted them without prejudice to the position of the respondent. The liquor licence
throughout
remained in the name of the respondent and was never transferred to the appellant.
The appellant made heavy losses in its operation of the club and, according to the evidence of
Mr.
Jones, as at September 15, 1958, owed the respondent Shs. 50,199/96 for rent under the
agreement. Mr.

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Khanna for the appellant, asserted before us that the keys were surrendered on September 15 and
not
September 16. But as there is an admission that the date was September 16, and two agreed
issues were
framed on that basis, I think that I must take that as the correct date. The learned judge (at p. 65)
says that
the defendants occupied the premises
“until September 15 when they handed over the keys of the club to the plaintiff’s accountants.”
But, at p. 70 he refers without demur to an argument that the keys were handed over on
September 16. As
I have already stated, there is an admission (at p. 62) that September 16 was the date that the
keys were
handed to Mr. Jones.
On November 18, 1958, the respondent filed a plaint claiming Shs. 50,199/96 arrears of rent,
interest
and costs. There was no defence on the merits except as to the quarter’s rent due for payment on
September 15, 1958. The defence was that the agreement operated by way of present demise and,
being a
lease for more than three years, required registration under the Registration of Titles Ordinance;
and, not
having been registered, was ineffectual to create any estate or interest in the land. The appellant
averred
that, as the consideration for the agreement, namely the appellant’s expectation of the grant of a
valid
term, had (for lack of registration of the agreement) wholly failed, the covenant to pay rent,
which was
inseparable from the lease, was unenforceable. The appellant denied being indebted to the
respondent in
the sum of Shs. 50,199/96 or at all. The appellant averred, as a second line of defence, that the
agreement

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was tainted with illegality, as the parties to it contemplated, and had been permitting, sales of
liquor for
the appellant’s gain under a licence held by and in the name of the respondent without changing
the
proprietorship of the club. The appellant further averred that the respondent had no registered
title to the
premises at the date of the agreement and that, by reason of the respondent’s delay in getting a
registered
title and transferring the liquor licence to the appellant, it (the appellant) had rightfully
terminated the
arrangement by moving out of the premises and handing back the keys to the respondent’s duly
authorised agent. The appellant said that the keys were not, and could not be in the
circumstances,
accepted “without prejudice”. The appellant further averred that it had suffered damage by
reason of the
respondent’s failure to give the appellant a registered title and to transfer the proprietorship of the
club
and the benefit of the liquor licences to the appellant for which the appellant reserved a right to
sue; and
the appellant said that, in any event, there could be no liability for rent after September 1, 1958.
The following agreed issues were framed:
“Issues:
1. What is the effect of the unregistered agreement of April 16, 1956?
Page 930 of [1960] 1 EA 926 (CAK)
2. Is there an action maintainable in law or equity on the said agreement of April 16?
3. Is the said agreement of April 16 tainted with illegality? If so, is it void?
4. Was the business of the Black Cat Club being run contrary to the Liquor Ordinance? If so,
does it
invalidate the said agreement?

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5. Was possession given on September 16, 1958, and was there an acceptance thereof by the
plaintiffs?
6. What is the legal effect of qualifications ‘without prejudice’ or ‘under protest’ if used in
relation to the
acceptance of possession?
7. Was there such delay and failure to make out a title or to grant a registered lease as entitles the
defendants to repudiate?
8. Can the plaintiffs recover rent for the period September 15 – December 15, 1958, in view of
the
acceptance of possession on September 16?”
The learned judge decided these issues in favour of the respondent and gave judgment for the
respondent
for Shs. 50,199/96, interest at 6 per cent. per annum, and costs.
The appellant appealed. Before us Mr. Khanna argued the propositions of law which had been
pleaded in the defence, with certain other propositions which will be noticed later. By far the
most
important of these was the contention that a covenant to pay rent contained in an agreement
which
operates as a present demise of land for upwards of three years is unenforceable if unregistered.
Mr.
Khanna summarised his argument on this question in this way: Section 3, s. 9 (3) and s. 51 of the
Registration of Titles Ordinance (Cap. 123 of the Laws of Uganda) prevent legal or equitable
estates in
land from arising out of unregistered instruments. The covenant in the agreement to pay rent is so
bound
up with the land that it cannot have effect unless it is part of a registered lease. Section 9 of the
Registration of Titles Ordinance strikes even at estates arising by estoppel, but not at pure
contracts.

