The Gazette 1952-1955

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