Ramsbury Properties Ltd v Ocean View Construction Ltd (St Christopher and Nevis)

A lease is capable in principle of termination for repudiatory breach, but the remedy will be rare because a lease also confers a proprietary interest, especially where it is long-term. The question is whether the breach, assessed at termination in light of actual and probable consequences, goes to the root of the agreement or deprives the tenant of a substantial or substantially whole benefit. On an objective and contextual reading, a grant of sleeping accommodation does not ordinarily prohibit basic living activities such as eating and laundering. A landlord’s settled and continuing prohibition of those activities may be repudiatory where it substantially defeats the known purpose of the letting and exposes the tenant to serious commercial consequences. A tenant may accept the repudiation without waiting for threatened forfeiture or self-help. The result depends on the exceptional facts, not on every incorrect restriction by a landlord.

Ramsbury leased a building to Ocean View for seven months to accommodate 250 workers carrying out hotel repairs. Ramsbury’s representative prohibited the workers from eating meals and doing laundry on the premises. Ocean View vacated and treated the lease as terminated for repudiatory breach.

Redhead J (Ag), in Claim No NEVHCV2009/0111, found that Ramsbury was in repudiatory breach and ordered a refund of the deposit. The Eastern Caribbean Court of Appeal, in SKBHCVAP2011/0020, dismissed Ramsbury’s appeal. The Privy Council considered whether the lease permitted those basic activities and whether Ramsbury’s continuing prohibition amounted to a repudiatory breach entitling Ocean View to terminate.

1. Appeal dismissed. The Board advised His Majesty accordingly. Ramsbury’s prohibition against eating meals and doing laundry on the premises was a breach of the lease.
2. The phrase “sleeping accommodation only” had to be interpreted objectively and contextually. It described the accommodation to be provided by Ramsbury and did not prohibit the workers from carrying out basic activities of life, including eating, laundering, washing and using toilet facilities. The factual background indicated that Ramsbury was not itself to provide meals or cooking facilities.
3. Permission to eat meals and do laundry could also be treated as terms implied by fact. They satisfied the business-efficacy and obviousness tests. The implied term concerning laundering bedding was additionally capable of supporting compliance with the express covenant to keep the premises clean and sanitary.
4. Repudiatory-breach principles apply in principle to leases. The proprietary interest conferred by a lease, particularly a long-term lease, means that termination for repudiatory breach is likely to be rare. Care must be taken not to undermine express or statutory remedies, including forfeiture.
5. The relevant implied terms were innominate terms. Applying Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, the seriousness of the breach had to be assessed by its consequences. The burden was on Ocean View, and the assessment was made at the time of termination, taking account of what had occurred and what was likely to occur.
6. The continuing prohibition was sufficiently serious. Ramsbury maintained its settled position, the lease’s known purpose was to house the workforce needed for the hotel repairs, and the prohibition created widespread dissatisfaction and an immediate threat that nearly one quarter of the workforce would return to Mexico. The breach deprived Ocean View of a substantial part, and substantially the whole, of the intended benefit of the lease.
7. Ocean View was entitled to accept the repudiation without waiting to see whether Ramsbury would exercise forfeiture rights or take self-help measures. The facts were exceptional because the lease was short-term and the continuing breach threatened to defeat its commercial purpose. The Board did not suggest that every incorrect restriction by a landlord would justify termination.

• Privy Council: Appeal dismissed. The Board advised His Majesty that Ramsbury’s appeal should be dismissed.
• Eastern Caribbean Court of Appeal (St Christopher and Nevis): Ramsbury’s appeal was dismissed in SKBHCVAP2011/0020. Baptiste JA gave the judgment, with which Blenman JA and Michel JA agreed.
• High Court of Justice of St Christopher and Nevis: Redhead J (Ag), in Claim No NEVHCV2009/0111, found a repudiatory breach, denied Ramsbury specific performance and damages, and ordered a refund of the US$56,000 deposit.