Griffith v Pelton

An option in a lease allowing the lessee, executors, administrators and assigns to buy the freehold is a collateral contract and a chose in action. It is not merely a covenant whose benefit must run with the land. The reference to assigns ordinarily means assignees of the leasehold term. Where the lease so provides, the benefit passes with a mere assignment of the term, even without express reference to the option, and may be enforced against the original lessor’s personal representative. If necessary, a later assignment to the assignee of the term is also effective. A notice exercising the option may expire after the term where the lease permits notice to be given before expiry and contains no contrary requirement.

The respondent claimed a declaration and consequential relief after giving notice exercising an option in a lease to purchase the freehold and a leasehold right of way. The original lessee had assigned the lease to him in 1948, but the assignment did not expressly mention the option. After the lessor’s death, the respondent received a further deed purporting to assign the option and gave notice exercising it.

Vaisey J held that the 1948 assignment had vested the benefit of the option in the respondent. The executrix appealed. The central issues were whether the option passed with the lease without express reference to it and whether the notice was effective although it would expire after the lease term.

1. Appeal dismissed. The Court of Appeal, in the judgment delivered by Jenkins LJ, upheld Vaisey J’s declaration. The appeal was dismissed with costs, while costs below remained reserved.
2. Nature of the option. An option to purchase contained in a lease is collateral to the demise but is itself a distinct conditional contract. It is a chose in action whose benefit is assignable where the contract is not personal. The rule that covenants do not run with land does not prevent contractual enforcement by an assignee of the term against the original lessor or the lessor’s personal representative.
3. Construction and assignment. The word Lessee, defined to include executors, administrators and assigns, referred to assigns of the leasehold term. A mere assignment of the term therefore passed the benefit of the option, although the assignment contained no express reference to it. The court treated In re Adams and The Kensington Vestry 27 Ch D 394, Friary Holroyd and Healey’s Breweries Ltd v Singleton 1899 2 Ch 261 and Batchelor v Murphy 1925 Ch 220 as supporting that construction.
4. Woodall v Clifton. The court distinguished Woodall v Clifton 1903 2 Ch 257. That decision concerned remoteness and whether an option could bind assignees of the reversion. It did not decide that an assignee of the term could not enforce the contractual option against the original lessor.
5. Alternative assignment. Even if the 1948 assignment had not included the option, the 1956 deed would have effectively assigned it to the respondent, who was the assignee of the term. The earlier assignment did not destroy the option.
6. Notice. The six-month notice was effective although it would expire after the lease term. The rent provision was not inconsistent with that result, and the final words of the option expressly contemplated notice given before expiry but expiring afterwards.

• Court of Appeal. Appeal from the declaration of Vaisey J was dismissed with costs. The declaration stood. Leave to appeal was refused by this court, subject to any application to the Appeal Committee.
• High Court. Vaisey J answered the first question in the respondent’s favour, holding that the 1948 assignment effectively vested the benefit of the option in him. The second question was not determined because it was unnecessary.