Lease — Alleged breach of covenant — Possession claim — Consent order dismissing action — Claim by tenant that entitled to acquire freehold under Leasehold Reform Act 1967 — County court upholding that claim — Court of Appeal dismissing appeal — Lease restored once possession action dismissed — Judgment for tenant
Twinsectra Ltd were landlords of 22 Grewsdon Road, London SW7. H was the tenant. A long lease was created on July 20 1891 and by 1978 the reversion was held by Haysport Properties Ltd and the term by Harscott Ltd. On February 16 1982 Haysport issued a writ against Harscott, alleging forfeiture for breach of covenant to repair and claiming possession. On September 6 1983 Harscott transferred the whole of its term to H and, on the same date, H entered into a trust deed declaring that he held the term on trust as to one-third for himself and two-thirds for another person (“A”). The deed recited that the purchase price paid to Harscott by H was £1,500, £1,000 of which had been provided by A. At a date unknown, but before May 8 1985, Haysport transferred its reversion to the landlords. On July 19 1988 there was a consent order in the forfeiture action that: (1) the action be dismissed; and (2) in effect the defendants pay all costs, including the costs of the H’s application for leave to commence proceedings. A counterclaim for relief from forfeiture was not dealt with in the consent order. At the date of the consent order neither party had any interest in the premises.
H subsequently claimed to be entitled to acquire the free-hold of the property under Part I of the Leasehold Reform Act 1967. The landlords did not admit H’s right and he applied to the court for an order that he was entitled to acquire the free-hold. In June 1993 the county court made the order sought, but the landlords appealed. The landlords argued that the bringing of a possession action on the ground that the lessee was in breach of covenant was treated as equivalent to actually entering the premises and as a final election to forfeit the lease. The landlords could not thereafter do anything inconsistent with that intention to forfeit. As the tenant had not applied for relief from forfeiture, he was not a tenant for the purposes of the 1967 Act even though the consent order in 1988 had dismissed the forfeiture action. In Driscoll v Church Commissioners for England [1957] 1 QB 330 at p339, it was stated that although a writ for forfeiture was an unequivocal election by the landlords to determine the lease, until the action was finally determined in their favour, the lease or any of its covenants did not cease to be potentially good. For example, the forfeiture might not be established.
Held The appeal was dismissed.
1. It was clear that a lease came to an end on the service of the writ in which a landlord claimed forfeiture. But where there was a consent order dismissing the action, common sense required that it could not follow that the law was that, whether or not a claim for possession succeeded, the mere service of a writ put an end to the lease.
2. Whatever the status of a lease pending an action for forfeiture it must be taken to have been fully restored when the action for possession was dismissed. Therefore, there was no need of the grant for relief from forfeiture to restore the lease to its full existence.
3. Accordingly, the tenant was entitled to apply to acquire the freehold of the property.
Romie Tager (instructed by Wallace & Partners) appeared for the landlords; Bruce Speller (instructed by Armstrong & Co, Forest Hill) appeared for the tenant.
