National Carriers Ltd v Panalpina (Northern) Ltd [1981]

Court: House of Lords

Facts: A tenant (D) held a 10-year lease for a warehouse that became unusable for 10 months due to a street closure. As a result, the tenant withheld rent, and the landlord (C) sued to recover the withheld rent. The tenant argued that the lease had been frustrated by the street closure, making the property unusable.

Issue: Could the doctrine of frustration apply to a lease contract, and was the lease frustrated due to the temporary closure?

Held: The House of Lords held that while frustration can apply to lease contracts in principle, the lease in this case was not frustrated. The 10-month interruption was not significant enough to frustrate a 10-year lease.

Key Judicial Statements: Lord Wilberforce acknowledged that frustration could theoretically apply to leases, as a lease is both a proprietary interest and a contractual arrangement. However, he ruled that the disruption in this case was not enough to frustrate the lease. Lord Russell dissented, arguing that leases should not be subject to frustration due to the indestructibility of land, and the tenant should bear the risk of unsuitability unless otherwise warranted.

💡 Leveluplaw: shows that leases can, in principle, be frustrated, but the circumstances must significantly disrupt the contract's purpose. Short-term issues affecting a long-term lease may not be enough to invoke frustration.