Non haec in foedera veni. It was not this that I promised to do" (Davis Contractors v Fareham Urban DC [1956] AC 696 per Lord Radcliffe). In order to determine whether frustration of a contract has taken place the court adopts the multi-factorial approach set out by Rix LJ in Edwinton Commercial Corporation v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) 2007 EWCA Civ 547 where "among the factors which have to be considered are the terms of the contract itself, its matrix or context, the parties' knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of the contract, at any rates so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties' reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances". So construing the contract in the usual way and in accordance with the usual rules is important (and will often resolve the question) but the exercise requires the court to take into account factors which would never be taken into account when construing a contract. Matters of subjective intent such as the assumptions and expectations of the parties are considered because the law recognises the limits of an objective construction exercise when dealing with a truly unanticipated supervening event (whether that be caused by illegality, impossibility or frustration of purpose).

These rules, in theory, apply to all contracts and in Scotland, at least, no real distinction has been made where leases are concerned. Two cases are particularly relevant. First, in Denny Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265 a long lease on a timber yard was held to be frustrated by an emergency order passed by the government following the outbreak of the Second World War. It was, the court said, impossible to know the length of the war but the presumption had to be that the war may continue for a long time and that, in the absence of any certainty on the issue, the contracting parties could not be left in indefinite suspense. So the lease was at an end. In Tay Salmon Fisheries Co Ltd v Speedie 1929 SC 593 the court dealt with another case arising out of the war. Here the RAF had taken over certain land on the Tay for target practice. The lease involved was for 19 years and the target practice was only occasional. However, Lord Sands held that "even though the Air Ministry endeavour to exercise their rights civiliter, the value of the salmon fishings is destroyed and that the area not affected is so small and of so little value that, if it is regarded as alone freely available, the character of the fishery is entirely altered". Again, the Scottish court held the lease to be frustrated.

In the Tay Salmon case, however, Lord Sands alludes to the fact that the position in England is different. He says that "…it might be suggested that, if during the currency of the term the fishery rights through external interference have become worthless, they have perished to the person to whom for the term they belonged and, as this has happened through no action of the landlord, the tenant remains liable in payment of the annual sum stipulated. This, I understand, is the view to which the law of England gives effect. But this is not how the law of Scotland treats the contract of landlord and tenant". Indeed, in an English case arising as a consequence of the war Cricklewood Property and Investment Trust Ltd v Leightons Investment Trust Ltd [1945] 1 All ER 252 the House of Lords confirmed that the approach in England was different. In that case, the imposition of building restrictions by the government did not frustrate the lease largely on the basis outlined by Lord Sands - i.e. that the lease creates an estate in land vested in the lessee which could never be frustrated even though the contractual obligations were effectively suspended by wartime regulations. The English courts also put a significant emphasis on the length of the unexpired term of the lease given that this was a 99 year lease with more than 90 years to run assuming (contrary to the Scottish courts) that the war would only last for a fraction of that term.

Following Cricklewood the English courts effectively rejected the idea that leases can be frustrated in the way that other contracts can until National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 in which Lord Simon, at least, accepted the possibility that leases can be frustrated. Notwithstanding that acceptance, the English court in Panalpina still refused to give effect to the frustration argument despite the tenant of a 10 year lease arguing that a road closure and subsequent lack of any access to the leased premises made the premises impossible to use. This is a result which would have been considered inequitable in Scotland. Again, reliance was placed on the temporary nature of the closure compared to the length of the unexpired term of the lease. Panalpina was, however, a softening of the approach of the English courts to leases and Rix LJ in the Canary Wharf decision expressly doubts whether the argument that leases are special because they create property interests is right as the court in Panalpina implicitly accepts that a lease which continued to subsist as a property interest could nonetheless be frustrated.

It will be very interesting to see what effect the current crisis has on the law in both jurisdictions. One point which we need to bear in mind is that, for all the wartime analogy used by politicians, this is not a war. There is no doubt that the government measures put in place are temporary and so the idea of uncertainty raised in the earlier Scottish war cases does not arise to the same extent. Accordingly, arguments about the length of the interruption as opposed to the unexpired term of the lease may be easier to make. That said, it is difficult to see the Scottish courts taking the same doctrinaire approach to frustration as the English courts have done.

The approach in Scotland is, and always has been, more equitable, both in relation to the operation of frustration as regards leases and to loss (which is outwith the scope of this note but essentially allows for an equitable adjustment on the basis of unjustified enrichment in a way which English law is reluctant to do). In a recent concept note, the British Institute of International and Comparative Law considered what areas of law may be ripe for change in order to ameliorate the more damaging economic effects of the current crisis. The law of frustration in England particularly is surely one such area. Leases are not special. They are contracts like any other and the doctrine of frustration should apply to them as it applies to any other contract. The approach of the English courts is particularly surprising given the purpose of common law rules on frustration which are to do justice between the parties and ensure fairness in light of an unanticipated supervening event caused without fault by either party. A greater focus on the purpose of the rules of frustration and a more inventive use of the law in order to provide justice between the parties will hopefully see a softening of the historic approach and more alignment of approach between the two jurisdictions.