By Christian N. Oti, Esq.
ABSTRACT
The outbreak of the COVID- 19 in Nigeria has brought about an enormous impact on the people; ranging from business transactions, employments, contracts, security, transportation, law and justice system delivery, e.t.c. However, one case that must not be neglected is the possible impact of the pandemic on the Nigerian populace who in not a small cases, depend on the arrangement of a Landlord and tenant relationship to find shelter and by extension stability for themselves, close family members and other dependants. This is evident in the many styles of periodic tenancy; like the monthly, quarterly, half-yearly and yearly durations that is prevalent in the country.
It is therefore the purpose of this paper to appraise the doctrine of frustration to tenancy agreements vide the circumstances where same may apply, while sieving through the cases on the arguments for the applicability or otherwise of the doctrine of frustration to tenancy. The work will also canvass for the marriage of the doctrine to periodic tenancy in compelling circumstances of the facts of each case.
INTRODUCTION
It can really be a difficult task to clearly distinguish between a license and a tenancy, but one character that has been fairly settled by the authorities, statutes and by learned authors is that of exclusive possession. A tenant has full possession of a demised property but a licensee is limited; it is at best a permission to occupy a premises. It is subject always to the proprietary interest of the landlord to the reversion.
In the case of African Petroleum Ltd. V. Owodunni[1], the word ‘tenant’ was defined by the Supreme Court as below: “The definition of the tenancy is very wide and includes all persons who occupy premises lawfully. Whether a person pays regular rent, subsidized rent or indeed no rent is immaterial. The qualification for becoming a tenant under the law is lawful occupation. Hence, when the initial occupation of premises is lawful, the occupier, even if holding over becomes a protected tenant qua the landlord.
The thin line in identifying a tenancy is further expressed in the many statutes of each states of the country covering both residential and commercial premises, as the subject of tenancy is a residual matter. As stated earlier, the primary feature of a tenancy is exclusive possession. It may be apropos to state that a tenancy may be periodic or a fixed (term certain) and different principle of law applies to them. For instance, a fixed term tenancy, say for five years is determined automatically by effluxion of time or arrears of rent for a certain period depending on the law of the state with respect to tenancy; while, a periodic tenancy can only be determined by an appropriate notice to quit[2].
The author has had cause to interact with some legal practitioners on this score, but one thing is apparent: the many agreements prepared in terms of a fixed term, usually for a year, is what many refer to as periodic tenancy, when in essence it’s a fixed term, and posits erroneously that periodic tenancy can be determined by effluxion of time. The choice of words used in drafting the habendum of tenancy or lease (tenancy of above three years) is important as parties are bound by their agreement[3].
THE DOCTRINE OF FRUSTRATION IN CONTRACTS
It is safe to state that property transactions are in two phases; these are the contractual and conveyance stages. Tenancy agreements must meet the ingredients of contract for there to be a valid lease or tenancy. Consequently, the discussion on frustration is vital as it applies to leases although there are arguments contrary to its applicability. It is the author’s view that there is really no reason why the doctrine of frustration should not apply to leases, and to all forms of tenancies for that matter.
Frustration occurs whenever the law recognizes that, without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni: it was not this that I promised to do.[4]
The Supreme Court has stated that the doctrine of frustration applies to all categories of contracts. It is defined as the premature determination of an agreement between parties, lawfully entered into and which is in the course of operation at the time of its premature determination, owing to the occurrence of an intervening event or change of circumstances so fundamental as to be regarded by law both as striking at the root of the agreement and entirely beyond what was contemplated by the parties when they entered into the agreement.[5]
The courts have recognized certain situations or events as listed below that constitute frustration- a. subsequent legal changes. b. outbreak of war. c. destruction of the subject matter of the contract. e. cancellation of an expected event. In other words, a court would recognize that a contract is frustrated where after the contract was concluded, events occurs which make performance of the contract impossible, illegal or something radically different from that which was in the contemplation of the parties at the time they entered into the contract. A contract which is discharged on the ground of frustration is brought to an end automatically by the operation of law, irrespective of the wishes of the parties.[6]
APPLYING THE DOCTRINE OF FRUSTRATION TO LEASES
In the famous case of Cricklewood property v. Leighton’s investment,[7] the House of Lords was even divided on the question as to whether or not the doctrine of frustration can apply to a demised of Real property. In that case, a parcel of land was demised to leases for a term of 99 years of which they covenanted to erect a number of shops and to pay annual rent. In an action by the lessors to recover rent, the lessees repudiated liability on the ground that the obligation to pay rent had been excused or discharged by frustration since the wartime restriction placed by the government had made it impossible to erect the shops. The Court of Appeal rejected the contention of the lesses and held that the doctrine of frustration has never been applied to a demise of real property. On appeal to the House of Lords, Viscount Simon L.C. and Lord Wright held the view that the doctrine may in certain cases apply to leases. They observed that on rare occasions, a lease may be frustrated as, for instance, if some convulsion of nature swallowed up the property altogether or buried it up in the depth of the sea or in the case of a building lease, if by subsequent legislation a building on the land was permanently prohibited.