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There is a distinction in this respect between e.g. the personal covenant to repay contained in a
mortgage
and a covenant in a lease to pay rent, because rent issues out of the land and is bound up with the
estate
in land which the lease creates. The consideration for the sub-sub-lease sought to be created by
the
agreement was the grant of a valid term and, that having failed by reason of non-registration, the
consideration for the agreement wholly failed and the covenant to pay rent was unenforceable.
Section 3 of the Registration of Titles Ordinance (Cap. 123 of the Laws of Uganda) so far as
material,
reads:
“3. Except so far as is expressly enacted to the contrary, no Ordinance or rule so far as
inconsistent with
this Ordinance shall apply or be deemed to apply to land whether freehold or leasehold which is
under
the operation of this Ordinance.”
Mr. Khanna contends that “rule” in this sub-section includes a rule of equity, a point on which I
feel
considerable doubt, but which I find it unnecessary to decide.
Section 9 (3) of the Registration of Titles Ordinance occurs in Part III of the Ordinance of which
the
heading is “Bringing Land Under the Ordinance”. It reads:
“(3) No dealing with any land however held prior to this Ordinance shall, after the
commencement of this
Ordinance, operate to pass any estate or interest whatever, until such dealing is registered in
manner
herein provided.”
Page 931 of [1960] 1 EA 926 (CAK)
It will be observed that this sub-section relates only to dealing with land and to passing estates or

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interests in land.
Section 51 of the Ordinance, so far as material, reads:
“51. No instrument until registered in manner herein provided shall be effectual to pass any
estate or
interest in any land under the operation of this Ordinance or to render such land liable to any
mortgage; but upon such registration the estate or interest comprised in the instrument shall pass
or (as
the case may be) the land shall become liable in manner and subject to the covenants and
conditions
set forth and specified in the instrument or by this Ordinance declared to be implied in
instruments of a
like nature.”
It will be observed that what s. 51 says is that no instrument until registered shall be effectual to
pass any
estate or interest in land . . .; but upon registration the estate or interest in the land shall pass or
the land
shall become liable in manner and subject to the covenants and conditions set forth . . . in the
instrument.
That is to say that no estate or interest in land can be created or transferred by an unregistered
instrument,
and land cannot be made liable to the covenants in an unregistered instrument; but s. 51 does not
say that
an unregistered instrument cannot operate as a contract inter partes. Similarly s. 9 (3) (assuming
without
deciding that that section applies generally and not only to land which has been brought under
the
Ordinance for the first time) says that an unregistered dealing in land shall not operate to pass
any estate
or interest; but does not say that an instrument purporting (ineffectually) to create an interest in
the land

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and containing contractual terms cannot operate as a contract between the parties to it.
Mr. Khanna pressed upon us that by s. 15 of the Uganda Order-in-Council, 1902, the doctrines of
equity are only applied to Uganda in so far as they are not modified, amended or replaced by the
provisions of any Ordinance of the Uganda legislature, and that no equity can override the terms
of the
Registration of Titles Ordinance. No doubt that is right, but there is no question here of an equity
overriding the terms of the Ordinance. As already stated, that Ordinance avoids the creation of an
estate
or interest in land by unregistered instruments, but there is nothing in the Ordinance which
renders such
instruments ineffectual as contracts between the parties to them: there is nothing in the
Ordinance to say
that an unregistered document purporting to be a lease of, or an agreement to lease, land which is
subject
to the operation of the Ordinance for more than three years is void. In my view it can operate as a
contract inter parties and can confer on the party in the position of intending lessee a right to
enforce the
contract specifically and to obtain from the intending lessor a registrable lease. That is not to
override the
provisions of the Ordinance, but to act in conformity with them. The same principles apply to
sub-leases.
In England, since equity treats as done that which ought to be done, the intending lessee would
be a
lessee in equity and would have an equitable estate in the land: Walsh v. Lonsdale (1) (1882), 21
Ch. D.
9. In Uganda he cannot derive any estate (whether legal or equitable) in the land from an
unregistered
instrument, because s. 51 so says. Accordingly, as the intending lessee has no estate in the land,
he would

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not have anything to assign or sub-let until his lease was registered, and he would be postponed
to any
subsequent lessee from the landlord who took without notice of the unregistered document and
registered
his lease; but, as already stated, there is nothing in the Ordinance which prevents the document
operating
as a contract between the parties to it: the document, as I have said, is not avoided by the
Ordinance and
must be construed ut magis valeat quam pereat.
The case of Ariff v. Jadunath Majumdar (2) (1930), 58 Cal. 1235, though decided on a different
statute, is in point. In that case, the appellant, having
Page 932 of [1960] 1 EA 926 (CAK)
in 1913 orally agreed with the respondent to grant him a permanent lease of a plot of land at Rs.
80 per
month, let him into possession. Shortly afterwards, the respondent, with the knowledge and
approval of
the appellant, erected structures on the land at a cost of over Rs. 10,000. In December, 1918, the
appellant definitely refused to grant the respondent the agreed lease, and, in 1923, sued to eject
him after
a month’s notice to quite. Under the Indian Limitation Act, 1908, Schedule 1, art. 113, the
respondent’s
right to sue for a specific performance of the oral agreement was barred in December, 1921. It
was held
that there being no lease made by a registered document, as required by s. 107 of the Transfer of
Property
Act, 1882, the appellant was entitled to eject the respondent with liberty to him to apply to
remove the
structures; had the respondent’s right to sue for specific performance not been barred, he could
have

