12 minute read
T the Fire Courts
THE FIRE COURTS
Professor Jay Tidmarsh (Notre Dame Law School) in conversation via webinar with Master Donald Cryan for the First Selden Society and the Inns of Court Annual Lecture held on Wednesday 21 October 2020
The Great Fire of London (1666) © Painting by Philippe-Jacques de Loutherbourg, circa 1797
Donald Cryan: The idea of having this webinar on the Fire Court was conceived at about the same time as the terrible fire at Grenfell tower in West London. Many, many lives were lost. Little did we know then that there would be fire followed by plague, in the form of the Covid-19 pandemic. In many ways, the situation which has arisen is rather like the situation that existed when the Fire Courts came into being in 1666.
Jay, perhaps you could paint a picture for us of what was happening in London in 1666?
Jay Tidmarsh: I would say that the situation in London is grim, especially after the fire. It is not that there isn’t a willingness to rebuild the City of London, but there are financial and legal impediments to do so. But London was rebuilt, and I think it is in no small measure because of the operations of the Fire Court. Then, of course, it was plague and then fire. Now it is fire and then plague.
DC: Can we start by understanding what London was like after the Great Plague, and the period leading up to the fire? During the COVID-19 lockdown, if you went into the city, it was virtually empty. Might that be a reasonable comparison to how it was in 1666?
JT: I think there are some comparisons. The Great Plague begins in London in April 1665. It has more or less run its course by March of 1666, but it is not unreasonable to think that as much as a quarter of the City of London died between 1665 and 1666. The City of London itself was teetering on the brink of financial ruin at this time. Its guild system, its ability to control trade in the metropolitan area, was collapsing. Roughly a quarter of its revenues came from rents, and the rental market had plummeted as a result of the plague. Then came the Great Fire. DC: A Great Fire like that could never have come at a good time, but it seems that it could hardly have come at a worse time?
JT: I think that is right. The Great Fire’s devastation of this wonderful medieval city was nearly complete. The fire destroys about 13,000 buildings. The Royal Exchange, the Customs House, most of the churches, many of the other buildings in the city are gone. The fire burns all the way down to the Inner Temple, where the Duke of York and his intrepid band of sailors fortunately saves the Inner Temple from destruction.
The Great Fire’s devastation of this wonderful medieval city was nearly complete. The fire destroys about 13,000 buildings. The Royal Exchange, the Customs House, most of the churches, many of the other buildings in the city are gone. The fire burns all the way down to the Inner Temple, where the Duke of York and his intrepid band of sailors fortunately saves the Inner Temple from destruction.
His Honour Donald Cryan (Hon) LL.D
I want to focus on one particular aspect of why this was such a catastrophic fire. There are limited opportunities for people who have money to invest in instruments that might pay a reasonable rate of return. If you wanted a safer kind of an investment, the best way was to invest in property. You would find a property, you would lease it, then you would turn around and sublease it to someone, either for an increased rack rent so that you would get a stream of income guaranteed over a number of years, or maybe you would just take a large payment at the beginning. On top of that, leases were used as a form of security against mortgages. They were used to create an early form of an annuity in some instances. Much of the wealth of England is tied up in these properties, all at a time when England is at war and Charles needs a lot of money, and he needs it quickly.
DC: Presumably, there were other vested interests as well as Charles who were very anxious to see this phoenix rise from the ashes as quickly as possible. But where do you start when you are faced with so much devastation?
JT: Many people have a vested interest in rebuilding as quickly as possible. But the difficulty is really not so much with the desire to rebuild; it’s with the practicalities financially. One of the difficulties is when the decision is finally taken to rebuild London on more or less on the same footprint with somewhat wider streets and brick buildings and so forth. Where does the money come from to compensate the property owners who lose some property in the process of rebuilding?
In addition to that, we have this rabbit’s warren of property interests that need to be cut through. And this is where law turns out to be particularly unhelpful, because nearly every one of these leases and subleases that have been executed contains a covenant, and that covenant requires the tenant to repair and rebuild the property should anything occur, including a fire. Ultimately, it falls upon the tenants in occupation to be the ones to rebuild the property.
If I am a landlord and you are a tenant, you have very little reason to want to rebuild the property. You are going to be required to rebuild a property in brick – a much better property than the property before – and if you’ve only got perhaps two or three years left on your lease, you have little incentive to rebuild that property, when I’m going to be the ultimate beneficiary of most of the reconstruction that you’ve done.
DC: As I understand it, the reconstruction under the Rebuilding Act required serious investment in terms of rebuilding in brick and in accordance with the building regulations that were designed to reduce the risk of fire in the future. What was going to provide the tenants with the incentive and indeed the means for rebuilding in accordance with the new legislation? JT: The Rebuilding Act sets the basic template for the modern construction in London. The Fire Disputes Act then establishes the Fire Court to resolve disputes between landlords and tenants – all with the goal of rebuilding the city as quickly as possible.
The wonderful thing about the legislation with respect to the Fire Court is that it actually provides for a system of shared responsibility. The Disputes Act creates this court composed of the 12 common law judges, any three of whom sitting together can constitute a court, and it tells the judges: “You figure out ways to change the lease structures of the parties, so that the parties have an incentive to rebuild.” The legislation allows this Fire Court to extend leases by up to 40 years. In addition, the court was allowed to lower the rent to give you as a tenant an incentive to rebuild the property. The Court is in essence built on a principle of sharing the loss between the tenant and the landlord.
