Assignment without consent — Section 146 notice served on assignor — Landlord effects peaceable re-entry — Second section 146 notice served on assignees — Whether breach of covenant against assignment — Whether both notices ineffective — Whether lease forfeited — Claim by tenants succeeds — Inquiry as to damages
The defendant company is the owner of a shop, with residential accommodation above, at 534 London Road, Cheam. In 1987 J R Graham Ltd (“Grahams”) held the premises under a lease dated November 8 1976 for a term of 20 years from June 24 1976. In November 1987, and in accordance with the covenants in the lease, Grahams sought the defendants’ consent to an assignment of the lease. On April 6 1988 Grahams entered into a contract to assign the lease to the plaintiffs and contracted, as vendors, to obtain the defendants’ consent; the contract reciting that the landlords’ consent had been obtained. In fact it had not been obtained. Completion took place on April 13 1988.
In January 1989 the defendants became aware of the assignment and served notice under section 146 of the Law of Property Act 1925 on Grahams requiring the breach of covenant to be remedied. On February 24 1989 the defendants effected peaceable re-entry. On February 28 1989 the defendants served a second section 146 notice on the plaintiffs. The plaintiffs contended that (1) there had been no breach of the covenant against assignment because on the evidence it was clear from the defendants’ behaviour subsequent to April 13 1989 that they had retrospectively consented; (2) the first section 146 notice was invalid; and (3) the second notice was ineffective because the defendants had already taken possession.
Held The plaintiffs’ claims for an order restraining the defendants from remaining on the premises and to be supplied with keys was allowed. Inquiry as to damages.
1. No licence to assign had in fact been granted by the defendants by April 13 1989. Despite extensive correspondence between the parties after that date, there was never any situation as between either the defendants and Grahams or as between the defendants and the plaintiffs that could be read as meaning that there was a retrospective grant of any licence to assign.
2. The first section 146 notice had been wrongly served on Grahams who, at the time, were no longer the tenants. No estoppel arose based on the correspondence. In any event the plaintiffs paid the rents in July, September and December 1988 to the defendants, and these payments were accepted.
3. Because the defendants had already taken possession on February 24 1989, they could not rely on the second notice served on the plaintiffs after that date. Forfeiture cannot be founded on a notice served after possession is purportedly taken by a landlord. The second notice was without effect. Accordingly, there had been no effective forfeiture of the lease.
Had the defendants succeeded in showing that they were entitled to forfeit, relief ought to have been given to the plaintiffs by allowing the lease to run on condition that the plaintiffs paid the costs of the proceedings within six months.
Old Grovebury Manor Farm Ltd v W Seymour Plant Sales & Hire Ltd (1979) 252 EG 1103 applied.
Alison Potter (instructed by Symons) appeared for the plaintiffs; and Graham Platford (instructed by Cohen & Naicker) appeared for the defendants.