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claimed the execution of an instrument, which he would have registered, the appellant’s suit
being stayed
in the mean time. Even (their lordships said) if an English equitable doctrine should be applied in
any
case so as to modify the effect of an Indian Act, which might well be doubted, the English
equitable
doctrine of part performance, referred to in Maddison v. Alderson (3) (1882), 8 App. Cas. 467,
affecting
the provisions of an English statute as to the right to sue upon a contract, could not be applied, so
as to
create, without writing, an interest, which s. 107 of the Transfer of Property Act enacts can be
created
only by a registered instrument: the principle laid down in Ramsden v. Dyson (4) (1886), L.R. 1
H.L. 129
appeared to be based solely upon the doctrine of part performance; but, even if it was intended to
cover
anything beyond that, it did not apply to Ariff’s (2) suit, as the only contract to which the
erection of the
structures could be referred had since ceased to be enforceable and as there was no
representation of fact
giving rise to an estoppel by s. 115 of the Indian Evidence Act, 1872. Their lordships held further
that
Walsh v. Lonsdale (1) did not apply, as the respondent’s right to sue for specific performance was
barred.
At p. 1241 Lord Russel of Killowen, delivering the judgment of the judicial committee, said:
“Now it is clear that the verbal agreement alone could confer upon the respondent no such right.
By s. 107 of
the Transfer of Property Act, 1882, it is expressly enacted that ‘a lease of immovable property
from year to
year, or for any term exceeding one year, or reserving a yearly rent, can be made only by
registered

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instrument. All other leases of immovable property may be made either by a registered
instrument or by oral
agreement.’ This amounts to a statutory prohibition of the creation of such a right as is claimed
here by the
respondent, otherwise than by a registered instrument. No registered instrument exists: therefore,

the
respondent can have no such right as he claims, unless he can establish it by some means
operating
independently and in violation of the statute.”
At p. 1245 Lord Russell says that the English equitable doctrine of part performance is
inapplicable to
modify an Indian statute and continues:
“Their lordships find themselves in agreement with the High Court in the view that Walsh v.
Lonsdale (1882),
21 Ch. D. 9 has no application to this case, owing to the fact that the respondent’s right to
enforce the verbal
contract had been barred long before the commencement of the present suit. The respondent was
not in a
position to obtain specific performance of the agreement for a lease from the same court and at
the same time
as the relief claimed in this action. Had he been so entitled, the position would be very different,
for then the
respondent could claim to have executed in his favour by the appellant an instrument in writing
which he
could duly
Page 933 of [1960] 1 EA 926 (CAK)
have registered, the appellant’s ejectment action being stayed in the mean-time. In these
circumstances, the
respondent would obtain complete protection, but consistently with and not in violation of the
provisions of

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the Indian statute.”
Ariff’s case (2), makes it quite clear that notwithstanding that under the Indian statute an oral
agreement
to lease land for more than one year or an unregistered document could not operate as a lease, it
could
(but for the question of limitation) have operated as a contract capable of specific performance
and
entitling the intending lessee to call for a registrable instrument. Notwithstanding that the statutes
are
differently worded, that is precisely the position in the present case.
A similar though not identical position obtains in various jurisdictions where a Torrens system of
registration of title is in force. For instance, s. 40 of the Transfer of Land Act, 1954, of the State
of
Victoria, Australia, provides:
“40(1) Subject to this Act no instrument until registered as in this Act provided shall be effectual
to create or
extinguish or pass any estate or interest or encumbrance in or over any land under the operation
of this
Act, but upon registration the estate or interest or encumbrance shall be created or extinguished
or pass
in the manner and subject to the covenants and conditions specified in the instrument or by this
Act
prescribed or declared to be implied in instruments of a like nature.”
This, though the wording is slightly different, does not differ in substance from s. 51 of the
Registration
of Titles Ordinance. It has, however, been held under it that an unregistered agreement for sale
though
inoperative at law until registered, may create equities between the parties to it: National Bank of
Australasia v. United Hand-in-Hand and Band of Hope Co. (5) (1879), 4 App. Cas. 391, 407
(P.C.). Fox

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in his treatise on the Transfer of Land Act, 1954, at p. 34, writes:
“Equitable claims and interests in land are recognised by the Act and unregistered instruments
may confer
such equitable claims or interests . . . An instrument which is unregistered will be regarded as an

agreement
binding on the parties to it: National Bank v. United Hand-in-Hand etc., Co. Ltd. (1879), 4 A.C.
391;
Mathieson v. Mercantile Finance, etc., Co. Ltd. (1890) 17 V.L.R. 271.”
At p. 69 Fox writes:
“Unregistered Leases, Effect
“No instrument (which includes a lease, s. 4 ante) until registration is effectual to pass any
interest in land
under the Act (s. 40 ante).
............
“By virtue of the effect of the Judicature Act an unregistered lease of land under the Act for more
than three
years operates, not merely to create contractual rights and duties, but creates an equitable term of
years . . .
“Consequently in all the Australian States except New South Wales, where the Judicature Act is
not in force,
by the provisions of that Act and of the doctrine in Walsh v. Lonsdale (1882), 21 Ch. D. 9 a
lessor is, as
against his lessee, in as good a position to enforce the covenants in the lease when it is under seal
and
unregistered or even when it is in writing and unregistered and susceptible of specific

performance as when it
is registered in accordance with the provisions of the Act. In a matter resting on covenant it is the
contract and
not the estate which is the determining

