A warehouse lessee claimed frustration when street closure prevented access for 20 months of a 10-year lease. The House of Lords held that while the doctrine of frustration can in principle apply to leases, it would only do so in rare circumstances. On the facts, the interruption was insufficient to frustrate this lease.
Facts
By a lease dated 12th July 1974, National Carriers Ltd (respondents/landlords) let a purpose-built warehouse in Kingston Street, Hull to Panalpina (Northern) Ltd (appellants/tenants) for a term of 10 years from 1st January 1974. The only access to the warehouse was via Kingston Street. On 16th May 1979, the City Council closed Kingston Street to all traffic due to the dangerous condition of a derelict Victorian warehouse opposite, which was a listed building. The closure meant the demised premises could not be used as a warehouse. The appellants ceased paying rent and claimed the lease had been frustrated.
The Lease Terms
The lease restricted use to warehousing in connection with the tenant’s business. Rent was initially £6,500 per annum, increasing to £13,300 for the second five years following a rent review. The lease contained provisions for suspension of rent in case of fire damage but no provision for other interruptions.
Issues
Two main questions arose for determination:
- Whether the doctrine of frustration can ever apply to determine a lease
- Whether, if applicable in principle, there was a triable issue that the lease had been frustrated on the facts
Judgment
The House of Lords unanimously dismissed the appeal but divided on the question of principle. Lords Hailsham, Wilberforce, Simon of Glaisdale and Roskill held that the doctrine of frustration can in principle apply to leases, though such cases would be extremely rare. Lord Russell of Killowen expressed reservations about extending the doctrine beyond cases where a lease is merely incidental to a wider commercial adventure.
On the Applicability of Frustration to Leases
Lord Wilberforce identified that the arguments against application of the doctrine to leases were twofold: first, that a lease creates an estate in land which cannot be divested; and second, that risk passes to the lessee on conveyance. He rejected both arguments, noting that leases can be determined according to their terms on specified events, and that risk allocation depends on the terms of the lease.
Lord Simon of Glaisdale emphasised that the doctrine of frustration was developed to escape injustice where enforcement of literal terms would be unjust after significant change in circumstances. He stated that justice might make similar demands regarding leases, and noted that to deny the doctrine’s application would create anomalies, particularly the distinction between leases and licences.
On the Facts
All their Lordships agreed that even accepting frustration could apply to leases, the appellants failed to establish a triable issue. Lord Wilberforce noted that at the time of closure, the lease had over four and a half years to run, the interruption lasted approximately 20 months, and nearly three years would remain after access was restored. The interruption represented only about one-sixth of the total term.
Implications
This decision established that the doctrine of frustration can in principle apply to leases, resolving a long-standing uncertainty in English law following the divided opinions in Cricklewood Property and Investment Trust Ltd v Leighton’s Investment Trust Ltd [1945] AC 221. However, the House emphasised that successful invocation of the doctrine would be extremely rare, likely limited to catastrophic events. The case confirmed that temporary interruptions of use, even if prolonged, are unlikely to frustrate a lease where substantial time remains on the term after the interruption ends. The decision represents an important development in recognising the contractual nature of modern commercial leases while maintaining appropriate limits on the frustration doctrine.
Verdict: Appeal dismissed. The House of Lords affirmed the Order of the Queen's Bench Division granting summary judgment to the respondents. While holding that the doctrine of frustration can in principle apply to leases, the appellants failed to establish a triable issue that this lease had been frustrated.
Source: National Carriers Ltd v Panalpina (Northern) Ltd [1980] UKHL 8 (11 December 1980)
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To cite this resource, please use the following reference:
National Case Law Archive, 'National Carriers Ltd v Panalpina (Northern) Ltd [1980] UKHL 8 (11 December 1980)' (LawCases.net, August 2025) <https://www.lawcases.net/cases/national-carriers-ltd-v-panalpina-northern-ltd-1980-ukhl-8-11-december-1980/> accessed 2 April 2026