However, Lord Russel and Goddard were of the view that the doctrine of frustration can never apply to put an end to a lease. The rationale of their view is that a lease creates an estate in the land vested in the lessee and that that estate can never be frustrated even though some contractual obligation under the lease such as the convenant to build the shops, may be suspended or impossible of performance. Lord Porter, who was the fifth member expressed no opinion on the issue.
The above case shows us the difficulty in applying the doctrine of frustration to leases. It is urged that the contractual basis of transactions as this should play a fundamental role in the marriage of the doctrine to leases. In the Araka’s case[8] the plaintiff let out his property to the defendant at an annual rent. It was agreed that the expatriate of the defendant company will reside there. As a result of the Nigeria-Biafra war, the expatriates were asked to leave that region of the country (portharcourt). After the war, the plaintiff sued for the rent during the wartime. The defence of frustration was upheld.
It is instructive to note that the demised property in the above case was on a periodic tenancy. Although, it seems that what impressed the mind of court was the fact that the agreement was premised on the occupation of same by the expatriates and the non-return of the expatriates to the premises after the war.
In National Carriers Ltd v. Panalpina(Northern)Ltd[9], National carriers Ltd granted Panalpina a 10 year lease of a warehouse. The only road wherein the warehouse could be accessed was closed five years after by the government for 20 months. Panalpina refused to pay for the period and pleaded upon this suit that the lease was frustrated as a result of the closure, and as such was not liable for the rent. It was held that the lease has not been frustrated as the 20 months period was not a significant interruption to the lease.
The following decisions stress the fact that the doctrine of frustration can be applied in leases where the very foundation of the contract cannot be performed, and can be applied even to periodic tenancy. The eminent professor Emeka Chianu opines doubt on the application of the doctrine to periodic tenancy.[10] He further avers that, in the case of a periodic tenancy, however, once an event occurs which either party considers as frustrating the tenancy, all one of them has to do is to give notice terminating the relationship.[11]
The author is of the view that there is nothing that ought to hinder the application of the doctrine to periodic tenancy where the fundamentals of the contract cannot be performed. For instance, many premises used for theatres or cinema have been locked right from the outbreak of the COVID-19 in Nigeria up to the time of this writing; assuming the tenancy is periodic (say yearly), it would definitely be unjust to require rent for the months gone without use. Consider also a building gutted by fire, thus depriving the purpose of residence or commerce. I do not see how the doctrine shouldn’t be applied just because it’s a periodic tenancy. Even where the premises is occupied constructively, the court should look at the essence of the contract and hold that the tenancy is frustrated if the foundation of the contract cannot hold.
CONCLUSION
The relationship of landlord and tenant is one that may present difficulties to the parties, such as the intricate nature of vesting an estate in another, and linking up same with the contractual obligations attached thereto; and which in certain cases may result to frustrating incidences. It is imperative that the stand of protecting the tenant who in law is presumed to be the weaker party is upheld in cases of frustration no matter the type of tenancy it is, so far as there are compelling circumstances inhibiting the performance of the essence of the contract. Although, the doctrine of frustration is an all or nothing principle, it may also be proposed that in certain cases the impact of the frustrating events be shared among the parties.
Law is not cast in iron. It must in all times evolve when necessary to meet the demand of society. It is therefore urged that depending on the facts of each case, the impact of the Covid-19 on leases should be regarded as a frustrating element, and also applied to periodic tenancy.
[1] (1991) 8 NWLR (pt. 210) 391
[2] Hilda Josef v. A. S. Adole (2010) LPELR- CA
[3] Alhaji Sadi Abdulaziz & Anor v. Alahji Bello Garba (2019) LPELR-48086-CA
[4] Lord Radcliffe in, Davis Contractors Ltd v.Fareham UDC(1956)2 All ER 145, 160, quoted in Emeka Chianu, Law of Landlord and Tenant, 2nd edition, Lawlords Publications, Abuja, 2010, pg.340
[5] Per Adekeye, J.S.C. in AG Cross River state v. AG Federation & Anor (2012) LPELR- 9335(SC) (Pp. 49-50, paras. E-A)
[6] Ibid, at Pp. 50-51, paras. B-A
[7] (1945) A.C. 221 quoted in Araka v. Monier Construction Co.(NIG)Ltd(1978) LPELR-531(SC) Per Mohammed Bello, J.S.C.
[8] Ibid
[9] (1981) AC 675
[10] Ibid, n.4 pg 342
[11] Ibid