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Page 934 of [1960] 1 EA 926 (CAK)
factor: Hallen v. Spaeth (1923) A.C. 684, at p. 690; Firth v. Halloran (1926) 38 C.L.R. 261, at p.
269.”
The learned authors of Kerr on the Principles of the Australian Lands Titles (Torrens) System at
pp. 129,
130, 131 and 132 write:
“Unregistered Instruments and Documents in Form
Incapable of Registration Operate Inter Partes.
“246. An instrument in statutory form until registration operates as a contract inter parties. In
this respect it
stands on the same footing as a document, which, owing to its being in a form which will not be
accepted by the registrar, is incapable of registration. The mere execution of a registrable

instrument
transfers no interest in the land, but merely gives a right in personam.
............
“248. An unregistered lease in statutory form operates inter partes in like manner as an
agreement for lease
does under the general law.
“Whilst at law the lessee is a tenant at will only, yet in equity the unregistered document is
binding and
effectual as between the parties to it, and an action lies on the covenant for payment of rent, and
the
landlord’s ordinary remedies, such as distress and re-entry would be open to him.
............
“255. There is nothing in the Torrens Statutes to prevent registered proprietors being compelled
by courts of
equity to fulfil their contracts. The holding of a certificate of title does not as between the
immediate
parties to a contract alter their rights and liabilities to each other.”

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In my opinion, all the above quoted extracts would be applicable in Uganda, except the statement
that an
unregistered lease operates to create an equitable term of years. I would not agree that in Uganda
any
estate or interest in land is created by an unregistered lease. Such a document may, however, give
a right
to require a registrable lease and its terms may be enforceable as a contract.
Mr. Khanna pressed upon us the case of Davis v. McConochie (6) (1915), 15 S.R. 510. In that
case the
full court of New South Wales held that the lessor under an unregistered lease could not sue for
rent even
thought the instrument contained an express covenant to pay rent.
Pring, J., said:
“Section 41 of the Real Property Act provides that ‘no instrument until registered in manner
hereinbefore
prescribed shall be effectual to pass any estate or interest in any land under the provisions of this
Act’.
According to the facts as set out in the plea, the lease was not in the form prescribed by the Act,
neither was it
registered; of course if it was not in the form prescribed by the Act, it could not be registered
under the Act.
The contention on the part of the plaintiffs is that, nothwithstanding that the plaintiffs are entitled
to sue upon
the covenant for the payment of rent, the defendant’s answer to that contention is that, inasmuch
as rent issues
out of the land, he is not liable to pay the rent. I think that contention must prevail. There are
several
authorities which show that, in the case of covenants to pay rent, to repair and some others,
unless an estate

lOMoARcPSD|10710373
passes by the lease to the tenant he is not liable. One is Pitman v. Woodbury 3 Ex. 4. I need not
deal with the
facts, but there is a passage in the judgment of the court which, I think, bears out what I have just
said, it is
this: ‘But with respect to leases by indenture the older authorities show that the covenants, which
depend on
the interest of the lease, and are made,
Page 935 of [1960] 1 EA 926 (CAK)
because the covenantor has that interest – such as those to repair and pay rent during the term,
are not
obligatory if the lessor does not execute – not because the lessor is not a party, but because that
interest has
not been created to operate, as such covenants undoubtedly do not, if the term ends by surrender
and are
suspended by eviction by the lessor, so they do not begin to operate unless the term commences:
the
foundation of the covenant failing, the covenant fails also. Unless there be a term a covenant to
repair during
it is void’. In Toler v. Slater (L.R. 3 Q.B. 45) Cockburn, L.C.J., says: ‘I quite agree that if a man
enters into a
deed as lessee, under which he binds himself by covenants, he expects as the consideration that
he shall have
a valid lease granted to him in return; and the principle of the cases is perfectly good and
intelligible which
decide that, where the lessor does not get the consideration on which the covenants attach, viz.
the grant of a
term, and the tenant is not bound by the covenants although he has executed the deed’.”
This is the argument which Mr. Khanna puts forward. He says that rent issues out of the land and
that the

lOMoARcPSD|10710373
grant of a term is the consideration for the covenant to pay rent and that, in the present case, the
appellant
did not get by the agreement the term for which he had bargained, or any term or any estate or
interest in
the land, and therefore, the consideration for the covenant to pay the rent wholly failed.
No doubt that contention might be right if the present suit were, as Davis v. McConochie (6),
was, an
action at law pure and simple. The Judicature Act was not, when Davis v. McConochie (6), was
decided,
in force in New South Wales and the court which decided Davis v. McConochie (6), did not have
jurisdiction to apply equitable principles. Pitman v. Woodbury (7) (1848), 3 Ex. 4 and Toler v.
Slater (8)
(1867), L.R. 3 Q.B. 45 were decided before the Judicature Act was enacted. The principle on
which they
were decided ceases to have force once the intending lessee can compel specific performance of
the
agreement by the lessor to grant him a term, for then the consideration for the lessee’s covenant
to pay
rent has not wholly failed. As Pring, J., himself said in Davis v. McConochie (6);
“It is true that since the Judicature Act in England a plaintiff in the position of the plaintiffs here
would be
entitled to recover because there being a deed of lease, invalid in itself, the defendant, the lessee,
would
nevertheless be able to compel the landlord in a court of equity to grant him a valid lease that is a
proper lease
by memorandum under the Real Property Act. The Judicature Act entitling the courts there to
deal with
matters of law and equity, the plaintiff in this case would I think be entitled to recover. The same
may be said