DC: What was the process in the Fire Court that was different from the courts of Common Law and equity?
JT: The thing that was radical about this court was that it operated ‘sine forma et figura judicii’ (‘without the form and figures of the law or judicial system’), which I think better translates as ‘summarily’. And that is exactly the way that the Court worked. It was an extraordinarily informal process. A petition would be filed, parties would be summoned, and there would be a hearing before the judges. The case is typically resolved on that same day. The judges agreed to do this work pro bono or gratis.
DC: We learned that London begins to rebuild very quickly. Did the Fire Court go through the bulk of the work in the early years and then just park the difficult cases until later?
JT: We do know something about these cases because we still have the records of the Court. The Court is often not adjudicating these disputes. Oftentimes, it is acting as a mediator, trying to convince the parties of a fair resolution. In addition, a lot of the parties came to the court with the agreement already settled. All they were doing is asking the Court, “Would you please bless this agreement that we’ve already come to out of court?”
DC: On a day-to-day basis, how did the court function? Where did it sit?
JT: It sat at Clifford’s Inn, right at the edge of where the fire stopped. The Fire Court was a rather simple court. There was no requirement that anyone come with counsel and, indeed, in more of the earlier cases than not, people would appear without counsel. Eventually there develops a Bar around the Fire Court. And one thing that I get a sense of is how important the Bar was to the functioning of the Court. The professionalised Fire Court Bar helps the Court to do its business and brings more people to the table, willing to mediate a solution, rather than to have the Court try to adjudicate a dispute with unwilling parties.
Professor Jay Tidmarsh
DC: Can you give us an example of a typical case that would give us a feel for what was happening?
JT: There are so many differences it is almost impossible to pick a representative case, so I randomly picked out a case brought by the Haberdashers against someone named Farrington, as well as two other tenants on the property. This is a somewhat unusual case because it describes the property that was burned down as a “capital messuage”. In other words, one of the principal houses in London. The original lease on the property was in 1648 for 29 years. There are also separate leases to another person to run what is called the Golden Fleece and to someone else for a shop. The lease to Farrington is for £40 per year; for the Golden Fleece, it was £34 a year; for the shop, it was £26 a year.
After much negotiation back and forth, the Haberdashers agree with the tenants that they will take £25 from Farrington for the capital messuage, as well as £20 from the other two for the Golden Fleece and the shop. The lease is extended to 61 more years, with the Haberdashers receiving £65 per year.
DC: There was a reduction of £35 a year, but over a very long time. And at that point, was it not a limitation of 40 years on the court as to the amount of time it could extend leases?
JT: Yes, by statute, it was allowed to extend the lease by 40 years. There were rare cases, and this just happens to have been one of them, where even before it is given the power to extend leases by 60 years in subsequent legislation, the Court nonetheless does so. I suspect that the Court feels that it has the ability to order a longer lease because the parties ultimately agreed this deal.
DC: It was also manifestly achieving the paramount objective of the court – to get on and get it done.
JT: Case after case recites the purpose of this legislation is to adjust the differences between landlord and tenant, to find the most rapid means of trying to rebuild the City of London. The court was always looking for who could best rebuild this property and then setting up an incentive structure to make that happen. So, if it were the landlord who could build more quickly, then sometimes the tenant would be required to make a contribution to the landlord. If, on the other hand, the tenant was the one who really wanted to rebuild the property, then the landlord would be required to give some incentive to the tenant by reducing the rent and by extending the term of the lease. DC: The judges seem to be rather more mediators and arbitrators than one might normally have expected in the 17th century. What were the criteria that the judges were able to use when making their decisions? How would the judges know by how much to reduce the rent?
JT: I have never been able to determine precisely what principle guided the Fire Court judges. However, there is a book written by Stephen Primatt, containing charts for what appropriate rents would be, and how to value rents. My guess is if you were to plot the way in which the Fire Court works in those cases in which it must make a decision against what is in going on Primatt’s book, you would probably find some correlation. To the extent there’s guidance, I think it is coming out of that treatise; it is not coming from the legislation.
DC: I would like to move on to considering what lessons we might draw from the Fire Courts for the present day, and the situation we find ourselves in.
JT: I wonder how it is that the Fire Court is so successful. I have a couple of ideas. One of them is the single-minded purpose of this court: rebuild London as quickly as possible. It was limited in scope and scale. It had a lot of buy-in from major players. Also, it was not simply trying to compensate people for some awful thing that had happened in the past; it was prospective in its nature. It held out the prospect of being a win-win situation, where both the tenant would get a reduction in rent and the landlord would get a better building.
There are certain aspects of our present situation that we face, where that same idea about trying to find a way to split the difference might be useful. That to me is the critical thing about the court – what lay behind it, the inspiration behind it – when you recognise that law is not an appropriate way to try to allocate loss. The laws that exist put too much loss on one side or the other. Let us find a way to split the difference and make everybody bear a fair share of what is a truly unexpected and un-anticipatable crisis.
Professor Jay Tidmarsh Notre Dame Law School
His Honour Donald Cryan (Hon) LL.D
A member of the Council of the Selden Society and a former Treasurer of The Inner Temple
For the full video recording of this lecture: innertemple.org.uk/firecourts
