Shiloh Spinners Ltd v Harding

Shiloh Spinners Ltd v Harding [1973] A.C. 691

ASSIGNMENT – COVENANTS – EQUITABLE REMEDIES – LEASEHOLDS – RIGHT OF RE-ENTRY

Facts

The claimants (S) were assignees of two long leases of adjoining mills. S assigned part of the premises to T, who in turn assigned to H. The assignment to T contained several covenants of which H was aware, including a covenant not to diminish the support and protection given to the retained premises. H committed several breaches of covenant, including demolishing most of the buildings.

C sought possession of the premises and H both disputed C’s right of re-entry and sought relief against forfeiture. The court at first instance found in favour of H but this decision was reversed by the Court of Appeal. An appeal was brought by H before the House of Lords.

Issues

A number of issues fell to be resolved by the House of Lords. Chief amongst them, however, were whether (1) A right of re-entry was registrable as a Land Charge, the absence of which would preclude it being enforceable against H; and (2) Whether relief from forfeiture could, in principle, be made available in cases of wilful breach.

Decision/Outcome

The House of Lords, finding in favour of C, held that a right of re-entry, as an equity, would not fail for want of registration. Moreover, as an equitable proprietary right, it would be enforceable against H, as it was accepted that H had actual notice of its existence.

As to whether relief from forfeiture could be made available in cases of wilful breach it was found that, whilst the circumstances in which it would be appropriate to grant relief would be rare, the fact that forfeiture proceedings were initiated by deliberate breach of covenant was not, of itself, fatal to the case of a covenantee.