lOMoARcPSD|10710373
of the Victorian cases because those were decided since the Judicature Act was adopted in
Victoria.”
The High Court of Uganda is of course entitled and bound to apply the doctrines of equity to the
extent
mentioned in s. 15 of the Uganda Order-in-Council, 1902, and, as I have already said, to give
effect to the
agreement as a contract is not to override the Ordinance by an equitable rule, as Mr. Khanna
suggests,
but is merely to apply an equitable doctrine to the extent that is applicable without creating an
estate or
interest in the land or infringing the provisions of Ordinance. So far as I can ascertain, it has been
uniformly held in many, if not in all, jurisdictions subject to Torrens systems of registration of
title where
the court has jurisdiction to apply equitable principles, that an agreement for a lease or an
unregistered
lease operates as a contract inter parties. That does not (as Mr. Khanna suggested) depend upon
express
provisions to that effect in the legislation.
In New South Wales the position is different because equitable principles are not applicable.
Page 936 of [1960] 1 EA 926 (CAK)
Baalman in his Commentary on the Torrens System in New South Wales (1951 Edn.) at p. 125
writes:
“The judgment in Davis v. McConochie would appear, at first sight, to support the literal
construction of s. 41
(1). In that case the full court held that the lessor under an unregistered lease could not sue for
rent, even
though the instrument contained an express covenant to pay rent. It should be noticed, however,
that that was
an action at law. As PRING, J., said at p. 515, it could not happen in Victoria, or in any other
jurisdiction

lOMoARcPSD|10710373
which had adopted the system of the English Judicature Acts. In a suit in equity the plaintiff
would have been
entitled to recover.”
and, at p. 126 and p. 127 in the commentary on s. 41 of the Real Property Act, 1900, of New
South Wales
which is very similar to s. 51 of the Registration of Titles Ordinance, the learned author says:
“Unregistered Leases.
“A lease for a term exceeding three years, like any other instrument which is required by the Act
to be
registered, comes under the effect of s. 41. Such leases were discussed by Jordan, C.J., in
Carberry v.
Gardiner, where he said:
‘As regards land under the provisions of the Real Property Act, 1900, no instrument until
registered in
manner prescribed is effectual to pass any estate or interest therein; s. 41; and no instrument is
registrable unless it is in accordance with the provisions of the Act; s. 39. When any such land is
intended to be leased for any term of years exceeding three years, a memorandum of lease must
be
registered; s. 53. It follows that, subject to any exception introduced by s. 53, no common law
term can
be created in such land by an instrument unless it is both registrable and registered. An informal
instrument may, however, be treated as evidencing an agreement for a formal lease, of which a
court of
equity may decree specific performance by the execution of a registrable instrument: Wellington
City
Corporation v. Public Trustee. And although the informal instrument of itself creates no common
law
term in the land: Davis v. McConochie; entry under it will constitute a common law tenancy at
will

lOMoARcPSD|10710373
inter partes, upon which payment of rent may produce the effect provided for by s. 127 of the
Conveyancing Act, 1919. There is nothing in the Act to prevent a common law tenancy at will
from
arising, inter partes, by implication, out of occupancy; Josephson v. Mason: nor irrespectively of
any
occupancy, to prevent the creation, inter partes, of a common law term by means of an oral lease
at the
best rent taking effect in possession for a term not exceeding three years: Daniher v. Fitzgerald.’
“Again, in A.P.A. Co. v. Rogers, Jordan, C.J., said of a woman who claimed under an
unregistered lease for
seven years:
‘Indeed nothing prevented her from obtaining a common law term of seven years except the fact
that
she neglected to register the instrument, a neglect which she could have repaired at any time.
Unless
and until she chose to register it, it operated merely as an agreement specifically enforceable in
equity,
but not of itself creating a term in the land. The acts done by her, however, in pursuance of the
instrument, in entering into possession under it, and proceeding to pay some, although not all, of
the
rent provided for by it, had the effect of bringing into existence a common law tenancy at will,
terminable only by a month’s notice in writing, but otherwise upon all the terms of the
unregistered
memorandum
Page 937 of [1960] 1 EA 926 (CAK)
of lease applicable to such a tenancy: Conveyancing Act, 1919, s. 127. Carberry v. Gardiner’.”
It seems that even at common law entry under an unregistered lease for more than three years
creates a

lOMoARcPSD|10710373
tenancy at will. A tenancy at will involves no definite interest in the land, but merely a personal
relation
for which, however, a rent may be reserved: BAALMAN, supra, and Hill and Redman Law of
Landlord
and Tenant (11th Edn.) pp. 20 to 22.
Whether, therefore, the covenant to pay rent contained in the agreement be looked at as
contractual
stipulation in a document of which specific performance could be obtained in equity or as a term

