Consultation Paper on the General Law of the Landlord and Tenant

was offered a tenancy he turned this down. Despite all this Peart Jconcluded that he had had a tenancy from the beginning. The judgeput much weight on the English authorities notwithstanding that theywere dealing with residential arrangements, whereas the Smith caseinvolved a commercial arrangement.1.30 The Commission would make a number of comments aboutthese two cases. First, it would appear to be extremely difficult toreconcile the judicial approaches: in Kenny Homes both Costello Pand the Supreme Court clearly put considerable weight on theprovisions of the agreement, as evidence of what the parties intended;in Smith Peart J disregarded the provisions of the agreement, eventhough he accepted that they did reflect exactly what the parties’intended. In that sense the approach adopted in Smith seems difficultto reconcile with section 3 of Deasy’s Act. 125 It is one thing toscrutinise the terms of an agreement in order to protect a party fromunfair advantage being taken by the other party through a weakbargaining position and to prevent “sham” transactions, but it is quiteanother to disregard terms which, the evidence confirms, reflect bothparties’ intention and understanding. This seems to be carrying thecourts’ supervisory function much too far and is difficult to squarewith the long-established principle that it is not the courts’ function torewrite commercial agreements. Furthermore, it is difficult toreconcile with Henchy J’s statement of the parameters of the judicialrole quoted earlier. 126 Perhaps the most questionable aspect of theapproach in Smith is that it put so little weight on the fact that theparties’ agreement was negotiated at arms length on their behalf bytheir own, independent professional advisers, including their lawyers.1.31 The Commission has concluded that the uncertainty thatnow exists in our law and practice as a result of such not easilyreconciled, decisions, should not be allowed to continue. The needfor some legislative guidance seems clear, but the question remains asto what form it should take. The Commission is not unsympathetic to125126It is, however, worth pointing out that the agreement in Smith containedmore clauses commonly found in leases than the agreements in KennyHomes (where, eg, there was no forfeiture clause or alienation clause). Yetin Smith the “landlord’s” solicitor had refused to allow a covenant for quietenjoyment to be included, on the basis that it was incompatible with a merelicence and the tenant’s solicitors conceded this.Paragraph 1.26 above.29