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bound to pay to the lessor the lessor’s solicitor’s
costs for same in accordance with the scale applicable
thereto under the Solicitors’ Remuneration Act.”
And in No. 37 : “ In the absence o f agreement
to the contrary, the lessee is liable to pay the costs
of both lease and counterpart including the duty
upon the counterpart.”
These opinions are clearly dealing with specific
points that might arise on taxation, on the assump
tion that the lessee is bound to pay costs.
They do not, o f course, conclude the matter in
this Court; and they may be based to some extent
on the Irish decision in re Mecredy (1920), I.R. 93.
However, I think I have sufficient evidence that
there is a custom here that a term is implied that the
lessee should pay the lessor’s solicitor’s costs o f
granting the lease or underlease.
A ll this, however, is irrelevant to the present
case because I do not think that the present trans
action is a lease or underlease, although it appears
to be such in form, I think, rather, that it comes very
close to the circumstances In
re
Webb : Still
v.
Webb (1897) I Ch. 144. That was a case in which
leasehold property held with other property under
one lease was sold by auction subject to a condition
that the purchaser should accept an underlease
for the whole of the unexpired term, less three days,
at an apportioned rent. The vendors’ solicitors
by virtue o f Rule 5 o f Part 2 o f Schedule I to the
General Orders under the Solicitors Remuneration
Act, 1881, claimed to be entitled to a scale charge in
respect o f the price and to a further scale charge
in respect o f the rent. It was held that the transaction
though carried out by way o f an underlease was in
fact a sale and that the solicitors were not entitled
to a charge in respect o f the rent. That is very close
to the present case in which a proportion o f lease
hold property was agreed to be transferred to the
present plaintiff by way o f underlease for the whole
term less the last day at a rent which was less than
the rent reserved by the headlease. What Stirling,
J. said In
re
Webb : Still
v.
Webb at page 149, is
very relevant:
Then is it a lease ? In a sense no doubt, it is a
lease, but in truth it is a sale. It is described as a
sale in the conditions o f sale and it is so described
in the plaintiffs’ solicitor’s bill o f costs. It is a sale
carried out by an underlease, which is a well-known
conveyancer’s expedient, where the property sold
is held with other property under one lease, to avoid
an apportionment of the rent about which there
might be a difficulty with the superior landlord.”
That applies very closely to the present case.
There was a letting agreement for three years
between the parties. By a subsequent agreement—-
under which the question arises—an “ option to
purchase the premises ” was conferred. This agree
ment provided that “ the sale shall be effected by
way o f underlease.” The lessors are called the
vendors, the lessees are called the purchasers ; the
purchase is expressed to be by underlease for the
full term less the last day
;
and the agreement refers
to the consideration for the purchase as “ the price
or sum o f £4,500.” The rent provided for is the
annual sum o f £ 18 , and it is only in respect o f the
amount o f that rent that In
re
Webb can be suggested
to be distinguishable. The underlease was to be in
the form o f a draft stated to be annexed to the
agreement; but, in fact, no draft was so annexed
The rent was clearly much less than a rack rent.
I should also, I think, refer to McGowan
v.
Harrison (1941) I.R. 331, which is somewh at
analagous although, perhaps, not as helpful here
as Webb’s Case. The net point in McGowan
v.
Harrison was whether the transaction entered into—
which in form was a lease at £8 per year at a fine of
£775—was a “ contract for letting for habitation.”
It was held not to be. The case is, however, an
instance o f an ostensible letting not being treated
as such, when the substance o f the matter was
regarded.
In the present case, I think I must look at the
substance o f the transaction in deciding whether
it was a letting or a sale. It has been submitted that
Webb’s case is distinguishable from the present,
because in Webb’s case the lessor had retained no
interest in the property and the sub-lease was
merely a conveyancing device. That submission
is based on the fact that in Webb’s case the underlease
was to be “ at an apportioned rent ” while the ground
rent reserved in the present case is o f such an amount
that if similar ground rents were reserved on other
houses to be built there would be a profit to the
lessor. The headlease provided for the building of
sixty houses and a maximum yearly rent o f £ 158 ,
with a provision for the protection o f any sub-lease
which reserved a yearly rent o f not less than £ 15 .
Assuming each sub-lease reserves at least a rent o f
£ 15 yearly, there must be a profit rental created.
In fact, although all the houses have not been built,
a profit rent has already been created by reason o f
some having been sublet at rack rents.
I do not think, however, that is a vital distinction.
For the purpose o f determining whether the trans
action is a lease or a sale it is not necessary to con
sider whether the rent is an aliquot portion o f the
head rent. It seems to me sufficient if it is less,
provided the substance o f the transaction appears to
be a sale. The sub-lessor can split up the head
rent as he likes. He can reserve rents less than he is
obliged to pay. Usually he tries to reserve in the
aggregate, at least the same rent. A further difficulty
r9