of
common law tenancy at will, it is, I think, enforceable.
The appellant could have required from the respondent a registrable sublease (as in fact the
appellant
did on June 29, 1956, and March 11, September 17, 1957). Not having received a registrable sub-
lease,
the appellant could have brought a suit for specific performance of the agreement and for a
registrable
sub-lease, in which suit, if necessary, the Registrar of Titles could have been joined. I may here
mention,
with respect to the Registrar of Titles (who appeared at the request of this court and as amicus
curiae and
for whose argument and for the loan of various Australian and other authorities the court is much
indebted) that I think he was wrong in saying that no “sub-sub-lease” could be registered under
the
Ordinance. A “sub-sub-lease” is a sub-lease; and s. 111 of the Ordinance applies the provisions of
the
Ordinance affecting leases, lessors and lessees to sub-leases, sub-lessors and sub-lessees.
Accordingly, s.
108 and the form in the Tenth Schedule to the Ordinance (with any necessary modification: see s.
209)

lOMoARcPSD|10710373
would apply to “sub-sub-leases”. If the agreement was not registrable in its existing form, the
lessee
could have called for a sub-lease in a form which was registrable, and, if he did not get one, he
could
have sued for it. The Registrar of Titles is, as he himself pointed out, subject to the jurisdiction of
the
court, and could have been compelled to register a “sub-sub-lease” in proper form. The appellant
chose,
however, to surrender possession of the premises. It was suggested in argument that he did this
because
he could not get a registered sub-lease. There was no finding on this point; but I think that on the
evidence and the correspondence, in particular the letter from the appellant’s solicitors dated
August 16,
1958, and the evidence of Mr. Thomas, the appellant’s accountant, that up to March, 1957, the
accounts
of the club showed heavy losses, the strong probability is that the appellant surrendered
possession of the
premises because the club was unprofitable and not because the appellant could not get a
registered
sub-lease. The appellant’s accountants had been told by the Registrar of Titles that there was no
necessity
to register the agreement: the appellant had possession and enjoyment of the club premises and
no one
was disputing its right thereto. The balance of probabilities is heavily in favour of the premises
having
been surrendered because the club was unprofitable and not because of any failure to obtain a
registrable
sub-lease.
Of course, the agreement could not be given effect to as a contract if there was no consideration
to

lOMoARcPSD|10710373
support it; but there was consideration. The appellant took possession under it and remained in
occupation and enjoyment of the premises for a very considerable time.
Mr. Khanna argued that because the respondent, at the date of the agreement, had itself no
registered
title and did not register its transfer of the sub-lease until September 15, 1958, the agreement was
not
specifically enforceable. Before that date, he argued, there was no co-existence of privity of
estate and
privity of contract between the appellant and the respondent and both must exist before the
agreement
could be specifically enforced. He cited as an authority for that proposition Purchase v. Lichfield
Brewery Co. (9), [1915]
Page 938 of [1960] 1 EA 926 (CAK)
1 K.B. 184. That, however, was a case of an assignment where the assignee had neither privity of
contract with the landlord, nor privity of estate. Here there was privity of contract between the
appellant
and the respondent. The respondent could have registered its transfer from George Burloyanis at
any time
and had registered it before action brought. In a suit for specific performance of the agreement
brought
by the appellant at any time after the date of the agreement, the respondent could (subject to any
question
of limitation) have been compelled to register its transfer and give a registrable sub-lease to the
appellant: Ariff’s case (2).
I think, therefore, notwithstanding the able and persuasive argument of Mr. Khanna, that his
contention that the covenant to pay rent contained in the agreement is uneforceable fails.
I will now consider the other grounds of appeal seriatim: Mr. Khanna contended (ground 1 of the
memorandum of appeal) that the respondent had disentitled itself from suing for specific
performance by

lOMoARcPSD|10710373
conduct; for instance by re-taking possession, attempts to re-let the premises, election to sue for
damages
and the like. In my opinion, provided that an unregistered lease or sub-lease can be specifically
enforced,
it may operate as a valid contract to grant a lease or sub-lease whether a suit to enforce it is
actually filed
or not. In the present case the respondent is not suing for damages for breach of the agreement,
but is
suing to enforce a term of the agreement: the respondent’s claim is for payment of the amount
which the
respondent says is due under the agreement for the period during which the appellant was in
occupation
and enjoyment of the premises. Except in respect of the last quarter, the claim is a claim for
payment of
the sums due under a contract to pay rent (or under a tenancy at will on agreed terms) for a
period during
which the appellant had had possession and enjoyment of the property. As in Hallen v. Spaeth
(10),
[1923] A.C. 684 at p. 690, it is the contract between the sub-lessor and its sub-lessee and not the
estate
which passed or did not pass which is the determining factor. As to re-taking possession, the
respondent
did not resume possession until the appellant company, having moved out, had voluntarily
surrendered
the keys to the respondent’s accountant. The learned judge found, and there was evidence to
support that
finding, tha the keys were not handed to a servant or agent of the respondent and that the
respondent’s
consent to the surrender of possession by the appellant was never obtained. In my opinion, there
was

