Walsh v Lonsdale (1882) 21 Ch D 9

Facts

• The case concerned an agreement between Lonsdale (landlord) and Walsh (tenant) for a seven-year lease of a mill.
• The agreement required rent to be paid quarterly in arrears, but also provided that one year’s rent was payable in advance if demanded.
• No formal legal deed of lease was executed, although Walsh took possession of the mill and paid rent quarterly.
• Lonsdale subsequently demanded one year’s rent in advance, in accordance with the agreement.
• Walsh contested this demand, asserting that, in the absence of a formal deed, he was a common law tenant without the obligation to pay a year’s rent in advance.
• The dispute arose because, at the time, a lease for a term exceeding three years required execution by deed, which had not occurred.

Issues

1. Whether an agreement to grant a lease, without execution of a formal deed, created an enforceable leasehold interest.
2. Whether equity would recognize the landlord’s right to advance rent as stipulated in the agreement, despite the absence of a legal lease.
3. Whether the Judicature Acts allowed equitable principles to override strict common law formalities regarding lease creation.

Decision

• The Court of Appeal ruled in favour of Lonsdale, holding that an enforceable agreement for a lease created an equitable lease.
• The equitable lease bound the parties to the same terms as the intended legal lease, including the provision for rent payable in advance.
• Under the Judicature Acts, equitable rules prevailed in cases of conflict with the common law; thus, the agreement was specifically enforceable in equity.
• The tenant could not escape agreed obligations on the basis of non-execution of a deed.

Legal Principles

• An agreement for a lease that is specifically enforceable gives rise to an equitable lease, effective from the date of agreement.
• Equity treats as done that which ought to be done, enforcing the contract’s terms as if a legal lease had been granted.
• After the Judicature Acts, if equity and common law are in conflict, the rules of equity apply.
• Taking possession and paying rent under an agreement constitutes part performance, supporting the existence of an equitable lease.

Conclusion

Walsh v Lonsdale established that a specifically enforceable agreement for a lease creates an equitable lease, granting the parties the same rights and obligations as if a legal lease had been executed, thereby harmonizing common law and equitable doctrines following the Judicature Acts.