lOMoARcPSD|10710373
nothing in the respondent’s conduct which would disentitle it from suing for specific
performance of the
agreement. I may here mention that I see no reason why the keys of the premises should not have
been
accepted without prejudice to the rights of the respondent: Unsworth v. Elder Dempster Lines
Ltd. (11),
[1940] 1 K.B. 658. It is unnecessary, however, to decide the point as the learned judge held as a
fact that
Mr. Jones was not the respondent’s agent or servant authorised to accept the surrender.
Ground 2 of the memorandum of appeal avers that no contract inferable in equity was ever
pleaded
and avers that it was never pleaded that the agreement was capable of specific performance or
that the
respondent was at the date of the suit ready and willing to perform all the obligations under the
contract.
The respondent pleaded the agreement, exhibited it to the plaint and sued for rent under it. Not
only had
the respondent been ready and willing to perform the agreement but had part performed it by
giving the
appellant possession of the premises. That was pleaded. In my opinion that was a sufficient
pleading in
the circumstances of this case.
In ground 3 of the memorandum of appeal it is averred that
“para. 8 of the plaint is inconsistent with the respondent having reserved to himself the remedy
of suing to
enforce specifically any contract inferable in equity (if any).”
Page 939 of [1960] 1 EA 926 (CAK)
Paragraph 8 of the plaint reserved the right to sue the appellant for breach of the agreement
before its

lOMoARcPSD|10710373
expiry. It is not clear to me why it should be inconsistent with a claim for rent under a lease to
say that
the plaintiff reserves a right to sue for any damages it may have suffered by a premature
determination of
the lease. Such damages could arise, for instance by failure to pay rates and taxes or to perform
covenants in the head lease or throught leaving the premises empty.
Ground 5 asserts that
“in jurisdictions in Australia other than New South Wales an express statutory provision exists in
the
Registration Laws about an unregistered lease operating as an executory agreement to take and
accept a lease
in future.”
Mr. Khanna did not point to any such statutory provision and I have not been able to find any in
the text
books on the Torrens system in Australia which are available to me. There is, in s. 42 (2) (e) of
the
Transfer of Land Act, 1954, of the State of Victoria, a provision (referred to by Mr. Khanna) to
the effect
that land which is included in a registered instrument shall be subject to (among other
incumbrances) the
interest of a tenant in possession of the land. But I cannot see that that has anything to do with
the
enforceability of a covenant to pay rent contained in an unregistered lease or sub-lease. There is a
somewhat similar provision in the proviso to s. 61 of the Registration of Titles Ordinance.
Grounds 6 and 7 of the memorandum of appeal aver that
“no equity can take the case out of a statute such as the Registration of Titles Ordinance and that
no equity
can co-exist with s. 3 and s. 51 of that Ordinance.”

lOMoARcPSD|10710373
As I have already indicated, there is no question of equity conflicting with s. 3 or s. 9 or s. 51 or

taking
the case out of the Registration of Titles Ordinance so as to create an estate or interest in land
which the
Ordinance says may not be created. The question is not the creation of an estate or an estate or
interest in
land but whether a term in a contract or a term of a tenancy at will can be enforced. Of course, an
equity
can co-exist with the provisions of s. 3 and s. 51 of the Ordinance so long as the equity is not
inconsistent
with these sections.
Ground 8 of the memorandum asserts that the learned trial judge held that equity could override
s. 3
and s. 51 of the Ordinance. I do not think that he did. I think that he was right in treating the
agreement as
a contract which was specifically enforceable.
In my opinion, grounds of appeal Nos. 1, 2, 3, 5, 6, 7 and 8 of the memorandum of appeal fail.
I pass on to consider ground 4 of the memorandum of appeal which alleges that the parties sold
or
permitted the sale of spirituous liquor contrary to the Liquor Ordinance (Ordinance No. 5 of
1955) and
the Liquor Rules, 1955 (L.N. No. 31 of 1955) and always knew and meant the occupation to be
for such
illegal purposes and that, accordingly, the claim for rent was tainted with illegality.
The learned judge decided this issue in favour of the respondent thinking that r. 14 (2) of the
Liquor
Rules, 1955, covered the point. He, however, overlooked the fact that r. 14 applies to club liquor
licences
which are licences for the sale of non-spirituous, and not spirituous liquor.

lOMoARcPSD|10710373
Mr. Khanna argued that cl. 4 (e) of the agreement was a sham and not intended to be operated
and he
pointed to the fact that applications for spirituous liquor licences for 1957, 1958 and 1959 had
been made
in the name of, and by, the respondent company and not by the appellant. Mr. Baerlein, for the
respondent, denied that the agreement was a sham. He relied on cl. 4 (e) of
Page 940 of [1960] 1 EA 926 (CAK)
the agreement and pointed to the evidence of Mr. Sawyer, a director of the respondent company
who
testified:
“We did contemplate parting with our licences for club. We were obliged to do this by cl. 4 (e) of
our
agreement. We were not bound to help defendant get a licence under our agreement. The
defendant had to
apply for the licence.”
The appellant was not called as a witness. Mr. Smith, an employee of the Kampala Municipality
was the
only defence witness called. He produced a file showing no change of ownership of the licence
of the
Black Cat Club since 1956 and proved that the appellant had never made an application for a
club
licence. The agreement was on the face of it a perfectly legal agreement and there was no
evidence that
the parties when they entered into it had any illegal purpose in contemplation. In my opinion, it
was not
rendered unenforceable by the respondent by the fact that the appellant failed to apply for the
liquor
licence as under cl.4 (e) it was bound to do. The appellant having failed to perform its obligation
in this

lOMoARcPSD|10710373
respect, the club would have lost its licence to the detriment of both appellant and respondent if
the
respondent had not applied. If the respondent in so doing misrepresented the position to the
Licensing
Authority, it is for that Authority to take action. There is no evidence that when the agreement
was made,
the parties intended to act illegally, and the fact that the appellant failed to honour his
undertaking
contained in cl. 4 (e), thereby forcing the respondent to apply for the licence or stand by and see
it lost
did not, in my view, taint a legal agreement with illegality or render it incapable of enforcement.
Ground 9 of the memorandum of appeal avers that, as licences with a view to letting on the
respondent’s own account were applied for between September 16, 1958, and December 12,
1958, there
was no continued occupation (by the appellant) or consideration for the quarter’s rent from
September 15
to December 15, 1958. These licences were applied for by the respondent after the appellant had
abandoned occupation of the premises. I think that it was for the appellant to satisfy the learned
judge
that the delivery of the keys of the club to the respondent’s accountants was a valid termination
of the
contract, or of the tenancy at will whichever it be called, carried into effect before the Shs.
5,100/-
payable in advance on September 15, 1958, fell due. The appellant failed to satisfy the judge of
the facts
necessary to establish this and I am not prepared to say that the judge was wrong. The fact that,
as
alleged in ground 9, licences may have been applied for by the respondent between September
16 and

lOMoARcPSD|10710373
December 12, 1958, with a view to re-letting the premises would not establish that the key were
delivered
to a servant or agent of the respondent authorised to receive them and were received in time to
save the
appellant’s having to pay for that quarter. In my opinion, that ground also fails.
I would dismiss the appeal with costs.
Gould JA: agree and have nothing to add.
Crawshaw JA: I also agree.
Appeal dismissed.
For the appellant:
D. N. Khanna and S. A. Pinto, Kampala
For the respondent:
Patel & Patel, Kampala
A. Baerlein
D. G. Thomas (Registrar of Titles, Uganda) as amicus curiae.

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Souza Figueiredo - Case Law

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Souza Figueiredo & Co Ltd v Moorings Hotel Co Ltd

[1960] 1 EA 926 (CAK)

Division: Court of Appeal at Kampala

Date of judgment: 6 December 1960

Case Number: 42/1960

Before: Sir Kenneth O’Connor P, Gould and Crawshaw JJA

Sourced by: LawAfrica

Appeal from: H.M. Supreme Court of Uganda – Lewis, J.

[1] Land registration – Agreement creating sub-sub-lease – Agreement defective in form –

– Uganda Order-in-Council, 1902, s. 15 – State of Victoria (Australia) Transfer of Land Act,

Liquor Rules, 1955, r. 14 (2) (U.).

Downloaded by Mike Mullah (mikemullah88@gmail.com)

Page 927 of [1960] 1 EA 926 (CAK)

should be construed “ut magis valeat quam pereat”.

intending lessor a registrable lease.

stipulation in a document of which specific performance could be obtained in equity, or as a term

of common law tenancy at will, it was enforceable.

Downloaded by Mike Mullah (mikemullah88@gmail.com)

illegality or render it incapable of enforcement.

Cases referred to in judgment:

(1) Walsh v. Lonsdale (1882), 21 Ch. D. 9.

(2) Ariff v. Jadunath Majumdar (1930), 58 Cal. 1235.

(3) Maddison v. Alderson (1882), 8 App. Cas. 467.

(4) Ramsden v. Dyson (1886), L.R. 1 H.L. 129.

(6) Davis v. McConochie (1915), 15 S.R. 510.

(7) Pitman v. Woodbury (1848), 3 Ex. 4.

(8) Toler v. Slater (1867), L.R. 3 Q.B. 45.

(9) Purchase v. Lichfield Brewery Co., [1915] 1 K.B. 184.

(10) Hallen v. Spaeth, [1923] A.C. 684.

The following judgments were read by direction of the court:

respondent are both limited companies carrying on business at Kampala.

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was ten years from March 15, 1952.

Page 928 of [1960] 1 EA 926 (CAK)

plaint was filed on November 18, 1958.

operative provisions. Paragraph (3) reads:

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fifty-six and thereafter on the last day of every succeeding month.”

Paragraph (4) reads:

hereby covenants with the company as follows:

pay all fees and duties in respect thereof.”

There followed other covenants whcih it is not necessary to set out.

Downloaded by Mike Mullah (mikemullah88@gmail.com)

was for a term exceeding three years.

Page 929 of [1960] 1 EA 926 (CAK)

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the defendants occupied the premises

handed to Mr. Jones.

Downloaded by Mike Mullah (mikemullah88@gmail.com)

The following agreed issues were framed:

1. What is the effect of the unregistered agreement of April 16, 1956?

Page 930 of [1960] 1 EA 926 (CAK)

3. Is the said agreement of April 16 tainted with illegality? If so, is it void?

invalidate the said agreement?